Inertia

For information about visit http://www.asymmetrymanagedaccounts.com/

Inertia is the resistance to change, including a resistance to change in direction. It’s an important physics concept to understand to understand price trends because inertia relates to momentum and velocity. A directional price trend that continues, or doesn’t change or reverse, has inertia. To understand directional price trends, we necessarily need to understand how a trend in motion is affected by external forces. For example, if a price trend is up and continues even with negative external news, in inertia or momentum is even more significant. Inertia is the amount of resistance to change in velocity. We can say that a directional price trend will continue moving at its current velocity until some force causes its speed or direction to change. A directional trend follower, then, wants keep exposure to that trend until its speed or direction does change.

newton-law-of-motion-force-ramps

From Wikipedia:

Inertia is the resistance of any physical object to any change in its motion (including a change in direction). In other words, it is the tendency of objects to keep moving in a straight line at constant linear velocity, or to keep still.

The principle of inertia is one of the fundamental principles of classical physics that are used to describe the motion of objects and how they are affected by externally applied forces.

In common usage the term “inertia” may refer to an object’s “amount of resistance to change in velocity” (which is quantified by its mass), or sometimes to its momentum, depending on the context. The term “inertia” is more properly understood as shorthand for “the principle of inertia” as described by Newton in his First Law of Motion; that an object not subject to any net external force moves at a constant velocity. Thus, an object will continue moving at its current velocity until some force causes its speed or direction to change.

Source: http://en.wikipedia.org/wiki/Inertia

Inertia

You are encouraged to reference this website, but please source ASYMMETRY® Observations and http://www.asymmetryobservations.com

Copyright 2013. ASYMMETRY® Observations All Rights Reserved.

7 responses

  1. Pingback: The role of shorting, firm size, and time on market anomalies « Asymmetry Observations

  2. Pingback: Momentum as a stand alone investment strategy « Asymmetry Observations

  3. Pingback: Trajectory and Directional Price Trends « Asymmetry Observations

  4. Pingback: Trend Change in Dollar, International Stocks, Gold? « Asymmetry Observations

  5. Pingback: Trends, Countertrends, in the U.S. Dollar, Gold, Currencies « Asymmetry Observations

  6. Pingback: The Trend of the U.S. Stock Market « Asymmetry Observations

  7. Pingback: Even Hurricane Irma Hasn’t Shaken Recent Investor Greed « ASYMMETRY® Observations

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s