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Benoit Mandelbrot ... 1924 - 2010

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ingot54
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Username: ingot54

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Registered: 05-2004

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Sunday, October 17, 2010 - 04:59 pm:Copy highlighted text to 'New Message' boxEdit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The ABC today reported the passing of Benoit Mandelbrot.

He published a book: "The Fractal Nature of Geometry" in 1982, postulating that irregular objects, with seemingly chaotic mathematical representations under the Euclidean geometrical model, were actually a reflection of nature.

His work led to "measuring the unmeasurable" - the length of coastlines, for example. He showed mathematically that the shorter the measuring stick, the longer the perimeter becomes.

In search of more about him, the reader could discover that he "invented the word fractal, to describe structures that exhibit self-similarity at any level of magnification".

Mandelbrot's work on Chaos Theory, which was more about the recurring patterns which occur amidst ostensible chaos, spawned a new way of analysing capital and commodity markets.

A simple example of this approach, is the recognition of primary, secondary and minor trends-within-trends. eg within a strong uptrend, there are corrective pull-backs or retracements. And within these retracements, are smaller up-and-down-trends.

This can be further illustrated by looking at market activity in time-frames. eg the monthly trend may be a strong rally, but the weekly trend may be corrective. Zooming in further may reveal that the daily move is again a rally, with intra-day moves corrective.

Traders who scalp the smaller moves are acting right at the coal face of seemingly unpredictive market direction. However, as the perspective is "zoomed-out" it becomes clearer that the market is actin in a "swing" pattern that could be exploited over hours or days.

Stepping away further, "waves" become apparent, and the Elliotticians amongst us understand this better. But the further back we step from the "chaos" of the pit/market floor, the more organised and structured the whole market seems to become.

It is this that the Fractal approach tries to use, to bring us enlightenment of the market's mood.

This brief note, to celebrate a little of Mandelbrot's work, has been compiled from a short read of what Google has revealed of the man.

A little more here, if you have an inquisitive mind.

Others may describe Mandelbrot's (Fractal) work in financial analysis better than has been done here, and I hope those contributions are made.


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Hell, there are no rules here - we're trying to accomplish something ~ Thomas A. Edison

Never believe that a few caring people can't change the world. For, indeed, that's all who ever have ~ Margaret Mead

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