pricecounting.com

Unravel the Mystery of Movement...

Thanks to a new TV script overlay simply called the 'Event Locator' we now have the ability to objectively count live price movement in any financial market! If you've never seen ELC output before, just look up, you're seeing it now! This new tool marks every countable event in price flow and updates in real-time as candles form.

That's not all. A completely new counting framework has been discovered. This new framework gives us unprecedented insight into what markets are doing, helping us to see how trends are built and what causes them to end.

This site is dedicated to educating traders, investors, and organizations; giving them the tools and training they need to start counting price movement in a truly objective, scientific way.

- Erek Daniels
Lead Analyst/Writer, PriceCounting.com
erek@pricecounting.com

"Fractal processes associated with scaled, broad band spectra are 'information rich.'"
- Ary Goldberger

"If the object has a fractal order to it... then it will be possible with a few rules to decode it." - Michael Barnsley

"he found that oscillations often governed the dynamics of processes..."

"Behavior of a system that is not explicitly described by the behavior of the components of the system, and is therefore unexpected... important in the study of... complex systems, and an almost inevitable consequence of any multi-agent system." - Wiki.C2.com, defining "emergent behavior" (also called "Swarm" or "Hive Mind")

"Emergent behavior is a... defining property of complex systems." - Contextualizing Emergent Behavior in System of Systems Engineering using Gap Analysis - Hindawi website, authors Linda Ponta and Silvano Cincotti

First three quotes above from the book, Chaos: Making a New Science, 1987, pgs. 293 and 230 respectively
Third quote from Wiki.C2.com/?EmergentBehavior

(All original content copyrighted, no portion may be copied, quoted, or redistributed.)

Is It Possible to Understand Price Movement?

It's possible to understand any ordered system. Though movement may look random, the best evidence shows it being organized and rule-based. If it's possible to decipher those rules then it will also be possible to use them in a framework that can accurately explain price movement. In fact, it is widely accepted that markets are fractal objects, and to reference Mr. Barnsley's comment above, a fractal object 'can be decoded with a few rules.'

Over the decades many have attempted to decode the movement of financial markets, but most of those efforts have been overly esoteric, looking for answers in reams of statistical market data. It seems that almost no one has looked for simple, visual, count-based rules of movement...

What Makes Markets Move?

Although media outlets, brokers, investment advisors and others constantly put forward the idea of externally driven markets - markets driven by economic forces, political events, federal actions, and crowd sentiment - there is good evidence to show that complex, multi-agent systems like markets, are actually controlled by a known phenomenon called emergent behavior (see the Wiki.C2.com quote above).

EB "can appear when a number of simple entities (agents) operate in an environment, forming more complex behaviors." EB is not crowd psychology. It's a special type of intelligence that forms within large groups, operating independently of individual group members or even collective sentiment. Markets do not require an influx of external events or information to move. The movement arises simply from the fact that markets are multi-agent systems.

Markets generate their own internal information and meaning and are in no way reliant on external events or forces to accomplish movement.

Emergent Intelligence is the metaphysical underpinning of the Magenta Framework.

Note: To learn more about emergent behavior and emergent intelligence in markets, please see the following book:
Emergent Intelligence: The Market Mind and the Case for Internally Driven Smart Markets

What is Magenta?

Magenta is a new framework for explaining price movement in financial spaces. It describes the way markets themselves employ counting as a device to govern oscillations. This unique framework allows an analyst to accurately count price using a natural phenomena that occurs in price flow called separation (sometimes called "HIPS" and "LOPS"). Unlike Elliott Wave Principle which counts flat waves, Magenta's automated marking tool counts the jagged points within those waves. This is where information resides in a price sequence (see Ary Goldberger's quote above). The event becomes the basis and foundation for all price counting.

Of course, Magenta also uses it's own counting systems which are completely different than the single static pattern that Elliott Wave uses.

The Magenta Framework includes three main processes or systems: the cycle, partial cycles (including types/anti-types), and primes. Each of these processes have their own counts and counting rules. The count is the way markets identify and track the process that play out within a price sequence. All processes are complimentary and work together to build structures and movements, to create meaning, and to terminate trends.

In order to get a better idea of what the framework involves, consider the following questions:

What is an Event?
What is an FCT?
What is a Prime Process?
Where is the Safest Spot to Trade?

What is an Event?

Events in a price sequence appear around jagged areas where candle highs or lows jut out beyond their neighbors.

Due to the up-down-up cadence of movement, a non-jagged or smooth event can sometimes be paired with a jagged rough event. You can see instances of this in the chart below (smooth events are indicated with a square).

The Event Locator (available on TradingView.com) can automatically detect and mark both rough and smooth events in a chart. A tool such as this provides the scientific foundation for any legitimate count-based analysis and should always be used so that even non-visible events are detected and included in the count.

G1: Above: The Event Locator overlaid on a 1 hour USDCAD chart (from TradingView.com). Using points of separation within the sequence, the tool identifies and marks rough and smooth events (red/blue triangles & red squares respectively).
Note: To add this tool to your TradingView charts, go to TV and search using the 'People' tab, search for "btc1019", click 'SCRIPTS' when my profile comes up, click on the most recent 'Event Locator' script (top left graphic), then scroll down and click 'Add to favorite indicators'. The tool will then appear in your 'Favorites' tab when you click the 'Indicators' button at the top of your TV chart.

G2: Below: The two types of events illustrated.

What is an FCT?

FCT is an acronym that stands for Fractured Counter Trend. All market movements have counter trend movements within them, but not all movements have FCT's. If a movement forms an FCT we call it a structure. If two or more FCT's form, we call it a super structure.

Even a single FCT can tell us much about what's happening in a price sequence. Once an FCT forms, we can identify prime values, a powerful process for determining where trends are most likely to pivot.

G3: An FCT (red arrow) forms in a downtrend. Notice that counting marks appear within the FCT between the low and high terminals. This is what makes it fractured. The FCT is then validated at the red target, once price breaches the low of the trend. At this point the movement becomes a structure and the prime values (yellow tag) can begin to be used.

What is a prime process?

A prime process is the market's way of identifying certain values near the start of a structure, then using them in an internal count to end the structure. Up to 2 sets of prime values can play out at the same time in a super structure. These values can play out in an alternating (dual value) or static (single value) sequence. The half prime value is often used to cap the sequence. Notice how a prime set plays out in the 6 hour super structure shown below...

G4: An 8/6/4 prime set appears at point C. We get these values from counting the sequence between points A and C. The market then uses a static single value (a repeating 8 count) to arrive at point K - the structural endpoint.
Note: It is important to realize that the prime process by itself did not end this trend. Point K also lines up with a cycle process that includes a 6/4 type/anti-type which extends through push 2. The convergence of these processes at K is what caused the trend pivot. For more information about cycles, types, and anti-types, please see Cycle Counting Forex Super Structures with Magenta (To be notified when this book is published, please email the author at erek@pricecounting.com).

In the chart above the green tags are location labels, the yellow ones are the prime process itself. First, we have to identify the prime values. If you count from A to C you get 8. So 8 is our high prime. If you count from A to C again but exclude the FCT terminals, you get 6. So 6 is our low prime. The half prime will always be the even numbered half of one of the prime values. So 4 is our half prime.

Since our high prime value of 8 hits at the FCT terminal at point E, we're going to start our sequence with 8. From here the sequence could alternate between the 8 and 6 or simply repeat one of those values. If we start counting over from point E we see again that 8 lands on an FCT terminal. The next 8 count hits a cross-count at point F. Markets use cross-counts along with DMC's and double price hits as signals, so this would have indicated that our count is on track. The final 8 count lands us at our endpoint at K which is followed by the absolute low at point Z.

But how would we have known that this particular 8 count would end the sequence?

Since this is a super structure and has multiple FCT's, we can get a second prime set from FCT 2. Notice how this prime process works along with the first one.

G5: Using two sets of prime values to locate the endpoint in a long down trend. Even though they both lined up at point F, the X/X anti-type did not line up with the primes until point K. So if we consider all processes, K is the only point of total convergence.

To get the values for the second prime set we count from A to E. At E we get 16/14 and a half prime of 8 for set2 (orange tags). If we start counting our second set from point E we see that 16 lands right on the cross-count at point F and lines up with 8 from set1. Counting our set2 half prime of 8 from point F we land at point K which lines up with our 8 count from set1. Our counts line up or converge.

When you're tracking two prime processes like this, convergence will indicate the possible turning points for the trend. Here we have points of convergence at F and K. (Actually, in this example, our counts never diverged. That's because the high prime of set2 (16) is a multiple of the high prime of set1 (8). Typically the count will begin with divergence, being out-of-sync for a time, then end with a convergence point.)

Some super structures will have a few points of convergence and some will only have one - at the endpoint. Higher time frames can be used to filter out some of these points. Below we see the same price sequence as above (highlighted area) in a 1 day chart. Here we also use prime values to anticipate a turn. This chart shows that the prime is met below 1.17618 (also shown in chart G5) since this ends our 12 count (which is a prime value). So that's probably why our first point of convergence in the 6 hour chart didn't pan out.

G6: Using a higher time frame to help filter out convergence areas in the 6 hour chart. This chart also shows how a prime value might play out in a standard structure containing just one FCT. The count from the price high of 1.23496 to the high FCT terminal gave us the values that would be used to end the structure, namely 14, 12, and 6. Subsequently, we see in the red shaded area, that a 12 count played out to actually end the sequence.

Since prime processes are so important in price movement, let's consider just one more example...

G7: Two sets of prime values based on two FCT's play out and finally converge at the structural endpoint.

Our first prime set above (yellow sequence) is connected to the first FCT of the structure. The values are 8/6/4. If we count 6/8/6 in an alternating fashion, notice that we land on the DMC (blue mark). This confirms that we have the correct sequencing. If we try an 8/6/8 count we miss the DMC. Our count then goes on to locate the endpoint and converge with the repeating 12 from set2.

Where is the Safest Spot to Trade?

The safest spot to enter a market is the point at which we have the most information to guide a trade, and contrary to popular thinking, that does not mean the middle of an established trend - it means toward the end of a sequence. It means learning to 'time' trend turns.

Of course primes are not the only process playing out in markets, but from a strictly prime perspective, the safest spot turns out to be near the point of prime convergence in a super structure. This is well illustrated below by comparing the green and red areas.

G8: The difference between trading a structure (green area) and a super structure (red area) is the amount of information the latter provides. In the red area we have two prime sets (yellow and orange) that converge at the endpoint, whereas in the green area we only have a single set. Obviously there can be no convergence with a single set. But in The blue areas are partial cycle (PC) counts separated by an SLR (Straight Line Reset). The SLR resets the count to zero (at point E) and the 2-count PC to follow (which starts at point E2) ends at point F, beginning a new upward sequence from there.

What makes the red area different from the green is that, since we have two FCT's, we're dealing with a super structure and we can identify two sets of prime values. We use yellow tags for the first and orange for the second set and count. The advantage of having two sets is that, unlike the green area, we have a point where counts from both sets converge. At point B2 the 4 count from set1 lines up with the 10 count from set 2. On top of that, the market signaled that point with a cross-count (green line). At point B2 our entry window for a short would have been above the trend high (the red rectangle inside the red area). Ideally we would have exited the trade somewhere around point D after the FCT formed, although we don't have as much information to guide our exit as we did our entry.

When we have the benefit of two prime sets, we can often use both counts to correct any sequencing errors that might be present in either count. For instance, an alternating 2/4 count in set1 might have seemed to be working up until point B2, but it didn't line up with the 10 from set2.

The bottom line is this, with a super structure you can get more information from the price sequence and you can use that information against itself to make better trading decisions.

Published 2019

Non-Toxic Trading: Acquiring the Essential View of Markets focuses on the way we view and understand markets. It examines whether common views of externally driven markets are sound and whether external events are really required as market drivers.
This is my first book published August 6, 2019. Front and back covers are pictured above.
The book is a 54 page paperback measuring 6x9 inches with a soft matte finish.

Published 2021

Emergent Intelligence: The Market Mind and the Case for Internally Driven Smart Markets presents the price action evidence proving that emergent behavior is at work in financial markets of all sorts, from Forex to Crypto to Stocks. It uses a software event locator and cutting-edge analysis (developed just over the past few years) to show the reader how markets create their own internal meaning and relationships.
This is my second book published October 24, 2021. Front and back covers are pictured above.
The book is a 59 page paperback measuring 7x10 inches with a soft matte finish. A hardback edition is also in the works.

Coming Soon

Five years in the making, Cycle Counting Forex Super Structures with Magenta introduces and explains all aspects of the Magenta Framework in detail. The book explains why counting is the only form of 'native analysis' in financial markets. It covers separation, FCT's, types of counts, cycles, types/antitypes and partial cycles, prime values, signals, EQ relationships and more. Basically everything gained over 5 years of throwing out the status quo and media noise and focusing on nothing but how price moves. I really shot for the ultimate trading book here, both in quality of content and format.
This book has yet to be published. It's designed to be a chart analysts' workbook. Front and back covers are pictured above.
The book is a 100+ page oversized paperback measuring 8.5x11 inches and featuring full color, full page charts with a glossy cover finish.

Coming Soon

Epic Fail considers the gaping holes in Elliott Wave Theory and how EWI has made millions promoting a defective explanation of market movement over the last 4 decades.
This book has yet to be published. Front and back covers are pictured above.
The book is a xx page paperback measuring 7x10 inches with a soft matte finish.

amazon.com/author/erekdaniels