In my band, the big joke is that the talent I lack as a guitar player, I make up for in equipment. Anyway, while listening to DVDs of famous guitar heroes on advanced techniques, the guitar master, Eric Johnson said the following about chords: "Don't look at chords as rigid patterns, rather try to think of them as hidden melodies." The idea of structuring the chords as a fixed system, so to speak, takes away some of the creativity and spontaneity. Rather, use the chords to add 7ths, 9ths, 11ths, augmented 4ths, invert them, move them around the keyboard, and use substitute chords. Often for example, a B minor will sound the same as an E6 and so on. From these substitutions and passing phrases, melodies which are hidden in the structure of the chord emerge to the ear. There are far more advanced musicians here such as Flam, Klosek, Glazier and the new spec, Todd Tracy, so I will defer to them on this. But the idea is that market patterns should not be viewed as rigid patterns, but rather as hidden melodies. As the day trades out, the variety of bars is endless and new. Rather than lock into fixed systems, it is good to see the hidden melodies in the market music, let them play out, and hopefully get in tune and be able to play along without being totally out of time, and out of tune. Figure out the market's scales and chords, and like Maria in the Sound of Music, once you know the notes to sing, you can sing almost anything. Ear training helps the musician hear what key is being played, what chords, and what scales without looking at sheet music, and only by listening. Market training, by watching it everyday, seems to help the training of the eye as well.

Todd Tracy comments:

I agree with Jim. There is no telling if a model shift has occurred without hindsight. Certain musicians or markets players might have tendencies and regularly use familiar notes to bridge the music into another scale. The Euro cruising past 1.30 could be the root note for a new song or just a suspended 4th of the 1.2950. However, there is always that moment when the mistress has to decide whether she's staying in G major or going for D major. There is no d flat in G major, so if you hear that note, the change has occurred.

Scott Brooks adds: 

As someone who has made a living for years with TA and pattern recognition, I can relate to this. Since I've added quantitative analysis to my management processes, I've been able to empirically test my prior pattern recognition skills.

What's interesting to me is that I've been able to better fine tune patterns by testing them, and now, I see them in a whole new way. I see things that I wouldn't have seen before. I'm a very visual person and the charts really help me!

As I've said before, my charts are just a visual representation of my calculations.

Some people find it helpful to look at blue prints. Some people like to look at what the finished building will look like. Regardless, quantitative analysis is required to create whatever visual image you prefer.





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