# How to Find the Correct Place to Stand and Profit from the Lever that Moves the Market (Part 2)

07/16/2008 12:00 am EST

Focus:

Timothy Morge

President, MarketGeometry.com

It is important to note that bond corner trades do not always have to include mirror bars. But they often do include them right at the corner where the ‘C’ Pivot is formed. If mirror bars are not present, I often see a series of bars with identical lows [when I am expecting price to head higher] or identical highs [when I am expecting price to head lower]. This clump of double, triple, or quadruple extremes is a marker in the bond market that I found that spawned the corner trade idea, so watch for them to form and then start stalking a corner trade.

But what’s really behind the corner trade? Why does it work? What is the math or physics—or simply put what is going on in the market that makes this trade entry so effective?

Let me show you an image and quote that might turn the light bulb on for you:

Archimedes was a well-known student of Euclid—you remember Euclid, right? He’s the mathematician that REALLY came up with those geometric progressions 38.2, 61.8, 127.2 and 1.618 around 300 BC that have somehow become associated with an Italian mathematician by the name of Fibonacci that lived about 1500 years later.

In plain words, Archimedes stated that if you could give him some place with firm footing and a stout lever, he could use the lever as a ‘machine’ and lift many times his own weight—today, we’d call the machine a fulcrum and lever. Perhaps his boast of ‘moving the world’ was a bit much, but you get the idea. Firm footing and the right conditions, coupled with some leverage can do amazing things! And that is the basis behind a corner trade. It’s not complicated, it’s not magic, it’s not proprietary—it’s simple common sense applied to the markets!

Alright what does this common sense approach look like when applied to a chart of the bonds?

Here’s the same chart, but now we are looking at it through the eyes of Archimedes and applying his fulcrum and lever principle to the bonds. The series of nearly same size bars in the consolidation range—that is well above the prior Swing Low—serves as the fulcrum [or firm footing] and the energy price is storing as it trades within this narrow range is going to be the lever that propels price significantly higher out of this range [if I am correct about which side breaks out on!].

More in part 3 tomorrow.