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Thread: Fractal analysis

  1. #1
    Join Date
    Aug 2014

    Default Fractal analysis

    Fractal analysis applied in trading on the financial market, can make the traders’ work much easier. In spite of its difficulty, fractal analysis can help trader to predict the growth or downfall of the price rates and, consequently, pricing and market behavior will become foreseeable. However, if you want to get into the essence of the fractal analysis you have to cast doubt on the Efficient Market Hypothesis. According to the theory, the present price is not connected to its past values, so neither long-term nor short-term chart will predict the price movement. Thus, it looks unpredictable which means high-risky. This is the main difference between the Efficient Market Hypothesis and the fractal analysis the founders of which consider it possible to plot charts which enable traders to see this slight connection.

    Let’s look at the meaning of the word, Latin flactus is treated as broken. Consequently, the fractal analysis bases upon not straight line, but the wavy line, which is reasonable because the market never acts according to the same scenario – increase and decrease of the currency rates are inevitable. But it is silly just apply the wavy chart of the past period to the present condition of the market, it will never work or bring any result.

    What shall we pay attention to? First of all, note factors which formed the price in some certain period. In case political, economic and social factors coincided, we can be sure that the price will move in the same way it did some time ago. However, as it was mentioned above, the fractal analysis has some difficulties: it requires serious analytical analysis and access to the latest accurate information about the situation in economy and market structures. Fractal analysis specialists confirm that this hard work is worth the efforts and investments as it renders huge profit comparing to the efforts. While other traders are waiting for the real market move, fractal analysis adherents are always in advance because they rely on the market predictions made with the help of fractal analysis before the actual move of the price.

    What shall we start with? Firstly, a trader should learn how to generate small models, the basis of which is a certain currency, commodity or share. As they need less external factors, analysis will not be difficult and you will succeed to model real market situation and check if it works, and if it does not, investigate what details you missed. You do not need to work on the real market, you can plot charts on the piece of paper, because you are learning. The positive dynamics of forecasting is the situation when you happen to model further development of the situation before the tendency becomes obvious for other market participants. Consequently, taking such decision in reality would allow you to earn. If the result met your expectations you are ready to start real trading.

  2. #2
    Join Date
    Mar 2015


    I've never heard about this type of analisys, thanks! I should pay more attention to it.

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