How does Fractal in market price prediction ?

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Question by kenyul
Submitted on 5/3/2004
Related FAQ: Fractal Frequently Asked Questions and Answers
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How does Fractal in market price prediction ?

Answer by Space Invader
Submitted on 6/22/2004
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It works by analysis of price formations, using basically two functions, 1. the hurst exponent, which is a measure of how chaotic a price pattern is, and 2. The Lyapunov exponent, which is a measure of the predictability of a price formation. To make thinks more complicated all price information is transformed into rescaled range, this can be accomplished using the wavelet transform. The current market prices are broken down into discrete moments (Slices), you then search for best fit slices, each of this slices will give a future prediction, after your have collected all best fits within a limited tolerance you can compose a measure of probability of market directions.

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