Experienced traders do their best to capitalize on patterns in the market: buying low before an anticipated upswing, and selling high before a forecasted drop. But rarely do simple, predictable patterns appear—with so many players, variables, and behind-the-scenes machinations interacting all at once, the markets can seem like a chaotic mess.
The truth is, patterns are present in financial markets, but they’re not visible to the naked eye (until it’s too late). Instead, fractalerts’ algorithms analyze massive amounts of market data to untangle the chaos and uncover infinitely repeating patterns known as fractals.
In the mind’s eye, a fractal is a way of seeing infinity
– James Gleick
Let’s take a step back—what exactly is a fractal? In short, it’s a repeating pattern that contains itself in smaller scales, also known as being self-similar. A perfect example is the Koch snowflake.
Named after a Swedish mathematician, it begins as a simple equal-sided triangle. Then smaller equilateral triangles are drawn on each of the three sides. The process is repeated ad infinitum on each new triangle, leaving us with an elegant snowflake fractal.
Real snowflakes follow the same pattern. In fact, fractals are all over the natural world—and they’re typically easier to see. Consider the Barnsley fern, which involves the same principle at work.
Real ferns follow the same basic idea: each branch resembles the whole fern writ small. Look closer and you’ll see that each leaf resembles the branch, which again resembles the fern as a whole. You find the same self-similarity in the shapes of Romanesco broccoli, river paths, seashells, and more. You find the same self-similarity in the shapes of Romanesco broccoli, river paths, seashells, and more.
Many early mathematicians studied the concept of fractals, but it wasn’t until 1975 that a research scientist working at IBM discovered you could see, illustrate, and explore these endlessly repeating patterns using computers.
Benoît Mandelbrot gave the term fractal its name—and in return, the most famous fractal is named after him.
Today, with the aid of even faster and smarter computer processors and algorithms, fractalerts can identify the hallmarks of minute fractal patterns in equities, currencies, and futures trading markets. Using its powerful proprietary technology, fractalerts finds the almost-invisible fractal patterns hidden in the complexity of financial markets.