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French physicist Jean Perrin once said that the key to scientific progress lies in the ability to interpret complex phenomena using simple principles. Despite the fact that investment theory has been developing for hundreds of years, it appears to have reached a standstill instead of progressing. Finance has been so glorified by modern technology that the average person finds it difficult to access this "black box". Whether this Pandora's box contains demons or angels is a matter of personal opinion.
In reality, finance is a broad concept that is often simplified in textbooks as the allocation of resources to more efficient sectors. However, is this really the case, or is it just a theoretical construct? In my personal opinion, the idea of allocating resources to more efficient sectors is half science and half wishful thinking. The essence of the financial market is actually the pricing of time, as traders exchange their expectations for the future.
My background in psychology, specifically in group psychology and behavior, sets me apart from many investors who solely analyze economic data and supply-demand curves. This allows me to approach the market from a unique perspective. I believe that the market's fluctuations are a product of the collective behavior of market participants. While the information that influences the market may be random, the market's interpretation and response to this information is not. During a certain period, market participants exhibit consistent ways of thinking that evolve into trends with specific patterns and preferences.
Therefore, being a successful investor means to me understanding market psychology. By taking a fresh perspective on economic data and market information, one can begin to see the market as having its own personality. Each trade is like a negotiation with an opponent to exchange chips and expectations. This is the unwritten rule of the economic system: everyone's income comes from another person's expenditure, and any sector's income growth must come at the cost of another sector's income decline. This is the first law of thermodynamics in the financial field, and wealth cannot be created out of thin air.
If you closely observe the market, you'll discover many fascinating aspects. Market participants have varying sensitivities to information, and different types of information are disseminated in the market or between various markets in a form that is determined by the composition of the participants. Ultimately, the form of information dissemination generates different types of market price fluctuations, which we can see as trends and oscillations on a candlestick chart. In a way, oscillation is a failed trend.
The field of study that focuses on information diffusion is known as diffusion studies. One of the most famous experiments in this field is the 1928 American corn hybrid experiment. In this experiment, researchers provided improved corn to 257 farmers and monitored their acceptance levels over an extended period of time. By 1933, only a small number of farmers had adopted the new corn. However, in 1934, 16 new farmers began using the new corn, and then the number of adopters began to increase rapidly, with 21 in 1935, 36 in 1936, 61 in 1937, 46 in 1938, 36 in 1939, 14 in 1940, and 5 in 1941. Eventually, all farmers accepted the new corn seeds.

The diffusion pattern of such information is a commonly observed phenomenon in the evolution of human