fractals, the universe...let's get into it

G

Gordon Gekko

Originally posted by DT-waw
Thank you Gordon Gekko for the link. Chaos theory is beautiful, it answers many questions from many areas. Trading is difficult, why? Simple answer: because markets move in non-linear way.

Universal theory. Everything can be treated as a fractal. Absolutely everything!
Here's another link: http://www.wfu.edu/~petrejh4/chaosind.htm
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i have to say, today is the first day i ever did some research on fractals and i already like the concept.

we discussed chaos theory the other day and that made 100% sense to me. the stock market really is a chaotic system. now i'm wanting to learn more about fractals. i have no idea if they can even be related to trading, but i'm interested in the subject anyway. the universe is a wonderful thing. this could turn into a good thread if we can get the smart guys into it.

let's start by someone explaining fractals and what the implications of them are..for the universe...and if they can be applied to trading (i have no idea).
 
here's the definition of a fractal for the clueless guys :) don't worry, i was one yesterday..and i still am. :D

"repeating geometric pattern: an irregular or fragmented geometric shape that can be repeatedly subdivided into parts, each of which is a smaller copy of the whole. Fractals are used in computer modeling of natural structures that do not have simple geometric shapes, for example, clouds, mountainous landscapes, and coastlines."
 
When you look at a part of a coastline (or cloud etc.) on a map you would not be able to tell if the piece you are looking at is 500 feet or 500 miles long just from looknig at the line on the map. It is a "fractal". When you look at a price chart without labels you wouldn't be able to tell whether it is a 1 hour or a 1 year chart.
 
GG sadly it just ain't gonna happen for you 'ol buddy. you should be fervently studying charts etc and here you are wasting your time talking about fractals.
 
Gordon,

I have been reading a lot of the recent threads that you have been posting to, and want to add my 2c.

It does appear that you have been losing money, and are afraid to trade, as you might lose more. Because of that, you are spending time trying to figure out the markets, as if gaining some special insight into market movement will unlock the money box.

You are also getting into paralysis by analysis- you are spending your time getting into chaos theory, and fractals, asking everyone's opinion about your developing beliefs about the market.

Don't worry about what others think about your opinions, especially whan you don't know them. We all have varying levels of trading success, and not all of us are right. Test your ideas for yourself- that will be an edge for you.

The old saying is true- you don't trade the markets, you trade your beliefs about the markets. Determine your beliefs, re-think your trading methods, and then test them under changing conditions. Example- I swing trade, and often buy triple top breakouts. I lost on several trades a couple of weeks ago. The error was buying breakouts after a 5 day runup on the Naz. I was taking low probability trades, when it should have been apparent that the Naz was due for a retracement.

Re-examine your losing trades, and understand why they went wrong. I may be wrong here, but this is my take, based on what you have been posting about. Relax, test your methods, and trade small, until you confirm that you are back in the saddle.

Kevin
 
Originally posted by Gordon Gekko

let's start by someone explaining fractals and what the implications of them are..for the universe...and if they can be applied to trading (i have no idea).
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A couple of comments here:

These are all very interesting and there are some applications of the concepts of self-similarity and fractional dimension to trading.

However, for the day to day operation of most daytraders the published theory and applications dont hold too much utility.
Particulary if you are just starting out with building a trading business on a small scale. There are useful concepts with respect to building automated trading systems or analytic models but IMHO these are activities that demand a fair a mount of trading experience and mathematical background - years of each.

If you really want to learn about these topics the books by mandlebrot, smale, and guckenheimer are all classic references.
 
I could barely pronounce 'Benoit Mandelbrodt,' much less understand him.

I will say this. Elliot Wave Theory seems to employ the concept of little patterns building upon eachother to make bigger versions of them. Very interesting. Sort an application of the idea that 'there is nothing new under the sun,' that even complex things have simple roots.

Would someone care to, again, please define 'chaos' for the purposes of this discussion? Thanks.
 
A couple of Prechter's books (that I have) get into fractals and the markets- the Elliot Wave Principle, and The Wave Princliple of Human Social Behavior.

Kevin
 
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