Five Elements responsible for the formation of all matter in the world.

According to chinese theory, Five Elements of Metal, Wood,Water, Fire and Earth, which in their turn were considered responsible for the formation of all matter in the world.

The Five Elements were held to interact thus:

• Metal gives birth to Water

• Water gives birth to Wood

• Wood gives birth to Fire

• Fire gives birth to Earth

• Earth gives birth to Metal

• Metal destroys Wood

• Wood destroys Earth

• Earth destroys Water

• Water destroys Fire

• Fire destroys Metal

Each element is stronger than the element which gave birth to it. Thus, as Metal gives birth to Water, Water is stronger than Metal. When any element is opposed by another quantity of the same element, the stronger quantity will win. To sum up, any element is stronger than two of the other four elements, and weaker than the remaining two. The interaction between the elements is eternal and continuous. Each element also has Yin and Yang characteristics. Thus Metal could be sharp and shiny or rusty and dull, while Water could be a roaring waterfall or a muddy pool. Let us take each one of the elements to represent one of the Five Directions:

• Metal represents Forward

• Wood represents Back

• Water represents Left

• Fire represents Right

• Earth represents Centre

If our opponent uses Metal (moves Forward) our response must follow the theory of the Five Elements. In other words we must use Water (move Left) or Fire (move Right) to destroy his Metal. If instead we use Metal (move Forward) also, then the stronger Metal will win, but this is contrary to Tai Chi Chuan principles. If we remain rooted to the Earth (Centre) Element we will be overcome by the advancing Metal. If we make use of Wood (move Back) the Metal will thrust forward in pursuit and cut us down when there is no more room to run. The Five Elements teach us which are the most advantageous and least advantageous of the Five Directions in any given situation. We do not actually need to step forward, back or to the side when moving from the centre, a slight shift of weight in the appropriate direction will normally suffice. These directions refer to the direction in which our body is moving at any one time and we apply the Eight Powers in conjunction with such movements. This gives us a wide variety of possible actions and responses.

Try to use above principle in financial market as pevious close ,open, high, low, latest price.