Fractals and Harmonic Pattern Trading
Simone Johnson | Posted: March 23, 2012 at 10:44 am | Updated: September 24, 2013 at 2:40 am
Categories: Technical Trading
Examine the tip of your finger and the pattern that forms your fingerprint, knowing that the perfect image created in you, whether the tips of your fingertips or your DNA, is unique.
A drop of water falling into a lake creates an eddy of rings that spreads out like the rings around Saturn. The displacement of water by the force of the droplet spreads evenly in a fractal pattern around the disturbance.
Step out your front door and you’re surrounded by them. Gaze at the clouds and marvel at their white fluff, different but the same; look closely at the leaf of a plant and notice its perfect symmetry with its structure and pattern repeated in other identical leaves of its life source.
The world is made of up vibrations and those sensations combine to create the fractal force of nature. Fractals are found in all forms of life and occur naturally in every host; human, animal, insect or plant life.
They are also recognizable as they shape the structure of harmonic patterns, causing patterns to repeat themselves over and over again and to occur naturally on any chart.
When we look at a chart, what most people see are candlesticks representing the emotions of the market. But at a first glance these emotions seem very complex. When something looks complex we say it’s chaotic. Chaos theory is the term we apply when we look at the market as “a mess of candlesticks”, but if we can find the order within the chaos, that makes it easier to forecast. Fractals are what helps us put order to the chaos. The harmonic patterns are a repeatable structure that are fractal in nature. When examining the market in this manner we can turn the unknown into something a lot more comforting.
So how do you use fractals and how would you make sense of chaos and order? When you trade like we do, you are observing all the rules surrounding chaos and order, fractals and harmonics.
Picture this: You’re sitting in the basement watching TV when suddenly the power goes out. You’re left in absolute darkness and cannot see and inch in front of your nose. Within a millisecond you have gone from feeling very comfortable knowing your surroundings, to feeling very uncomfortable because you can no longer see anything for certain. Unexpectedly you have nothing but the TV remote in your hands and uncertainty shadowing you.
You now have two choices. You can embrace the uncertainty, knowing that statistically everything in your basement is still where it was five minutes prior to the lights going out and start walking toward the breaker switch to get the power back on; or you can assume that everything has moved around and just start walking in a random direction hoping that you don’t crash into anything.
The latter situation is how most people trade in the market. They take the wrong approach becasue they feel uncertain. Chaos and order with fractals and harmonic pattern structures give us the certainty that no matter if the lights are on or off, we always know what to do, and when to do it.
That is the power of harmonics. The choice is easy. Harmonic patterns gives you the supremacy of trading with 70% probability on your side rather than groping around in the dark trying to figure out where to enter or exit a trade.