The large problem in evaluating your chart without hard empirical tests is often our eye sees what it wants to see. This is exacerbated by the fact that markets can really only go up or go down, and they can only either trend or range trade. Hence any indicator (Pitchfork in your case) is going to look great sometimes just by the virtue of these limiting circumstances. This is the big problem with believing something about the market based on a few occurrences of anecdotal visual 'evidence'. Just change the slope of your Pitchfork by 1 degree and see the effect of it. The guy that plays at Roulette will see similar patterns because there are only two choices: Red or Black.
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If fractal means charts have similar structure on all time frames, then yes, but with exception. Like in nateru, a snow flake is a prime example of fractal but only you zoom enough to go to molecules level and then its no fractal at all. Molecules or atoms, or quarks are not like snowflakes. Same in chart patterns, if you zoom to say tick chart or 10 second chart you will see it is very different from what you see on 15 or 60 minutes chart. You will see gaps, stall in price movement, long lines where price traded at same exact price, 1 tick wide bars and 20 tick bars going one after another. Zoom out and you see other factors that dont repeat on low time frames such as seasonality. Futures and stocks have very pronounced session character not repeated on either low nor high level but only within a session. Forex is most fractal of all, being 24h and most liquid, but again before you zoom to elemental level. There at tge tick level rules change. Its like Newtonian physics being replaced with quantum physics at subatimic level.
Trade to live. Not live to trade.
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@xelaar Since markets involve people, let's say one buyer and one seller agree on a price and make an exchange. Could that be considered the subatomic level for a market? If not, how about two buyers and two sellers agreeing on a price? Are the basic behavior patterns among people at the subatomic level self-similar as the number of market participants gets larger?
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Subatomic level of market consists of market making HFT (replacing specialists and market makers of earlier days), and total majority of trades are going not by "agreeing" between buyer and seller, but by hitting the bid or the offer placed by market makers. Think about not two people meeting each other via craigslist to buy/sell a car, but seller going to the used car dealership and selling at discount, and buyer going to the same dealership and buying at premium. Dealer is a market maker who collects the spread. If markets would be working by pairing real buyers and sellers it would be a dysfunctional place with really bad price discovery. It can be seen during flash crashes, when HFT remove their limits from the market, and your order close suddenly slips not 1 tick but 1000.
Subatomic level of market is governed by working of these algos, doing not only market making activity, but searching for elephants or huge buyer and seller, icebergs, other algos, predatory behaviour like stop running, etc.
Learning HFT kitchen is learning quantum mechanics of the markets. It has nothing to do with trend lines, ranges, stochastics or anything you learn from broker-sponsored education and mainstream book. If you want to trade pure technical - trade at the technical resolution, i.e. higher the better. Same thing with subatomic trading - it does not work at higher level when you want to risk 50 ticks and gain 100. It does not make any sense.
Well, I tried hard.
Trade to live. Not live to trade.
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Im quite surprised to see the differing views on this topic. I always thought the dominant opinion was that markets are fractal, and the longer I trade, the more I believe it. But this is what makes a market,...differing opinions. Without them, their would be no markets. Nice discussion.
In my opinion, markets at their core are no different now than how they were 100 years ago. Yes technology has progressed beyond anything imaginable when markets first began. But their reason for being remains unchanged. Buyers and sellers coming together with differing opinions of both current and future value, and meeting in the middle so that a transaction can take place.
Whether you're an HFT, long term investor, day trader, whatever,...you're all coming to the market because it is an auction place that facilitates trade. It is those differing time lines of market participants that ultimately causes the markets to be fractal. Repeating patterns of behavior reflected in the way markets operate across time.
Zoom in, it's an auction. Zoom out, it's an auction. Irrelevant of how the data is visually represented. Charts are just one representation of how the past auction took place. What underlies that data, the repeating human behavior across timeframes from the scalper to longer term investor is what causes fractal behavior.
For those that feel that the markets are not fractal, I would be interested in hearing why. There have been several posts saying that they are not. But why not? Saying something is not true requires more than simply saying so. I have posted my reason for believing markets are fractal,....what are yours for believing they are not.
Maybe as with just about everything in trading, their is no one single right answer.
You donít trade the markets; you only trade your beliefs about the markets.
- Van K Tharp
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