Your Daily Bit of Wall Street Wit & Wisdom

Mandelbrot set fractal

Mandelbrot set, fractal photo by Matthias Hauser

“The market is a fractal of human nature.”
— Basil Chapman

The term ‘fractal” was coined by mathematician Benoit Mandelbrot in 1975.  Fractals are simply defined as never-ending patterns that repeat at different scales.  Their property is known as “self-similarity.”  Although fractals are very complex, they are made by repeating a simple process.

Fractals are found and applied in: math, science, nature, art, architecture, music, the stock market, and more.  Arguably, fractals appear in all human pursuits, throughout the natural world, and the universe.

Mandelbrot studied financial markets and used a computer to analyze cotton price movement.  This led him to develop “fractal geometry” and the “Mandelbrot set.”

As Mandelbrot wrote, in his introduction to The Fractal Geometry of Nature (1982), “Clouds are not spheres, mountains are not cones, coastlines are not circles, and bark is not smooth, nor does lightning travel in a straight line.”

Markets may appear chaotic and rough.  I like to say market prices don’t travel along a one-way street.  Often, a familiar road map to price movement can be found.  Sometimes the market’s moves are natural and sometimes they are not.  I view it as an exciting and never-ceasing endeavor to catch the market’s twists and turns.

Technical analysis is a combination of art and science.

Human behavior (buying and selling) drives market price movement.  That is why Options Hotline uses Japanese charting techniques.  We use our charts to vividly reveal the human behavior behind headline numbers and help you stay a step ahead of the crowd.

We combine Japanese charting techniques with the best of western technical analysis. The addition of pattern recognition and the Superleverage power of options, to play the probabilities, and now we’re talkin’ sensible speculation.

Good luck in your trading!

Best regards,

Steve

 

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