this is an answer I made to an email >Hi Harry! Have started reading about Gann. Are your equations >describing growth/decay exponentially? It seems Gann tried >that. >"when price squares time..." >Have you read about the law of octaves? >I have seen markets geometry in realtime now. Fascinating! >I read some of your views of time at elitetrader. That time is an >illusion. Do you know what theoretical physicians say about >this? They mean it can´t be an illusion if it´s the 4:th dimension? Gann's approach is like astronomer's approach before Newton: they didn't knew that the cause was gravitation so they could only use DESCRIPTIVE geometry to do so. Descriptive approach is the first step but you don't know the cause. The geometry of planets is an ARTEFACT (effect) of Newton's law, it is not the geometry by itself that moves the planet: the same for stock market people who think is driven by geometry are wrong, geometry is the visible manifestation of the invisible cause. You can't see Newton's equation as it is abstract you see the geometry of planets orbits. It is not evident to deduce this invisible cause from the geometry or anybody before Newton would have done so. The same for market's equation: it is not evident to deduce them by observing the geometry. My underlying equations fixed price, and because of geometry then time is also fixed. So if time is squared with price it is once again an artefact. As time as 4th dimension, one must not confuse PHYSICAL DIMENSION with MATHEMATICAL DIMENSION. You can always invent a mathematical dimension it doesn't mean that it is a physical dimension. As Einstein puts it time only exists because things cannot occur simultaneously. I would say the same as for time in stock market. Ideally for market's efficiency as futures is known it is always discounted in present (this is the basics of financial theory of interest rate) but because price cannot be multiple at one time it has to move at different time (This is just an image don't take it litterally). So I consider that Gann has something interesting point of view but it is not scientifically based so I never read his things because I consider that it is too fuzzy and that I have already too busy with my own stuffs. Also I'm not a mystic guy and filtering all his mysticism bothers me . Now if you want to study him I encourage you to do.
Finally for fun I'm going to read Tunnel thru the air, maybe the most crazy of all Gann's writings . I didn't begin yet though, I will tell you what I think at the end but to tell the truth I have already a negative bias seeing rapidly all the references to the Bible; ok it's supposed to be a novel but all the same .
========= Harrytrader; Answer to question is no ; & don't know if Gann exactly said ''geometry moves the stock market'' since its math measureing. Like saying speedometer moves car. However to say for example that an exact 50% retracement is not scientific or even not helpful misses the point reguardless . Another foundational trading Bible reference Gann IS RIGHT on; is Ecclesiastes 1;9- King Solomon
There are potentially unlimited amount of perceived correlations that might exist on any random data set. The bigger the set the larger the number of hypotheses one could come up with to interpolate the data set. Geometry has a very large amount of rules that one could apply to such field as a two dimensional data set (Price vs Time) and seek for perceived patterns. I doubt that the patterns exist, however, entertaining yourself with the search for such patterns could well replace BINGO sessions in terms of effectiveness of time killing. Be well, Cheers.
I agree with you as perceived correlation doesn't mean "true" correlation: if something is truly random walk then the perceived correlation is fake correlation wich is mathematically called "persistency" since at least the statistician Levy has established it's law: see the thread "Arcsinus law: distinguishing trend from persistency of chance " http://www.elitetrader.com/vb/showthread.php?s=&threadid=22256&highlight=persistency+and+trend And what is true for "perceived trend" is also true for "perceived pattern" which can be as fake pattern as fake trend above when it is in fact persistency, that is to say you will find trendline, head & shoulders, triangles etc (more or less other complicated perceived patterns)... even in a random generated price. So when I am talking of patterns I'm not talking about illusionary (only perceived) patterns but about true patterns. What true patterns mean OPERATIONALLY speaking ? It is about probability of predicting them in advance not only that they can occur but that they will occur at a precise level because if you only say they will be a trendline or triangle the probability will be high that it will be true even with random prices. The basic premisces of believing that there is no true pattern is logical: it is because there are so many market participants the stock market can only be random (even it is non-normal law so random is used here in the sense there is a probability law or universe) and so the patterns are illusionary. For example if you see a trendline or a triangle pattern occurs well it could occur by random at any price. But what if it occurs at a level that you can predict before the pattern even appears ? Then maybe it is not random because you can estimate the probability of making such a prediction by randomness: it is very low (again whatever probability distribution you would assume normal or not the order of the probability will stay low) and above all if your prediction is repeatable with the same accuracy then you can apply Bayes law of compounding probability and the probability will be very very very low so that it will requires more than the age of Universe to realise all the predictions just by random. Now this is a school hypothesis as traditional TA can only see patterns AFTER the fact so that it doesn't prove much scientifically, but I can affirm that's what I CAN REALISE with my model. As it is not an urgency for me to demonstrate anything except for fun, I won't do it yet as it requires supplement work from me that doesn't really serve my trading because I don't base my trading on traditional patterns but on my own model's patterns which I called "design-pattern" that exist BEFORE market occurs to distinguish from patterns that appear AFTER market occurs. But one day I should do it when I will have time to collect all the datas from my model for that and from classical ta patterns.
Maybe he's a genius. That's why nobody else around here can ever understand what the hell he's talking about!!
What % sucess rate did you achieve so far for your predictions ? I mean levels, separate from patterns.
What % sucess rate did you achieve so far for your predictions ? I mean levels, separate from patterns. If I told you the % it would be so high you won't believe it : I could beat Gann's Legend... Now don't consider that I made a claim as long as I haven't finished the stats. And I don't do stats only for the pleasure of admiring how great I am or for showing them to others but for automating the process decision as I said in another thread. At the moment the stats for just one design-pattern is very detailed (the picture below will give you an idea) and I won't try to explain at the moment what the columns and abbreviations mean, I will make a more simplified version for the public in a few months. When I say public I intend in fact to restrict to only hedge funds managers or very high profile traders. But I'm not really decided yet what I will do: it can be dangerous to give this weapon to some of them and I don't really see if it is my best interest. I am not new in futures trading but I'm new as a professional so I'm still thinking about what I should or should not do and I hesitate much because you know my point of view about this industry is an organised crookery: I don't want to cope with crooks and would prefer then to stay alone. <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=469769>
Sorry I have retired the picture. I just don't want to show anything at this stage and it is an internal working sheet for us and not prepared for you especially so that it would rather frustrate you because you wouldn't understand what it means .