Created by Eugene Parks About Eugene Parks |
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Prosfer Copyright (c) 2015 |
How Prosfer Works
Prosfer is a fourth generation market behavioral program. First generation theories involved reading bar charts (candle sticks) to identify trading patterns. Second generation analysis used moving averages and their convergence and divergence (MACD) to anticipate changes in trading action. Third generation theories calculate flex points between support and resistance levels and use either retracement or oscillating wave theories.
Embedded within Prosfer is a fourth generation perspective that explains: why bar charts look like they do; why trading averages converge and diverge; why support and resistance levels appear to exist; and why there appears to be many trading ranges, waves and market reversals. Prosfer identifies the condition that forms the patterns that older techniques use.
Prior generations of analysis seldom worked reliably for the following profound reasons:
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Stock market activity is Fractal* in nature, which makes selecting the perspective most relevant in a particular moment beyond what can be accomplished through simple chart reading; |  |
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Near term stock market activity is Brownian* and therefore longer term predictions are often unreliable when based on near term market averages and movements; and |
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Intermediate term stock market activity is nearly random in the classic Gaussian sense, often making the application of historic market patterns to shorter term trends an exercise in random guessing. |
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The Fractal, Brownian, and Gaussian nature of Marketplace activity force prior techniques to over-signal and produce many contradictory and risky signals before producing a small and limited number of potentially profitable signals.
Hunting for patterns in a cloud of confounded data, practioners of 3 generation techniques vainly rely upon transient technical perspectives. For example, they often shorten the Moving Average Timeframe that they use - perhaps abandoning the traditional use of the 200 Day Moving average in favor of, say, the 50, 40 or even 12 day moving averages. Tragically, the consequence is the generation of many more false signals as these averages cross each other several times before the market settles on a single meaningful direction.
In contrast, Prosfer uses the three principles of Gaussian, Brownian, and Fractal motion to eliminate a vast number of the noisy and risky signals inherent in prior techniques. Further, by using the three principles, Prosfer generates signals earlier and less frequently. And highly significantly, Prosfer is able to manage risk to the smallest tolerances.
Prosfer’s first principles approach to motion provides: very early signals that are significantly stable evaluations of market direction with an extremely high degree of risk management.
*See Wikipedia for a summary of these terms.