Monday, 1 August 2011

A Paradigm Shift - A post from 28th Nov 2010

Until today,

I understood that price = candles/bars/line graph
I understood that indicators = add a further dimension to the above. that it takes info from the candles and recreates it.

My understanding now is that

Since price is a level where traders agree over price and disagree over value at a specific point of time.

We then see them from the following 4 dimensions.

1. Chart of Candlesticks (or Bars/Line Graph) - Representation of the above agreed level/s using Time dimension. (e.g. where was the price at a certain point "a" i.e. open of the candle, in time? ) OHLC

2. Alligator ( A combination of 3 Balance Lines based on Chaos)

3. AIMS - The structure of the structure - based on the fractal geometry of EW - (it took such a long time to truly realise and understand that at any given point when you view the charts you are at a certain degree of zoom in/out inside an AIMS BOX. AIMS boxes is the Mandelbrot set of the market. Just like we see Sierpinski Triangle and it always looks the same, the charts are all AIMS boxes.

4. AO - A histogram of convergence and divergence between a 5 simple moving average plotted over 34 simple moving average and shown as histogram.

Until today I considered the "candles" as the price.

Then I experienced a huge paradigm shift.

Now I understand that each of the above are separate unique dimensions that you can use to view the market.

The Candles -

e.g. The AO - I thought AO take info from the "candles" then shows it like bars. I thought it took information from OHLC and and the moving averages
now I believe that AO is a unique separate "dimension" of looking at price. If you were to look at AO only and make decision u wont be doing anything wrong.
likewise you can trade AIMS without anything else. e.g. u are inside an AIMS level (BOX) on H4 like we were the other day. U cannot enter the market untill it breaks out of it.
you zoom in and break down the box. Inside you find price inside an AIMS box but with smaller fractal number ie.e the dimensions of the fractal (X and Y axis, and the question arises, is there a Z axis, 3D?)
so for instance the distance b/w upper and lower aims level on H4 was 100 pips. on a H1 chart the distance of the AIMS box u see now was only 30pips. u zoom in further all the way to m1 and find that price
is in an aims box of 10pips.
similar could be said for Alligator and candles.

a fruit for thought. I hope it makes sense .