Here’s my experience in trading the currency markets (mainly EURUSD) using Square Root theory as it ISN’T fully taught anywhere. I feel the need to put some clarity in a not so frequently mentioned theory among retail traders. Square Root trading basics are very well explained by the traders over at TradingFives, but application of the theory on the markets still remains rather vague.
Hope you learn, enjoy, profit, and give some feedback!
Let us start with reviewing the current year’s Daily chart on the premises of Square Root Theory:
(http://img109.imageshack.us/img109/853/2012daily.png) Full-size image link
And here’s the 2H chart for 2012/13 (in fragments, of course) where actually all work is done and transferred to the Daily:
Now, first things first. Where/when do we begin charting is a fundamental question a lot of traders get wrong for the simple reason of lack of knowledge about how market responds to seasonality we observe every year across the world. As you have probably noticed, there is an esoteric element within my trading that I have implemented in order to gain an edge through my years of experience. In fact, when trading Intraday I rely on nothing but planetary relationships that influence the particular day, but this, of course, is a completely different subject. Just keep an open mind.
Seasonality through the year is a well-known fact (duh!). It affects us as human beings and this, in a way influences how we behave everywhere. But since I’m here to talk about trading, this is a subject the interested can research rather easily with the help of a certain search engine. So, back to the real subject.
Each solar year begins on the Vernal Equinox (20/21 March, differs in time each year). This is the starting point for our annual analysis, that extends to the next Vernal Equinox. Now, we may begin on March, 21 but this is not the place where we start our calculations. Instead, we look for a significant point where the market has reacted AFTER the Equinox has occurred - a significant High/Low.
So far, so good. The first significant High/Low was provided for us on March, 27 with a value of 1.33849. We begin our analysis at that particular high.
Each and every instrument on the market vibrates to its own frequency, same with humans. For the less esoterically inclined, this concept illustrates the correct market scaling (price/time ratio) on the charts. I will provide a fixed ratio for EUR/USD that allows us to square prices and time correctly, without getting into further details on the origin of the ratio itself, yet. The ratio is 100/10000 (1/100) [Time(Days)/Price] for 5-digit prices behind the decimal point.
Let’s see how we convert the current high into the correct values that we use for our analysis:
High = 1.33849 =>
Time = 1.33849100 = 133.849 -> Converted value used for timing
Price = 1.3384910000 = 13384.9 -> Converted value for pricing
Now let us dissect the values we acquired from scaling the market, so we can start applying Square Root Theory on our charts.
Time:
We have 133.849 as our converted value of the High at 1.33849
√133.849 = 11.569 Days as the frequency the market works 90 degrees of time on the chart. Therefore, a full rotation (360 deg) on the chart in timing terms comes at 411.569 = 46.277 days. We convert the 90 deg value from days into 2H bars, since the 2H is the chart we use to construct our model: 11.56912 = 138.83 ~ 139 2H Bars.
From the high, extend 139 bars forward 4 times (139, 278, 416, 555) to get the full 360 deg rotation in time across the chart (2H!)
Price
We’ve got 13384.9 as converted value of the high at 1.33849
√13384.9 = 115.693
(115.693 - 0.5) ^2 = 13269.5 = 1.32695 as 90 degrees south from the high at 1.33849
You’ve probably noticed that when dealing with prices we use modifiers to acquire our values for 90/180/360 degs, etc. In this case the modifier of 0.5 illustrates 90 degrees of the circle under square root. The value of a full rotation from the high under square root is 4*0.5 = 2. You can find more on the modifiers in the TradingFives guide or simply search for it on the Internet. Time squaring is not affected by this, since it is a constant, we simply use the square root values there.
Using the same formula, place price extensions on the chart for the rest of the sensitive points of the circle - 180 (1) /270 (1.5) /360 (2) degrees, etc. (Modifiers in brackets)
Once you’ve got the price/time extensions on the chart, only thing (charting wise) you’re left with is to draw the price channels. You can see how they’re constructed correctly to the scale - just start from the high and extend the channel to the first 90 deg time/price intersection and forward. Lower channel arm starts from 360 deg in price on the time of the high. Mid-arm begins at 180 degrees price / time of high.
Next, we’ll look at how to correctly interpret and trade the chart, and where to begin a new price/time channel. I’ll leave this for tomorrow as I’m actually quite busy and this whole impulse of me starting this thread came out of the blue when I woke up this morning 
Please, leave some feedback to keep me going, it’ll very likely be quite positive for all of us
Happy trading!
I think I might have found the wrong crowd here…was actually warned about that :31: Oh, well
Babypips peruggo, so little bits at the time 
Anyway,
1 - 10 - 1+0=1
2 - 11 - 1+1=2
3 - 12 - 1+2=3
4 - 13 - 1+4=4
5 - 14 - 1+4=5
6 - 15 - 1+5=6
7 - 16 - 1+6=7
8 - 17 - 1+7=8
9 - 18 - 1+8=9 etc etc.
You see, I think everyone uses the reverse of the sq9.
The numbers are 0 through 9, 0 is the beginning and the end, alpha omega, a point on a circle 0 and 360 etc. after 9 a new cycle starts.
45, 90, 180, 270, 360 all add to 9!
So…:30:
Very interesting but kind of hard to digest.
Thanks, Cricket. Which part do you find challenging, is it the math?
Good to have you here, D. Your point is actually very useful for peeps that dealt with the Sq9 at some point, but just left it in despair
hey Peruggo don’t give up. I’m interested in this Gann stuff. There’s been lots of times I’ve noticed the same angles repeating over and over on the charts so I’d like to hear more from you.
The math is easy by the way.
Here’s what my daily chart looks like, annotated. Hope this makes it easier to understand how the concept works, dramatic results with the omission of intraday-based decision making
I am new to trading, but am very interested in this theory. I’m a big math nerd. It looks promising based on your charts. However, I would need more info to understand it fully. Keep it up.
This is similar to multiples of 9. All multiples of 9 add up to nine or the sum reduces to 9 (ex. 9 * 3=27, 2+7=9; 9*18=738, 7+3+8=18, 1+8=9). It’s actually very simple. Also if you multiply 90 by 1.618 you get 145.62, the sun of the numbers is 18, 1+8=9. It you basic cycle of base 9. For base 10, a cycle must end in 0. For base 2, the number has to be divisible by 2. WD Gann is a good reference for this type of system.
By the way 180, 360 are all divisible by 9.
So, the price angle is the same coming in as it is coming out taking the 1.20 bottom as a dividig line.
That means that whatever was governing this move down, is now governing it on the way up.
History repeats, there is nothing new under the sun.
