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.
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
The hierarchy does exist (work) on larger time frames such as the yearly. The only issue is the stock market is not old enough to easily see it. You are in effect zoomed in if you look at any chart based on a yearly interval. For example 100 years of data would be 100 bars, or like looking at 100 minutes on a 1 minute chart and then drawing the conclusion that the hierarchy no longer works. Now if we had 2584 years of yearly data it would obvious the hierarchy is in full effect.
Super super interesting. Also what I've noticed is the drastic effect of economic news releases on lower timeframes like the 1min to 15min charts. In other words the maximum range on a 1min chart compared to the the average range is much greater than the maximum range on a 1D or 1W chart compared to to the average range. This is where the fractal nature also breaks down I think.
Good video, I observe that you can take advantage of knowing how higher fractal trend is moving, then look for pulback on the lower fractal trend for entry to get good fills, then put your faith on the power of higher fractal trends to make money. But this can be tricky becuase if lower fractal is moving down and higher is moving up, it does feel like buying a falling knife at times. I guess for a even better entry, you dig down into even lower fractal time scale, but there is a limited and a point where too mch is too much, finding the good balance between high and low fractal is a challenge, but of course, even higher fractal scale still have a even higher one, and even that have a higher one etc... in the end, I think the highest fractal is a nation's underlying strength and power, that also means all empire decline and nothing lasts forever, but you can still make money playing the fractl that is presented to you... i lost my train of thogught here
I find that for intraday forex trend trading most important relevant (Guide)trend direction is ON 15 minute, 1h and 4h charts only-- For intraday trading weekly & monthly trends do not matter much(too far removed from intraday field of activity) & can be ignored. For simplicity sake if 15 minute ,1h & 4h trends are in the same direction, you have a trade set up in the same direction (one could fine tune entry 0n 5 minute charts). In general if daily candle be in the same direction for any trade it is better but not A must.--Sir, what do you have to say?
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!
I have been thinking about this as well. Geometry patterns, golden ratio, fibonnaci in the market is strange. Does that mean the market control itself? Self correcting? Or is it artificially controlled with data input? I don't think market can act on it's own without the humans intervention. I'm curious. Who knows?
Charts of stocks, indexes, commodities, etc. are "Approximately fractal" but there's one other chart that is the 'real deal' - the chart of VIX. There's a beautiful pattern in it. Can you see what I see ?
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
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?
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!
@@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.
I think humans still have to intervene in it functionality. It's a computer programming algorithm right? A computer still needs to be checked, operated or it can't use itself. Even to perform a task it still needs to be programmed by human.
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.
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
The hierarchy does exist (work) on larger time frames such as the yearly. The only issue is the stock market is not old enough to easily see it. You are in effect zoomed in if you look at any chart based on a yearly interval. For example 100 years of data would be 100 bars, or like looking at 100 minutes on a 1 minute chart and then drawing the conclusion that the hierarchy no longer works. Now if we had 2584 years of yearly data it would obvious the hierarchy is in full effect.
Super super interesting. Also what I've noticed is the drastic effect of economic news releases on lower timeframes like the 1min to 15min charts. In other words the maximum range on a 1min chart compared to the the average range is much greater than the maximum range on a 1D or 1W chart compared to to the average range. This is where the fractal nature also breaks down I think.
Thanks and really interesting!!
Good video, I observe that you can take advantage of knowing how higher fractal trend is moving, then look for pulback on the lower fractal trend for entry to get good fills, then put your faith on the power of higher fractal trends to make money. But this can be tricky becuase if lower fractal is moving down and higher is moving up, it does feel like buying a falling knife at times. I guess for a even better entry, you dig down into even lower fractal time scale, but there is a limited and a point where too mch is too much, finding the good balance between high and low fractal is a challenge, but of course, even higher fractal scale still have a even higher one, and even that have a higher one etc... in the end, I think the highest fractal is a nation's underlying strength and power, that also means all empire decline and nothing lasts forever, but you can still make money playing the fractl that is presented to you... i lost my train of thogught here
I find that for intraday forex trend trading most important relevant (Guide)trend direction is ON 15 minute, 1h and 4h charts only-- For intraday trading weekly & monthly trends do not matter much(too far removed from intraday field of activity) & can be ignored. For simplicity sake if 15 minute ,1h & 4h trends are in the same direction, you have a trade set up in the same direction (one could fine tune entry 0n 5 minute charts). In general if daily candle be in the same direction for any trade it is better but not A must.--Sir, what do you have to say?
I really enjoy your content, just watched your most recent video and subscribed. Hopefully we get more of this!
Thank you - pleased you liked it. I will try to get to doing some more
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!
Wow - love it!! Thanks!!
7:45 9:35 physics, power & energy
I understand its a popular science. Though, it would be great to dive deeper, to Hölder exponent, persistent/antipersistent signals, and real cases 😅
Thanks for your interesting feedback - definitely something to think about!
Nice Explanation
Nice explanation been reading Benoit mandelbrot's fractal
Thank you!
I have been thinking about this as well. Geometry patterns, golden ratio, fibonnaci in the market is strange. Does that mean the market control itself? Self correcting? Or is it artificially controlled with data input? I don't think market can act on it's own without the humans intervention. I'm curious. Who knows?
Charts of stocks, indexes, commodities, etc. are "Approximately fractal" but there's one other chart that is the 'real deal' - the chart of VIX. There's a beautiful pattern in it.
Can you see what I see ?
Thank you
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
Yeah cheers mate! hee hee hee billionaire! hee hee hee
Hilarious 😂
Nice explanation.
I did'nt understand the connection between fractals and stock prices before this video.
Glad you found it interesting :)
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?
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!
@@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.
@@Kenayi22 Very interested, did you manage to create the indicator
Cold wallet ni nini mwalimu
In a way it works upwards too
So its called multi time frame market structure
Lets go hiaa
The market is naturally 100% fractal dude 😂😂😂😂
Hee hee - thanks!! 🤣🤣🤣
I think humans still have to intervene in it functionality. It's a computer programming algorithm right? A computer still needs to be checked, operated or it can't use itself. Even to perform a task it still needs to be programmed by human.
3669❤