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Identifying Order and Disorder in Chaotic Market with Elliott Wave Trend


Identifying Order and Disorder in Chaotic Market with Elliott Wave Trend

We have briefly covered four main characteristics of a chaotic system. Stock and forex market are the live example of a chaotic system. Order and disorder in chaos theory describe that the financial market can transition from order to disorder or from disorder to order. Order and disorder are highly related to the predictability and unpredictability of market. Ordered market is much easier to predict whereas disordered market is hard to predict. Every trader will agree that sometimes market is easy to predict with some simple technical analysis. Sometimes, the market is almost unpredictable no matter what kind of information or analysis on your hands. If you felt this, then you are probably right. This is the corresponding behaviour of order and disorder described in chaos theory. As a trader, your will be better off to avoid highly disorder market but to trade on highly ordered market. Unfortunately, order and disorder does not provide the rigid binary states, where you can pick up one or the other. We can only tell that degree of order and disorder. For educational purpose, I always like to present Hurst exponent. Hurst exponent will provide the some indication if the market is predictable or not predictable.

  • Author: theyoungway
  • Published: 2018-10-08 06:20:06
  • Words: 1993
Identifying Order and Disorder in Chaotic Market with Elliott Wave Trend Identifying Order and Disorder in Chaotic Market with Elliott Wave Trend