Trading Futures With Fractal Analytics, Knowledge Without Prediction


Lao Tzu, 6th century BC philosopher once said, "Those who have knowledge don't predict. Those who predict don't have knowledge." Following in Lao Tzu's footsteps, it is important to find a way to read stock market charts without the normal "high probability" prediction model. You must look outside the box for the knowledge of the Market's trend.

There is an old adage in the world of technical analysis...all Market information - past, current and even future - has already been discounted in the Market direction and reflected in the stock prices. If you are relying on the old standard indicators like MACD, Stochastics, and Moving Averages, then it is understandable why your trades don't work well, they, too, have already been discounted.

How can you get around this problem? You need to find a way to identify each of the Market's trades, by counting them, not summarizing them. Moving averages, MACD, even Stochastics, they all summarize Market action. Stochastics actually calculate the summaries and then forecast the future outcome, a forecast that may or may not ever happen.

The only way in which the Market cannot discount the indicator is if you get away from predicting the trend and count every trade coming through. Then use a plotting indicator instead of a summarizing indicator that only places each trade on the technical chart, every trade. Plotting indicators do not forecast Market trend direction, they just literally deposit the data onto the chart. Since every trade is plotted, the Market cannot discount...whatever is traded appears on the chart.

There are a variety of indicators that simply plot the Market trades instead of summarizing them. Perhaps the best known is the Fractal Analytic indicators. Fractal analytics is founded upon Fractal Geometry, fragmented geometrical forms, each representing a smaller copy of the entire form, such as a fern, where each leaf is a smaller replica of the larger fern.

Fractal Analytics assumes that the Market's price follows the geometical laws of form. Therefore intraday patterns can be "counted", just like counting fern leaves. Extending Fractal Analytics with computer generated trend rays can then become a true leading indicator. Fractal rays represent support lows and resistance highs. Unlike Bolinger Bands, when the support and resistance rays cross, putting support above resistance, a big move happens. Active traders listen to Lao Tzu. Trade with knowledge not prediction. Use fractal rays to identify support and resistance hights and lows.

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