Diversification in Vibratrading
We have learned that all entries into the pyramidal construct must be capstone-based to be bounded, except for the Unbounded Upside Macrosiso. You will soon learn to combine micro and macro trading in order to form a more efficient vibrational construct.
But, no matter how well we design the constructs to extract trend and vibrational profit, there is no way to prevent via the deployment of vibrational mechanisms alone the collapse of the pyramidal foundation. See Figure 10.1 for an explanation.
The only way to neutralize or at least drastically reduce the possibility of a pyramidal foundational collapse is through diversification. We have six levels of diversification to ensure that our pyramidal foundation is as zero test level–proof as possible.
Bounded Versus Unbounded Zero Test Level Event
There are three main factors which help strengthen the foundations of a pyramidal construct:
1. Demand creates a powerful upward force, especially in undervalued stocks. Demand works so well (and even better near zero test level) because of the extremely attractive PLR, BLR, and MLR. This natural support for price creates phenomenal retracement or rebound profits.
2. Capital risk (CVAR) is much less at lower entry levels. This allows investors to enter and buy stocks that they could not have otherwise afforded. ...