On the subject of trading tapes, recently came across this chart, here is the prequel by Jack;
Quote from tradingjournals:
Any area of study has laws. What are the natural laws of trading?
I suggest the laws be numbered to support ease of reference and discussion.
You are correct. the markets are a system of operation.
Systems have three facets: structure, process within the structure and results of the process.
There are 56 unique pieces that form the whole system of the market's operation. Each piece is precisely defined as unique.
Two theories bound everything about the system of market operation. One is Keynes's algorithm theory and the other is Carnap's logic theory.
From these it turns out two hypotheses (HS) fully define the market system of operation. Their parametric measure (PM) is the vector.
A person can become expert in taking the full offer of the market in 20 to 40 days, if he builds his mind from scratch and has no erroneous beliefs about markets.
He learns the laws in this order:
1. The psychology of the market is unchanging and based upon human nature.
2. The market has two variables: the independent variable is volume; the dependent variable is price. Most mathematics works with two such variables.
3. The system of numeration of the market is granular and not continuous. Thus the mathematics that has utility is dictated by the resolution of the PM of Keynes a vector and the granularity of the variables.
4. Information in markets is handled in bundles; timeframes are common. Bundles are commonly called bars.
5. Each bundle is relative. Therefore a RDBMS is of highest utility.
6 All timeframes allow at least three interlocking fractals to be observed.
7. Markets ebb and flow and cycles are formed. The fundamental cycle is an alternation of two vector oriented trends.
8. Trends have three parts: beginning, middle and ending. Trends overlap out of necessity.
9. One two variable pattern emerges to show the cycle. (The Pattern)
10. The logic of the system of the operation of the market can only be handled by Boolean Algebra. All pieces of the market are defined in Boolean terms and expressions.
11. The market can be fully automated using the logic of Boolean algebra. Thus, the market is fully described in finite mathematics.
12. The flow of the market can be shown as an integrated set of Orders Of Events (OOE's) since time is NOT a market variable. There are five ranked functional OOE's.
There are some neat facets:
a. Price has 10 unique RDBMS cases.
b. Volume has 11 such cases.
c. There are 35 unique End Effects.
Lower level significant details include:
d. There are three type of turns in markets.
e. There are four types of trends in markets.
I'm sure everyone knows and uses these things. There is nothing new about markets.
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https://www.elitetrader.com/et/threads/natural-laws-of-trading.279359/page-2
This is a bit of a rare chart in that there are annotations regarding trading states.
Furthermore, as anyone working out the method there are differences in the personal application of it depending on their developing spectrum.
The thing to note is the preponderance of FS's and that instead of it being interpreted as a misapplication, it's a sign post that one's on a productive path.
