Innovation Adoption Curve or IAC is also called the life cycle model or diffusion curve. In short, it helps you learn how something new, technological innovation or fashion trend for that matter is adopted by different sections of society.
The idea is that the information travels to different sectionsof the society at different times. The quicker you get the information the earlier you will be able to act on it. The earlier you act on it the higher the chancesz of you benefitiing form it.
Consequently thelater you receive theinformation the opportunity may have lost its appeal.
The IAC or the Diffusion Curve was originally conceptualised by E M Rogers. He published a book by the name “Diffusion of Innovations” which covered the topic in detail. It’s a worthwhile read…
His work was further popularized by Malcolm Gladwell in his book “The Tipping Point”, another interesting read. You must appreciate the fact that most of the traders learning may come from non-trading sources.
Trading is all about information and what you do with that information. The diffusion curve helps us understand our relative position on the “information discovery” spectrum. If you are late to the party you will enter in a trend only when it is about to turn around.
Be honest how many of you have had this experience where you enter a trade and immediately the market reverses. That is because you got in the game too late.
On the contrary if you get in too early you will have to deal with the bottom or top formation process, which is often associated with a lot of volatility aka stop hunts and time. Its not for small account hoders like retail traders.
Well once you understand where on the spectrum you are currently, also the reason why you are struggling in your trading. You have to look at improving your position and get as close to the smart money traders as possible.
Because that is the only way you can succeed in the game of trading. There are a bunch of ways you can use IAC to your benefit, and that is precisely what I have covered in detail in my course on the Advanced Technical Analysis Techniques… You are most welcome to check it out…
There is much more to this topic of trading and we cover it in great detail in the DTF Membership. So if you are curious and want to bring consistent profitability in your trading consider subscribing to our quarterly membership…
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