Nodal Displacement Sequencing (NDS)

Dr. Iraj Jafarian

[email protected]
July 2024

1 Introduction
Nodal Displacement Sequencing (NDS) is proposed as a framework to predict
price movements in zero-sum markets, including futures and foreign exchange
markets. NDS represents an emerging analytical approach which incorporates
cycle analysis, fractal theory, and symmetry analysis of price action.
This paper will elucidate the mathematical foundations of NDS, presenting
the theoretical constructs and analytical methods employed in this approach.

1.1 Market Geometry: A Structural Approach to Predict-

ing Price Projections
To accurately forecast future price projections within a market, it is essential to
develop a conceptual framework referred to as ”market geometry.” This frame-
work posits that market and price actions conform to an underlying geometrical
structure. This structure is comprised of functions and their derivatives, which
are termed ”nodes.” Nodes are critical points within the geometrical structure
where price reversals occur, thereby serving as pivotal indicators for predicting
future price movements.
The concept of market geometry is founded on the principle that market
behaviour is not random but rather follows a deterministic pattern governed
by mathematical functions. These functions, through their derivatives, form a
network of nodes. Each node represents a specific point in the market where a
reversal in price action is likely to happen. By identifying and analyzing these
nodes, it is possible to predict future price trends with greater accuracy.
Nodes, as points of reversal, play a crucial role in market geometry. They
act as markers that signify a change in the direction of price movements. Under-
standing the placement and significance of these nodes within the geometrical
structure allows for the anticipation of potential market shifts. This predic-
tive capability is invaluable for traders and analysts seeking to make informed
decisions based on the projected movements of market prices.
The application of market geometry involves a thorough analysis of histor-
ical price data to identify the functions and their derivatives that define the

1
market’s structure. Once these functions are established, their derivatives re-
veal the locations of nodes. By mapping these nodes and understanding their
relationships, one can construct a geometrical representation of the market that
facilitates accurate price projections.
In summary, market geometry provides a structured approach to forecast-
ing future market prices by utilizing the mathematical properties of functions
and their derivatives to identify key reversal points. This framework offers a
systematic method for analyzing market behaviour, enabling more precise and
reliable predictions of price trends.

2 General Model for Trend and Pullback Func-

tions
2.1 Trend Functions
1. T1 (t): Trend function from Z to N1

2. T2 (t): Trend function from S1 to N2

3. T3 (t): Trend function from S2 to N3

2.2 Pullback Functions

1. P1 (t): Pullback function from N1 to S1
2. P2 (t): Pullback function from N2 to S2
3. P3 (t): Pullback function from N3 to S3

3 Polynomial Representation
Assume each function is represented as a polynomial of degree n:

Ti (t) = αi0 + αi1 t + αi2 t2 + · · · + αin tn

Pi (t) = βi0 + βi1 t + βi2 t2 + · · · + βin tn

4 Specific Functions for the Nodes

1. Trend Function T1 (t) from Z to N1 :

T1 (t) = α10 + α11 t + α12 t2 + · · · + α1n tn

2. Pullback Function P1 (t) from N1 to S1 :

P1 (t) = β10 + β11 t + β12 t2 + · · · + β1n tn

2
 3. Trend Function T2 (t) from S1 to N2 :

T2 (t) = α20 + α21 t + α22 t2 + · · · + α2n tn

4. Pullback Function P2 (t) from N2 to S2 :

P2 (t) = β20 + β21 t + β22 t2 + · · · + β2n tn

5. Trend Function T3 (t) from S2 to N3 :

T3 (t) = α30 + α31 t + α32 t2 + · · · + α3n tn

6. Pullback Function P3 (t) from N3 to S3 :

P3 (t) = β30 + β31 t + β32 t2 + · · · + β3n tn

5 General Constraints
Continuity: The end of each function should match the start of the next.

T1 (tend ) = P1 (tstart )

P1 (tend ) = T2 (tstart )
T2 (tend ) = P2 (tstart )
P2 (tend ) = T3 (tstart )
T3 (tend ) = P3 (tstart )

6 Linear function
For simplicity, if we assume each function is a linear polynomial (degree 1), we
can write:

6.1 Trend Functions

T1 (t) = α10 + α11 t
T2 (t) = α20 + α21 t
T3 (t) = α30 + α31 t

6.2 Pullback Functions

P1 (t) = β10 + β11 t
P2 (t) = β20 + β21 t
P3 (t) = β30 + β31 t

3
7 Mathematical Model for Trend and Pullback
Functions
7.1 Definitions
• Trend Functions Ti (t)
– Represent the upward movement from a starting point Z or a previ-
ous low Si to the next high Ni .

• Pullback Functions Pi (t)

– Represent the downward movement from a high Ni to the next low
Si .

7.2 Polynomial Representation

Assume each function is represented as a polynomial of degree n:

Ti (t) = αi0 + αi1 t + αi2 t2 + · · · + αin tn

Pi (t) = βi0 + βi1 t + βi2 t2 + · · · + βin tn

7.3 Specific Functions

For the given set of points N, S, N 2, S2, N 3, S3, the functions are defined as:

T (t) = α0 + α1 t + α2 t2 + · · · + αn tn

P (t) = β0 + β1 t + β2 t2 + · · · + βn tn
T 2(t) = α20 + α21 t + α22 t2 + · · · + α2n tn
P 2(t) = β20 + β21 t + β22 t2 + · · · + β2n tn
T 3(t) = α30 + α31 t + α32 t2 + · · · + α3n tn
P 3(t) = β30 + β31 t + β32 t2 + · · · + β3n tn

5
7.4 General Constraints
For the model to be continuous, the end of each function should match the start
of the next:
T 1(tend ) = P 1(tstart )
P 1(tend ) = T (tstart )
T (tend ) = P (tstart )
P (tend ) = T 3(tstart )
T 3(tend ) = P 3(tstart )

7.5 Example with Linear Polynomials

If each function is a linear polynomial (degree 1):
T 1(t) = α10 + α11 t
T (t) = α0 + α1 t
T 3(t) = α30 + α31 t
P 1(t) = β10 + β11 t
P (t) = β0 + β1 t
P 3(t) = β30 + β31 t

7.6 Least Squares Fitting

To fit the polynomial functions to the data points using the least squares
method:
f (t) = α0 + α1 t + α2 t2 + · · · + αn tn
Objective function to minimize:
m
X
S= (yi − f (ti ))2
i=1

Matrix form:
y = Xα + e
Least squares solution:
α̂ = (X T X)−1 X T y

8 Deep Learning Model for Refining Trend Func-

tion
8.1 Trend Function with Neural Network
Trend function with a neural network component:
T̂i (t; θ) = αi0 + αi1 t + αi2 t2 + · · · + αin tn + N N (t; θ)

6
8.2 Error Calculation
Error between the predicted trend function T̂i (t; θ) and the actual observed
values yi :
ei = yi − T̂i (t; θ)

8.3 Loss Function

Mean squared error (MSE) as the loss function:
m
1 X 2
L(θ) = e
m i=1 i

8.4 Neural Network Adjustment

Using backpropagation to adjust the weights θ to minimize the loss function:
∂L
θ ←θ−η
∂θ
where η is the learning rate.

7
Mathematics of Fractal Market approach in NDS

9 Initial Trend Function

The initial trend function is denoted as T (t).

10 Recursive Division
Each trend function T (t) is divided into three sub-trends T1 (t), T2 (t), T3 (t) with
pullbacks in between. The recursive relationship can be defined as:

T (t) = T1 (t) + P1 (t) + T2 (t) + P2 (t) + T3 (t)

where P1 (t) and P2 (t) represent the pullbacks.

11 Sub-trend Functions
The sub-trend functions Ti (t) (for i = 1, 2, 3) are also divided into three parts,
scaled by a factor of 3. Therefore, each Ti (t) can be represented as:

Ti (t) = Ti1 (t) + Pi1 (t) + Ti2 (t) + Pi2 (t) + Ti3 (t)

12 Scaling Factor
The scaling factor is represented by the fractal number 3. This indicates that
each time frame is scaled down by a factor of 3.

13 Recursive Representation
This recursive process can be represented as:
3
X
T (t) = (Ti (t) + Pi (t))
i=1

3
X
Ti (t) = (Tij (t) + Pij (t))
j=1

8
 ..
.
3
X
Tijk (t) = (Tijkl (t) + Pijkl (t))
l=1

14 Fractal Scaling
The time frame for each sub-trend is scaled by a factor of 3. Let τ be the initial
time frame, then for each subsequent level:
τ τ τ
τi = , τij = , τijk =
3 32 33
and so on.

15 Recursive fractal model in NDS

The fractal market model can be summarized with the following recursive struc-
ture:
1. Initial Trend Function: T (t)

2. Recursive Division:
3
X
T (t) = (Ti (t) + Pi (t))
i=1
3
X
Ti (t) = (Tij (t) + Pij (t))
j=1

..
.

3. Fractal Scaling:
τ τ τ
τi = , τij = , τijk = , etc.
3 32 33

9
 Symmetrical Analysis

16 Hooks
Each hook is a price movement loop that gives back 86% of its initial move. Let
the initial move of a hook be H. The retracement of the hook is:

Hretrace = 0.86 · H

The remaining portion after the retracement is:

Hremaining = H − Hretrace = H − 0.86 · H = 0.14 · H

Therefore, each hook can be represented as:

Htotal = H − 0.86H + H = 0.14H + H

17 Trends
Each trend moves symmetrically, meaning the trend is divided into three equal
parts. Let the total trend movement be T . The three parts of the trend can be
represented as T3 .

18 Combined Model
Given that we always have 2 hooks and a trend, the combined price movement
model can be represented as:

18.1 Hook 1
H1 = H1,initial − 0.86 · H1,initial + H1,initial = 0.14 · H1,initial + H1,initial

18.2 Hook 2
H2 = H2,initial − 0.86 · H2,initial + H2,initial = 0.14 · H2,initial + H2,initial

18.3 Trend
T T T
T = + +
3 3 3

10
19 Symmetrical Analysis Summary
The price moves in a sequence of two hooks followed by a symmetrical trend.
Each hook gives back 86% of its initial move, and the trend is divided into three
equal parts:
P (t) = H1 + H2 + T
where
H1 = 0.14 · H1,initial + H1,initial
H2 = 0.14 · H2,initial + H2,initial
T T T
T = + +
3 3 3

11
Summary
Nodal Displacement Sequencing (NDS) represents a cutting-edge methodology
in market prediction, leveraging the principles of mathematical modeling and
artificial intelligence to forecast market movements with high precision. At its
core, NDS conceptualizes the market as a dynamic price matrix, where each
node corresponds to specific price points over time. This innovative approach
utilizes mathematical functions to model the relationships within this matrix,
offering a structured and analytical framework for market analysis.
The integration of AI techniques, particularly neural networks, plays a cru-
cial role in enhancing the accuracy of these predictions. By employing backprop-
agation, the model can iteratively adjust and fine-tune its parameters based on
the errors observed between predicted and actual market prices. This continuous
learning process allows the model to update its predictions in real-time, thereby
improving its forecasting capabilities with each iteration. As a result, NDS of-
fers a robust and adaptive tool for market prediction, capable of responding to
the ever-changing dynamics of financial markets.

Conclusion
Nodal Displacement Sequencing (NDS) heralds a significant advancement in
the field of market prediction, offering a novel approach that combines rigor-
ous mathematical modeling with the adaptive learning capabilities of artificial
intelligence. By treating market prices as a matrix of nodes and applying so-
phisticated mathematical functions to model their interactions, NDS provides
a comprehensive framework for understanding market behavior.
The application of AI techniques, specifically through the process of back-
propagation, enables the model to learn from its errors and continuously refine
its predictions. This real-time learning capability ensures that the model re-
mains responsive to new data, enhancing its accuracy and reliability over time.
The innovative nature of NDS, coupled with its ability to adapt and improve,
positions it as a powerful tool for market analysts and financial professionals
seeking to navigate the complexities of market dynamics.

1
7 Mathematical Model for Trend and Pullback
Functions
7.1 Definitions
• Trend Functions Ti (t)
– Represent the upward movement from a starting point Z or a previ-
ous low Si to the next high Ni .

• Pullback Functions Pi (t)

– Represent the downward movement from a high Ni to the next low
Si .

7.2 Polynomial Representation

Assume each function is represented as a polynomial of degree n:

Ti (t) = αi0 + αi1 t + αi2 t2 + · · · + αin tn

Pi (t) = βi0 + βi1 t + βi2 t2 + · · · + βin tn

7.3 Specific Functions

For the given set of points N, S, N 2, S2, N 3, S3, the functions are defined as:

T (t) = α0 + α1 t + α2 t2 + · · · + αn tn

P (t) = β0 + β1 t + β2 t2 + · · · + βn tn
T 2(t) = α20 + α21 t + α22 t2 + · · · + α2n tn
P 2(t) = β20 + β21 t + β22 t2 + · · · + β2n tn
T 3(t) = α30 + α31 t + α32 t2 + · · · + α3n tn
P 3(t) = β30 + β31 t + β32 t2 + · · · + β3n tn

5
7.4 General Constraints
For the model to be continuous, the end of each function should match the start
of the next:
T 1(tend ) = P 1(tstart )
P 1(tend ) = T (tstart )
T (tend ) = P (tstart )
P (tend ) = T 3(tstart )
T 3(tend ) = P 3(tstart )

7.5 Example with Linear Polynomials

If each function is a linear polynomial (degree 1):
T 1(t) = α10 + α11 t
T (t) = α0 + α1 t
T 3(t) = α30 + α31 t
P 1(t) = β10 + β11 t
P (t) = β0 + β1 t
P 3(t) = β30 + β31 t

7.6 Least Squares Fitting

To fit the polynomial functions to the data points using the least squares
method:
f (t) = α0 + α1 t + α2 t2 + · · · + αn tn
Objective function to minimize:
m
X
S= (yi − f (ti ))2
i=1

Matrix form:
y = Xα + e
Least squares solution:
α̂ = (X T X)−1 X T y

8 Deep Learning Model for Refining Trend Func-

tion
8.1 Trend Function with Neural Network
Trend function with a neural network component:
T̂i (t; θ) = αi0 + αi1 t + αi2 t2 + · · · + αin tn + N N (t; θ)

6
8.2 Error Calculation
Error between the predicted trend function T̂i (t; θ) and the actual observed
values yi :
ei = yi − T̂i (t; θ)

8.3 Loss Function

Mean squared error (MSE) as the loss function:
m
1 X 2
L(θ) = e
m i=1 i

8.4 Neural Network Adjustment

Using backpropagation to adjust the weights θ to minimize the loss function:
∂L
θ ←θ−η
∂θ
where η is the learning rate.

7
 Symmetrical Analysis

16 Hooks
Each hook is a price movement loop that gives back 86% of its initial move. Let
the initial move of a hook be H. The retracement of the hook is:

Hretrace = 0.86 · H

The remaining portion after the retracement is:

Hremaining = H − Hretrace = H − 0.86 · H = 0.14 · H

Therefore, each hook can be represented as:

Htotal = H − 0.86H + H = 0.14H + H

17 Trends
Each trend moves symmetrically, meaning the trend is divided into three equal
parts. Let the total trend movement be T . The three parts of the trend can be
represented as T3 .

18 Combined Model
Given that we always have 2 hooks and a trend, the combined price movement
model can be represented as:

18.1 Hook 1
H1 = H1,initial − 0.86 · H1,initial + H1,initial = 0.14 · H1,initial + H1,initial

18.2 Hook 2
H2 = H2,initial − 0.86 · H2,initial + H2,initial = 0.14 · H2,initial + H2,initial

18.3 Trend
T T T
T = + +
3 3 3

10
19 Symmetrical Analysis Summary
The price moves in a sequence of two hooks followed by a symmetrical trend.
Each hook gives back 86% of its initial move, and the trend is divided into three
equal parts:
P (t) = H1 + H2 + T
where
H1 = 0.14 · H1,initial + H1,initial
H2 = 0.14 · H2,initial + H2,initial
T T T
T = + +
3 3 3

11
Mathematics of Fractal Market approach in NDS

9 Initial Trend Function

The initial trend function is denoted as T (t).

10 Recursive Division
Each trend function T (t) is divided into three sub-trends T1 (t), T2 (t), T3 (t) with
pullbacks in between. The recursive relationship can be defined as:

T (t) = T1 (t) + P1 (t) + T2 (t) + P2 (t) + T3 (t)

where P1 (t) and P2 (t) represent the pullbacks.

11 Sub-trend Functions
The sub-trend functions Ti (t) (for i = 1, 2, 3) are also divided into three parts,
scaled by a factor of 3. Therefore, each Ti (t) can be represented as:

Ti (t) = Ti1 (t) + Pi1 (t) + Ti2 (t) + Pi2 (t) + Ti3 (t)

12 Scaling Factor
The scaling factor is represented by the fractal number 3. This indicates that
each time frame is scaled down by a factor of 3.

13 Recursive Representation
This recursive process can be represented as:
3
X
T (t) = (Ti (t) + Pi (t))
i=1

3
X
Ti (t) = (Tij (t) + Pij (t))
j=1

8
 ..
.
3
X
Tijk (t) = (Tijkl (t) + Pijkl (t))
l=1

14 Fractal Scaling
The time frame for each sub-trend is scaled by a factor of 3. Let τ be the initial
time frame, then for each subsequent level:
τ τ τ
τi = , τij = , τijk =
3 32 33
and so on.

15 Recursive fractal model in NDS

The fractal market model can be summarized with the following recursive struc-
ture:
1. Initial Trend Function: T (t)

2. Recursive Division:
3
X
T (t) = (Ti (t) + Pi (t))
i=1
3
X
Ti (t) = (Tij (t) + Pij (t))
j=1

..
.

3. Fractal Scaling:
τ τ τ
τi = , τij = , τijk = , etc.
3 32 33

9
Summary
Nodal Displacement Sequencing (NDS) represents a cutting-edge methodology
in market prediction, leveraging the principles of mathematical modeling and
artificial intelligence to forecast market movements with high precision. At its
core, NDS conceptualizes the market as a dynamic price matrix, where each
node corresponds to specific price points over time. This innovative approach
utilizes mathematical functions to model the relationships within this matrix,
offering a structured and analytical framework for market analysis.
The integration of AI techniques, particularly neural networks, plays a cru-
cial role in enhancing the accuracy of these predictions. By employing backprop-
agation, the model can iteratively adjust and fine-tune its parameters based on
the errors observed between predicted and actual market prices. This continuous
learning process allows the model to update its predictions in real-time, thereby
improving its forecasting capabilities with each iteration. As a result, NDS of-
fers a robust and adaptive tool for market prediction, capable of responding to
the ever-changing dynamics of financial markets.

Conclusion
Nodal Displacement Sequencing (NDS) heralds a significant advancement in
the field of market prediction, offering a novel approach that combines rigor-
ous mathematical modeling with the adaptive learning capabilities of artificial
intelligence. By treating market prices as a matrix of nodes and applying so-
phisticated mathematical functions to model their interactions, NDS provides
a comprehensive framework for understanding market behavior.
The application of AI techniques, specifically through the process of back-
propagation, enables the model to learn from its errors and continuously refine
its predictions. This real-time learning capability ensures that the model re-
mains responsive to new data, enhancing its accuracy and reliability over time.
The innovative nature of NDS, coupled with its ability to adapt and improve,
positions it as a powerful tool for market analysts and financial professionals
seeking to navigate the complexities of market dynamics.