Fractals and the Hidden Hierarchy in Stock prices, Forex, and other Markets - Fractals and Finance

Fractals are powerful tools for understanding forex, stock market, and other financial market strategy. Some technical analysis experts say they use "fractals" in their analysis of financial markets like forex, but this type of "fractal" has virtually nothing to do with what fractals really are (by which I mean the mathematical theory from which the term "fractal" comes from). And the real fractals are extremely useful for understanding these markets, and understanding them can only help improve your investment strategy making.
This video discusses how financial market data resembles turbulence data, and how this can be thought about in terms of fractal cascades. Understanding how the hierarchy works will give you a new way of thinking about stock, forex and other financial market data!
DISCLAIMER: This video is not intended as financial advice or advice on how you should invest or trade in financial markets. No specific strategies or recommendations are provided in this video. It is intended as an overview of the character of financial market data, for educational purposes. I am not a financial adviser. Seek out a qualified financial advisor and carry out your own due diligence before commencing any form of investing.
Kock fractal graphic: António Miguel de Campos - self made based in own JAVA animation. Public domain.
British coast animation: Tveness- Creative Commons CC0 1.0 Universal Public Domain Dedication

[@kimberlygladman9657]

I came to this video because I am interested in Hausdorff dimension, and it did not really help. But it was super-interesting. As I understood it, what it says is that the oft-noted "random walk" of Wall Street isn't---at least at certain scales, it is extremely patterned (fractal). This suggested to me at first that technical analysis contradicts modern portfolio theory--if random patterns self-replicate at multiple scales in stock prices, how can price movements be connected to underlying changes in asset value, as the dividend pricing model and the efficient market hypothesis assert? I was delighted to see the video immediately explain that on longer time scales, price changes are NOT fractal and in fact are driven by changes in value. That make me think that perhaps what the fracticality-on-shorter-time-frames phenomenon is a result of is the absorption of information by the market. That always happens in lots of fits and starts and irregularly, as the market gradually learns enough about the underlying security to price it. (What this suggests to me, incidentally, is that the similarity to turbulence that the video notes results from a similar fact---it is change in general, not only change due to information absorption, that produces these mathematical patterns ) Anyhow this video suggests that technical analysis and short-term trading are extracting value from the market and cheating long-term investors, which is hardly news. But it shows it on a mathematical basis I think is valuable.

[@fractalmanhattan]

Thanks very much Kimberly - that mostly sounds right to me - the key thing is that if they are fractal the fluctuations behave like they have a "memory", so today's fluctuations affect tomorrow's, while the random walk assumes they are independent from day-to-day. Also, because they are fractal, and so display power laws, that suggests there exists self-organising dynamics - so waves of reaction cause further waves of reaction, cascading around the system. So like you say, change in general driving the fluctuations, rather than just information absorption :) But this reminds me I should make some more videos focused on fractals

[@user-ob8vs6fe1f]

Nice Explanation

[@MrHighCeiling]

Thank you

[@riasgremory123456]

Nice explanation been reading Benoit mandelbrot's fractal

[@fractalmanhattan]

Thank you!

[@Ta2dwitetrash]

I accidentally stumbled across this while trying to figure out what i was seeing in the charts.
Im into quantum physics and this lit me on fire.
The fibs demand it!

[@fractalmanhattan]

Wow - love it!! Thanks!!

[@namelname2448]

You are a good in explaining the fractals as a proffessional.Could you please show us a practice of that on one of the stock's chart to know how to choose the fractal in a lower time frame then to plot it on a larger time frame chart to know the support and the resistance?ALLAH willing,thank you and I appreciate it in advance.

[@fractalmanhattan]

Thank you for your kind comment. I'm not sure if fractals like I am explaining here help in identifying support and resistance. I will think about this though. Thank you for your advice.

[@namelname2448]

@@fractalmanhattan You're Welcome!

[@Kenayi22]

Excellent stuff! Reading Ben Mandelbrot's Misbehavior of Markets also removed the veil for me. However, using digital signal processing to automatically detect dominant market cycles and combining that with fractal loop will no doubt be a powerful strategy. I have trying to do just that on tradingview and still trying. Any ideas?

[@fractalmanhattan]

Thanks! Using digital signal processing (DSP) might be able to detect something - in theory fractals don’t have any dominant market cycles, but DSP might pick up stuff being driven by other kinds of dynamics. This might be peculiar to particular stocks. I’m not sure that Tradingview does anything other than the “Bill Williams” fractals, which aren’t the same as Mandelbrot is talking about, even though a lot of TH-camrs seem to think they are! I only use either custom indicators from raw data, or the simplest indicators from the commercial tools of that kind. So I’d suggest getting the data and applying DSP directly yourself. Hope that is somewhat useful!

[@Kenayi22]

@@fractalmanhattan financial market fractal has a shape and it's called the zigzag. What we see are layers and layers of never ending zigzags of different degrees. Zigzags within zigzags basically. When you have two connected zigzags of medium to larger degree on top of each other, a trend is established. There are a lot of nuances to the system that cannot be explained here but I hope you got the point. Now, when DSP is applied to stock market data, zigzag cycles are detected in the form of oscillating troughs. Anyway, tradingview do not currently have this indicator of course but my goal is to create one.

[@geraldsnodd]

Nice explanation.
I did'nt understand the connection between fractals and stock prices before this video.

[@fractalmanhattan]

Glad you found it interesting :)

[@margarethmwinuka2518]

Cold wallet ni nini mwalimu

[@Swingsniper]

In a way it works upwards too

[@machi4744]

brother thank you i searched for days for something like this. you are must be billionaire but just got bored so thanks, secrtet method muahaha, just be smart gang gang

[@fractalmanhattan]

Yeah cheers mate! hee hee hee billionaire! hee hee hee

[@uklk]

Lets go hiaa

[@antonytrade]

So its called multi time frame market structure

[@mradjamesable]

3669❤

[@andrewmuchtar9286]

The market is naturally 100% fractal dude 😂😂😂😂

[@fractalmanhattan]

Hee hee - thanks!! 🤣🤣🤣