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The Feigenbaum Projections: An Introductory Hypothesis

to the Determinism of Time and Price
——————————————————————————
Tristen A. Gelrud1
June 10th, 2023

Abstract
The following is an informal introduction to the Theory and Application of the Feigenbaum Projections
within the Financial Markets. The following paper was created as a method of providing a Framework that allows
third-party participants to further explore and backtest the Theory to their own accord. This paper only covers the
basic fundamentals of the Theory at hand, and it does not explore the entirety of the Intermittent Market Hypothesis,
as further papers down the line will explore. This paper will not be Mathematically dense, and it has been
specifically designed for those without a background in applied sciences.
The Feigenbaum Projections are a set of two different tools used to project the next trajectory of Price
across both Time and Price axis, individually. These projections are created utilizing the Fibonacci-Price and
Fibonacci-Time Tools on TradingView, or other related charting applications containing the same toolset.
This Framework merges a variety of trading concepts across multiple disciplines, ranging from the 1.28
Framework by Larry Williams to the concepts discussed by Michael Huddleston across various markets and
conditions. This Framework is not to be used as a single methodology for trading - rather, it should be merged with a
combination of other methodologies to act as a form of confluence for any given trade idea.
These Projections can be continuously used at a Macro or Fractal level - or in other words, they can be
used to project large moves into the future or finite moves within the present with no limit to its application. Simply
put, if you had the time, energy, and scale to watch every timeframe at once individually, one could theoretically
predict every trajectory of price through to infinity.
The Feigenbaum Projections are named after Mitchell Feigenbaum, a Mathematical Physicist who
pioneered the study of Chaos Theory and is credited for the discovery of the Feigenbaum Constant(s). These
constants are universal in nature and appear just as frequently (or even more often) than the Fibonacci Sequence.
What's important to understand is that these constants are fundamental to the Theory of Chaos and the subject of
Nonlinear Dynamics while also playing an important role in Physics, such as the movement of Planetary bodies,
Particles, and even in Behavioral Theory - such as population densities. These Constants are emergent - they
naturally emerge from Complexity within a system.
The Complexity of the system at hand can be defined by the dynamic relationship between Actors and
Actants within the underlying Network, giving rise to interesting phenomena pertaining to hidden order within what
only seems to be a Random Walk.

1 The author of this publication is currently an undergraduate student at Palomar College; None of the views submitted in this paper
are to be interpreted as official representations of the financial markets and all views described below should be interpreted as the
author’s personal perspective - which may be subject to change over time as new information is introduced.

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Introduction to the Theory

The following will be a small and concise overview of the Theory at hand. This section holds high
importance to the Research & Development of these projections and other use-cases in the future. Not to mention, it
is extremely important that you are able to explain this Theory to others correctly, in the event that you are
attempting to do so. It goes without saying, but all concepts and ideas within this Forum are entirely based on my
own Research and Analysis, and this is of course Theoretical.
There are many theories that emerge that hold a near-zero plausibility, such as theories around Astrology
(The idea that the motion of the Planets play a direct role in Causation on Earth, both physically and spiritually).
True theories of causation are grounded in reality, where if the Theory is true, it must explain everything. It is not a
true Theory of Everything if it only explains some things. This is extremely important for two reasons:

1. In order for it to be accepted, it must make logical sense across the board. Nothing should be derived
randomly, it must have purpose
2. In order for it to be verified from multiple perspectives, it must confirm multiple phenomena within Market
Dynamics, such as Astrology

It is impossible to explain this Theory without the use of Mathematics, but I will do my absolute best to
keep things concise, specific, and easy to understand. Near the end, there will also be a list of resources that you can
use to dig into the Theory further, if you so please.
While this Theory does contain Mathematical concepts, that is only half of the puzzle. The other half is
related entirely to the Psychology of market participants and the relationship between one participant and another,
up to and including actions of Liquidity Providers / Market-Makers. There are many factors contributing to the
formation of Price, and it is a number that is impossible to quantify.
Therefore, we will be using Logical Induction to break Price-Action into its most finite and fundamental
elements as a means of interpretation.

The NYSE Market Model

The NYSE Market Model is the Framework in which the NYSE maintains an Efficient Market for Price-
Delivery. The framework in this example is specific to the NYSE, however, the CME Group, NASDAQ, and others
all contain similar models for maintaining the same level of Efficiency. There are three main participants that take
part within the NYSE Market Model:

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1. Designated Market-Makers: Firms that have obligations to maintain fair and orderly markets for an
assigned list of securities. They operate both manually and electronically to facilitate price discovery,
especially during market opens, closes, and periods of trading imbalances or instability. This involves
buying when there is an excess of sellers and selling when there is an excess of buyers, thus adding
liquidity to the market and dampening volatility. DMMs are required to be active in the stocks they are
assigned, applying their market experience and judgment of dynamic trading conditions, macroeconomic
news, and industry-specific intelligence to inform their decisions. They are essentially the traffic controllers
of the NYSE, ensuring that trading operates smoothly and efficiently.
2. Supplemental Liquidity Providers: SLPs are electronic, high volume trading firms who are incentivized
to add liquidity into the NYSE. They are required to maintain a bid or offer at the National Best Bid or
Offer (NBBO) in each assigned security for a minimum of at least 10 percent of the trading day.
Essentially, they stand ready to buy and sell their assigned stocks, adding depth and liquidity to the market.
These actors are primarily found in more liquid stocks with greater than one million shares of average daily
volume. Because they are only incentivized rather than obligated, SLPs tend to only be present when it is
most profitable for them. In times of great Market distress, such as the 2208 Financial Crisis or Covid-19 in
2020, they will mostly be absent.
3. Floor Brokers: These are the people on the trading floor of the NYSE. They are employees of member
firms who execute trades on the exchange floor on behalf of the firm's clients, which can include
institutions, hedge funds, and broker/dealers. They act as agents, buying and selling stock for the public.
They are physically present on the trading floor and are active participants during the NYSE's opening and
closing auctions, as well as throughout the trading day.

In December of 2014, there was a report that was published titled "Exploratory Trading" by Adam D.
Clark-Joseph, where the intentions of Supplemental Liquidity Providers are explored in great depth. This report
analyzed a variety of some of the highest volume High-Frequency Trading Firms and their returns.
Within this report, they found that most oddly aggressive trades placed by HFT firms end in losses.
However, there was a specific group of eight HFT firms who actually seem to consistently profit off these
aggressive orders, and this group is labeled as "A-HFT". While the group of eight firms are not directly named in the
report, it is speculated with high probability that these firms are the eight Supplemental Liquidity Providers named
under the NYSE Market Model.

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This report was able to find that Market-Makers possess a hidden set of information that pertains to the
future trajectories of Price. Analyzing A-HFT, the author was able to uncover data of A-HFT orders at the time
before a change in the state of delivery. At this precise moment, A-HFT places rapid and oddly aggressive orders far
outside the current range of Price (they place orders into the abyss). These orders are specifically created to tap into
hidden orders placed by Designated Market-Makers, where they can then judge what happens to price when those
orders are filled. Doing so, they are able to Quantify the amount of Liquidity present, which coincides with the
maximum range price is able and willing to move before needing more Liquidity.
Once Liquidity has been quantified by the firms under A-HFT, they then engage in a manipulatory practice
which is known as "Momentum Ignition" - this is the true definition of an Orderblock. SLPs engage in Momentum
Ignition to ignite participants into a specific sentiment, where they then take advantage of that sentiment and use
them as Liquidity.
For example, if a Bullish trend is ending, then SLPs will ignite Momentum into a Bullish direction, where
SLPs then sell off their orders to participants who are willingly buying at an expensive price. At this moment, SLPs
then reverse their positions, taking out retail and allowing Market-Makers to take price in the original planned
direction.
With this overview of the NYSE Market Model, you can now understand how markets are manipulated,
who they are manipulated by, and for how long they are manipulated for. This is only one form of Manipulation, and
there are many other strategies that HFT firms engage in, such as Cross-Asset Arbitrage & Spoofing.

Linearity and Non-Linearity

The Market is a Complex Network of interactions between various participants. Simple relationships are
not complex and are far easier to understand and interpret at face value. Most of the time, these simple relationships
are expressed through Linearity (or a straight line).
To understand this simply, we will use the equation: y = 2x
If you were to input x = 1, then you would get y = 2(1) = 2. Now, let's say we change it to x = 2... We will now
achieve y = 2(2) = 4.
All you need to understand is that as we increase the value of x by 1, then y will always increase by 2. If we
were to say x = 30, we can immediately say that y = 60 because there is a direct and linear relationship between one
input and the output. You will always get the same, straight-line relationship.
With that being said, this is not how Markets are. Today, if I were to buy one share in $AAPL, it may affect the
price completely differently than if I were to buy that same share tomorrow. This is what we call a Non-Linear
relationship.

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This is important for two reasons:

1. The Butterfly Effect: Two starting positions can be nearly identical in the beginning, but as time passes,
you will get extremely different outputs. This means that, theoretically, you can predict price to near
perfection up to a certain point in the near future, before it diverges and then becomes unpredictable. The
trick is to determine the starting position of a trajectory.
2. Power Law: Non-Linear relationships inherently contain the Power Law, which basically implies
exponential growth. To explain this simply, think of an exponent such as 2^2 = 4. If we then repeat the
process, we get 4^2 = 16. This is an important phenomena of Market Dynamics to understand, as
Expansions inherently move in Powers of 2, 3, and 5.

This is extremely similar to how the Weather is, but they are different in their own ways. If I were to
predict that we will see rain tomorrow, my prediction has zero effect on whether it rains or it doesn't. This is called a
Level-1 Chaotic System. However, if I were to make a prediction in the Stock Market, I would have to purchase a
position. The act of purchasing that position contributes to the total Orderflow of the market, and your single
position could make a massive difference on the outcome of price over time. Your single position could have made
somebody else decide to buy a position, where there is then a domino effect. This is described as a Level-2 Chaotic
System, where you take participation in the complexity of the Nonlinear system.
You now have a foundational understanding of why the Market is Non-Linear, and you now have a concise
perspective of how that plays a major contribution in the output of price over time.

Stochasticity and Determinism

The concept of Stochasticity refers to systems that are unpredictable due to the influence of random
variables. The future state of a stochastic system can't be predicted with complete certainty, even if all prior states
are known, as random events can and do occur. To conceptualize this topic, think directly of Economic events.
These are events that are completely unpredictable and there is no telling what said events will do to Price-Delivery
when they do occur. An event could be substantial or worthless, it can attract thousands of participants or millions,
and the participants it attracts do not all possess the same knowledge as each other. Therefore, each participant's
actions will be different from one and another. These factors are what contribute to Stochasticity within the markets
- it is inherently reliant on probability, and you cannot predict such events with certainty.

In simple terms: Stochasticity = Random and based on Probability

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On the other hand, Determinism is a concept that originates from philosophy, suggesting that all events,
including moral choices, are determined completely by previously existing causes. In other words, if we knew all the
factors and laws at play at a given moment, we could predict the outcome with 100% accuracy. Determinism is the
exact opposite of Stochasticity, but rather than dealing with probabilities, you are dealing with certainties and
absolutes. There is zero probability within a Deterministic system.
To understand the concept of Determinism further, think about every single variable that may play a role in
Price-Delivery. The list below is not every single variable, as it's impossible to Quantify. However, as an example,
this can be a list similar to the following:

1. Supply of Liquidity
2. Demand of Orders
3. Seasonal Conditions
4. Cross-Asset Correlation
5. Greeks (i.e. Volatility, Delta, Gamma, etc…)

If you were to know the exact value of every Greek, know the exact Supply of Liquidity and the exact
Demand for Orders, know how correlated one asset is with another, understand the exact seasonal conditions we are
in, then every future state should technically be predictable since you know every factor playing into Causation.
This is the idea of Determinism, and it relates to the thought experiment of Laplace's Demon in Physics,
which says the following: If you had some all-knowing intellect that knew the exact position, acceleration, and
velocity of every particle in the Universe, then every state within the Past and the Future can theoretically be
predicted.

In simple terms: Determinism = Specific and based on Certainty

Interestingly enough, the Financial Markets seem to exhibit both behaviors, and this is what we call
"Intermittence", which is basically a periodic shift from one state to another.
This is extremely important to understand, as if the market were purely Stochastic, then Stochastic
indicators would make millionaires out of everybody. They would work with extreme accuracy. The same can be
said for purely Deterministic indicators, as if the market was purely Deterministic, it would again make millionaires
out of every participant. The markets require deception to stay efficient.
This is where the idea of Chaos Theory arises, as Chaos Theory is what lies in-between the two states of
Stochasticity & Determinism. Chaos is neither purely Stochastic nor purely Deterministic. This is entirely due to the
Butterfly Effect.

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If I were to drop two balls from the exact same position, they may bounce the same at first for one or two
bounces, but over time, they diverge as each ball loses energy at a different rate. In this example, you can understand
that the bounce of the ball is only predictable up to a certain number of bounces, until you are then dealing with
probabilities. This makes the bounce of the ball Chaotic. On the surface, it looks random, but it is actually
deterministic up to a certain point.
However, the example does not end there. When the bounce between the two balls are completely diverged,
they will both continue to bounce until there is zero energy left, and both of the balls will end up in a stable, still
position. Suddenly, order has returned from the disorder of the bounce. This is inherent to Chaos Theory, as Order
& Disorder emerge periodically as the system continues.

Setting up the Projections

Below, you will find the specific values in which you should apply to both the Time-Fibonacci and Price-
Fibonacci tools. It would be best to save these settings to quick-access Templates, if the application you are using
for analysis allows you to do so.
The Initial Condition for a measurement is defined by a specific amount of either time or value elapsed, and
we set that value as equivalent to 1.00, which would be the range defined between 0.00 and +1.00 in the settings.
We then take two multipliers, the Malthusian Parameter and the Feigenbaum Constant, which are defined
as +3.5699 and +4.6692 respectively. The range we define as +1.00 is multiplied by these values, where:

+3.5699(2) = +7.1398, and +7.1398(2) = +14.2796

We then do the same with the Feigenbaum Constant, where:

+4.6692(2) = +9.3384, and +9.3384(2) = +18.6768

Here, we can visually see that these values are Doubles and Quadruples of the original. However, there are
two additional values that will mostly be experimental. The first will be expressed as the Cubic Root of the
Malthusian Parameter, which is equivalent to roughly +1.6714.
There are actually two Feigenbaum Constants, and many forget about the other. Here, the second value is
defined as roughly +2.5029, and pairing with the Cubic Root of the Malthusian Parameter creates its own fractal
projection that can be used in a variety of methods.
For values within the Time-Fibonacci Tool, there are no Negatives, as Time is continuous and is always
moving in the forward direction. Therefore, there should be no need to account for past trajectories, but only present
and future. However, there are Negative values for the Price-Fibonacci Tool, as Price can move in multiple
directions.

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Due to our Initial Condition being the value between 0.00 and +1.00, the Negative side of the Price-
Fibonacci tool will always be relative to 0.00, while the positive values of the Price-Fibonacci tool will always be
relative to +1.00. Therefore, we need to make a slight conversion and decrease the values on the Negative side by
one point. Doing so, they will share an equivalent absolute value.

+4.6692 - 1 = +3.6692 and -4.6692 - 0 = -4.6692

+3.6692 is not equal to -4.6692

Feigenbaum Projection Settings

Time-Fibonacci Settings Price-Fibonacci Settings (+) Price-Fibonacci Settings (-)

+0.00 +0.00 +0.00

+1.00 +1.00 +1.00

+1.6714 +1.6714 -0.6714

+2.5029 +2.5029 -1.5029

+3.5699 +3.5699 -2.5699

+4.6692 +4.6692 -3.6692

+7.1398 +7.1398 -6.1398

+9.3384 +9.3384 -8.3384

+14.2796 +14.2796 -13.2796

+18.6768 +18.6768 -17.6768

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Summary
In the three sections above, we covered the three basic fundamentals of Market Mechanics. This can be
easily interpreted through Actor-Network Theory, where the Financial Markets can be algorithmically described as a
complex Network that contains a dynamic relationship between Actors and Actants.
In the first section, we went over the three primary Actors within the NYSE Market Model, primarily being
that of the Liquidity Providers. These Liquidity Providers, both Supplemental and Designated, facilitate Price-
Discovery within Retail participants through a means of controlling the Elasticity between the Supply of Liquidity
and the Demand of Orders. However, the Supplemental Liquidity Providers (A-HFT), being third-party Liquidity
Providers who are not obligated to maintain a fair market, engage in manipulatory practices to take advantage of this
Nonlinear Control provided by Market-Makers.
Price-Action is Chaotic at the beginning and end of a Change in the State of Delivery (Trend Shift). In this
exact moment, Price-Action is the most vulnerable to manipulation, as there are no algorithmic behaviors
contributing to the determinism of Price once the trajectory ends or before a new one has begun. This manipulation
is called a perturbation in Mathematics.
To visualize this. think of a ball sitting atop a hill. In order to make the ball roll down the hill, you may
need to give it a shove. Like fuel within a vehicle, Liquidity dictates the maximum trajectory of Price. The flow of
Orders are what dictate the velocity of Price.
Understanding who controls this Change in the State of Delivery, we can logically conclude that Liquidity
Providers determine the initial conditions of a trajectory. Therefore, with all of that being said, we should
theoretically be able to utilize the Manipulation of a Liquidity Provider to determine the next trajectory of Price. If
there is a proportional relationship between Manipulation and a trajectory, there should be a universal constant that
defines this relationship.
Using the universal constants of Chaos Theory, we arrive at the Feigenbaum value of 4.669. If there is
indeed a proportional relationship between Manipulation and Expansion, then Price should expand at a ratio
equivalent to the Feigenbaum value. Therefore, we can use this value as a multiplier for a given range, which is
where the Fibonacci Tool then comes into play.

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Resources
1. The NYSE Market Model: https://www.nyse.com/market-model
2. NYSE Liquidity Programs: https://www.nyse.com/markets/liquidity-programs
3. Orchestrating Chaos: http://www.nanex.net/aqck2/4045.html
4. Momentum Ignition Events: http://www.nanex.net/aqck/2950.html
5. Nanex Research Directory: http://www.nanex.net/FlashCrash/OngoingResearch.html
6. Comparing Time-Stamps: http://www.nanex.net/aqck2/4450.html
7. Speed-of-Light Latency (Fantaseconds): http://www.nanex.net/Research/fantaseconds/fantaseconds.html
8. Interpreting Nanex Data: http://www.nanex.net/aqck/QTSChartExplain/QTSequencer.html
9. Flash-Crash Detection with Nanex CEO: https://www.youtube.com/watch?v=f6q_QhsfPVk
10. Exploratory Trading Job-Market Paper (2013): http://www.nanex.net/aqck2/4136/exploratorytrading.pdf
11. Exploratory Trading Report (2014): https://www.aeaweb.org/conference/2015/retrieve.php?
pdfid=8651&tk=YaE6zR98
12. Level-1 and Level-2 Chaotic Systems: https://www.youtube.com/watch?
v=6OWdjz63fkg&list=PL7tPxNRY9_OpgBL7y6J-rN-mMcn3vXWHd&index=17
13. The Logistics Map: https://youtu.be/ovJcsL7vyrk
14. The Butterfly Effect (Video #1): https://www.youtube.com/watch?v=fDek6cYijxI
15. The Butterfly Effect (Video #2): https://youtu.be/aAJkLh76QnM
16. Sensitive Dependence on Initial Conditions: https://youtu.be/u9MBR4BCDv0
17. Laplace's Demon: https://www.youtube.com/watch?v=kLuUmYnTJCA
18. Dynamical Systems & Chaos Course: https://www.youtube.com/playlist?
list=PLF0b3ThojznQwpDEClMZmHssMsuPnQxZT
19. Complexity Course: https://www.youtube.com/watch?
v=Eo5oQ9Psmg8&list=PLF0b3ThojznRyDQlitfUTzXEXwLNNE-mI&pp=iAQB
20. Nonlinear Dynamics Course: https://www.youtube.com/watch?
v=MizhVorgywY&list=PLF0b3ThojznQ9xUDm-EbgFAnzdbeDVuSz&pp=iAQB

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