Quote from 1contract:
I have been following this thread for a while now. It's not always easy to follow but usually with a few reads & a bit of thought, I get there. But I just can't get my head around this odd/even harmonic stuff - what is it? - what is its significance?
Can someone help me please.
I looked through several books to find a good section. Two close calls were Technical Analysis from A to Z (Achelis) and The TC2000 recommended ref book: The Technical Analysis Course ( Meyers). They were not deep enough. I will keep at it.
Two other sourse areas are music and engineering.
Briefly speaking, here is the drift.
Periodic wave formations can be obtained by putting together (addition) other wave forms. Trigonometric expressions (sin and /or cosine) are one source. Three variables define each one. Magnitude, frequency, and phase angle. Phase angle is how a given item relates to the main item. It is the offset of the shape from the beginning of the main one.
Price is the main item. Volume moves at twice the frequency of price. A/D moves at twice the frequency of volume or 4 times the frequency of price. This is something I use to divide he price cycle into 8 parts. (See scoring in journal.)
The more important aspect of this is the price formations and how they wiggle. Draw a triangular price formation. Draw a sine wave inside it. You can see a horizontal axis that is there too.
Put a sine wave (smaller size in amplitude and 3 cycles long) inside the triangular price formation. 1 and 1/2 cycles fit in the up part of the original sine wave and 1 and 1/2 cycles fit in the down part of the sine wave.
Add the vertical values of the two sine waves together to get a new graph. You see first a peaking head and shoulders and then a troughing head and shoulders. This is an odd harmonic formation: 1 :3 for the ratio of frequencies (odd numbers only).
Do another. Start the same with a triangle (we will turn it into a square wave). Add the sine wave. Now add a sine wave 2 times as fast. The new ones each fit into half the original. Add them together. You see how there is no middle part that is highest. You see that the beginning and end is steeper. sketch a square wave in the be more extreme. This is pretending that you have more EVEN harmonics of the primary one.
we look at price formations and take them apart in the opposite way of building them.
If the horizontal axis is tipped, then the shapes change. Tipping it up makes a triangular formation be fast rising and slow falling. we could do this with a change of the phase angle as well. I won't but it only takes sliding the harmonic to the side so they do not start exactly together.
A second way to do this is with power series. Use either odd or even ones in the exponents that are chosen. Sines and cosines have equality in these power series as their makeup.
Ed Seykota and Soros are EE's and physicists; their minds are in a state where they cannot look at any time based function without reverting to this thought process. I am in the same but smaller boat.
Because I attended the Lincoln center stuff continualy for years and because of my relationship the the Accustical Cat Gut society of Bell Telephone Labs, I am the type who memorizes the ceiling settings of the sound buffers in an auditorium. This harmonic orientation causes me to know the phase angles of the harmonics of the flute and oboe, which have the greatest musical contrast. I have had maths students plot for months the first seven on butcher paper in color to be able to "see" the note A which the orchestra tunes to.
One of these two students manages over 8 million dollars (1964 dollars) personally and she is good at it. Another student who endured plotting this kind of stuff was voted best business person of the year by his prep school many years ago as a consequence of running the bond dept of Lehman Bros. His boss, Pete Pederson and I were on a first name basis as a consequence of his formerly being Secretary of Commerce.
People can really groove if they understand what is going on. the fact that you are dealing with understanding this, means that you are going to understand it.
My brief explanation is going to give you the basic experience you need to "see" what is going on automatically from now on.
What is going on here is that we are devouring tons of knowledge, practice and getting into skill development. I am writing in a dense manner in terms of factual substantive content. You all have to spread it out and deepen it. when you do you get big chunks of stuff that builds a large picture of markets and making money. At some point you will compare this with your educational process. This is a full whammy compared to just a book and homework assignments for a term.
BTL had Kelly college to take up stuff that wasn't in the formal education of new hires. Keely was a President of BTL who had the right picture. There is no college for making money. It is an informal place where people of like mind work together.
