The Trading Theory of Entanglement (缠论), developed by a Chinese trading Master in 2006, is the single most complete and comprehensive trading theory known today. Although the theory remains ‘mysterious’ among traders outside China, millions and millions of Chinese traders study this theory everyday, and the theory has been proven to provide the closest description of market behaviors for all types of market including forex, stocks, derivatives, commodity, and cryptocurrency etc., and for all time frames no matter monthly, daily, 30m, 1m or even in seconds. The theory’s philosophy is based on human greed, hatred, delusion, arrogance and doubt, which reveal the most fundamental aspects of any market. For this reason, other trading theories or techniques such as the Dow theory, the Elliott Wave theory, and the Gann theory etc. can all find their explanations as well as their limitations from the Theory of Entanglement.
Fractals, strokes, line segments and pivots are basic elements in the Theory of Entanglement, and only by accurately drawing them on a chart can one find the most accurate buying and selling points. However, manually drawing these elements on an ever-changing chart is both challenging and time consuming, and may lead to incorrect interpretation of the market trend. Our Zen Pro indicator aims to provide the most accurate drawings of strokes, line segments, and pivots, as well as to automate the drawing process for three consecutive levels such as 1m, 5m, and 30m (similar to time frames but not necessarily the same). Buying and selling points are also labeled on the chart to provide users with appropriate trading guidance.
Note that different from the ZigZag indicator or its related ones which mainly connect high and low points on a chart, our developed Zen Pro is a highly structured and well organized technical indicator, and the elements defined in the theory are constructed step by step in the following manner: a pair of top and bottom fractals form a stroke, a minimum of three consecutive strokes form a line segment, and the overlapping area of three consecutive line segments defines a pivot (indicated by the rectangular area). The pivot is the key component to help identify trend continuation or reversal, based on the so-called trend divergence. More importantly, distinguished from other similar indicators implementing the Theory of Entanglement, our Zen Pro perfectly realizes recursions of multiple levels (time frames). For example, a stroke at a higher timeframe of 30m coincides with a line segment in a lower timeframe of 5m, and also coincides with a ‘trend type’ (see below definition) at an even lower timeframe of 1m. This feature is essential for multi-timeframe trading and provides confluence of buying and selling signals at multiple timeframes.
It is important to emphasize that users are strongly recommended to apply the Theory of Entanglement to analyze the current trend (whether it will continue or reverse) based on the drawings provided by the indicator, rather than blindly follow the labels of buying and selling points as signals. For acquiring more information on our Zen Pro, getting tips on how to use it more effectively in trading, as well as learning the Theory of Entanglement from basic concepts, interested users are encouraged to contact the author directly.
Relations between fractal, stroke, line segment, pivot, and some important definitions: • Stroke: Connecting two adjacent top and bottom fractals with at least one candlestick in between. • Line segment: Consists of an odd number of strokes, at least three strokes are required, and the first three strokes must have overlapping portions. • Level: Levels generally correspond to time frames of the chart, such as 1w, 1d, 4h, 30m, 5m, 1m etc. Sub-level: The above levels are respectively the sub-levels of the previous level. • Pivot: The part of a trend type at a certain level that is overlapped by at least three consecutive sub-level trend types. • Trend type: There are two trend types: trend and range. In trend, there are also two types: rising trend and falling trend. • Range: At any level, a completed trend type contains only one pivot. • Trend: At any level, a completed trend type contains at least two pivots in the same direction in sequence, which is called a trend at this level.
List of drawings on the chart (for default color settings): 1. Thick blue lines: Strokes at the current level. 2. Thick orange lines: Strokes at a higher level, also line segments at the current level. 3. White dotted lines: Line segments at a higher level, also strokes at two levels higher from the current one. 4. Blue shaded rectangles: Pivots at the sub-level in a trend or a range. 5. Green shaded rectangles: Pivots at the current level in a rising trend or a range. 6. Orange shaded rectangles: Pivots at the current level in a falling trend or a range.
List of labels on the chart (above the candle: sell signal, below the candle: buy signal) 1. Small "1" label below the candle: The lower-level 1st buying point due to the bottom trend divergence or range divergence calculated from MACD: Buy signal 2. Small "1" label above the candle: The lower-level 1st selling point due to the top trend divergence or range divergence calculated from MACD: Sell signal 3. Large "1", "2", "3" labels below the candle: The current-level 1st, 2nd, and 3rd buying points due to the bottom trend divergence or range divergence calculated from MACD: Buy signal 4. Large "1", "2", "3" labels above the candle: The current-level 1st, 2nd, and 3rd selling points due to the top trend divergence or range divergence calculated from MACD: Sell signal
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