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Simple Harmonic Motion

Stock prices move following the Law of Simple Harmonic Motion. What does this law require stock prices to do? It requires that they move faster in the middle of a price movement rather than at the beginning or end of a price movement.

The Law of Simple Harmonic Motion can be seen when a child swings on a swingset. The child moves faster at the bottom of the swinging motion than on either end of the swinging motion. The same goes for stock prices.

The pendulum in a grandfather clock does the same thing. It stands still at either end of its motion but moves rapidly through the middle of its motion.

So do stock prices.

Many things in nature follow this law. The brightest time of day is the middle of the day, noon. The darkest time of night is the middle of the night, midnight. Both darkness and light peak in the middle part of their respective cycles.

Stock prices follow this law too. A stock that is just starting to rise will start out slowly and then picks up speed towards the middle of the rise. As the price rise approaches its end, the price rise slows down.

You can use the Law of Simple Harmonic Motion if you want to. How? Be sure not to insist on buying a stock at it bottom-most price or selling it at its top-most price. If you can do so, ok. However, be aware that these 2 price points are where stock prices move the slowest.

It's better to be content and not get greedy and try not to buy the the stock at its lowest price or try to sell the stock at it highest price. If you will do this, you will enjoy much more favorable price action.

The key to making the Law of Simple Harmonic Motion work in your favor is to remember this: Don't seek out the beginning of a price movement or the end of a price movement. Instead, go for the middle part of the ride which is the best part of the ride.

As any amusement-park ride operator will tell you, the ride slows down at the beginning and end of the ride so people can get on and off.

©Edward Abbott 2004