Financial market geometry: The tube oscillator

ArXiv ID: 2407.08036 “View on arXiv”

Authors: Unknown

Abstract

Based on geometrical considerations, we propose a new oscillator for technical market analysis, the tube oscillator. This oscillator measures the trending behavior of a fixed market instrument based on its past history. It is shown in an empirical analysis of the German DAX and the Forex EUR/USD exchange rate that a simple trading strategy based on this oscillator and fixed threshold leads to consistent positive monthly returns of average magnitude of 2% or more. The oscillator is derived from a broader understanding of the geometric behavior of prices throughout a fixed period, which we term financial market geometry. The remarkable profit results of the presented technique show that 1) prices of financial market instruments have a strong underlying deterministic component which can be detected and quantified with a matching approach and 2) financial market geometry is capable of providing such detectors.

Keywords: tube oscillator, financial market geometry, technical analysis, trading strategy, deterministic component, Equities (German DAX) & Forex (EUR/USD)

Complexity vs Empirical Score

  • Math Complexity: 4.0/10
  • Empirical Rigor: 6.0/10
  • Quadrant: Street Traders
  • Why: The paper introduces a geometric oscillator with relatively simple linear algebra and geometric concepts, lacking advanced stochastic calculus or rigorous statistical inference. However, it provides backtest-ready trading rules and reports consistent positive returns (2%+ monthly) on real financial data (DAX, EUR/USD) over empirical analysis.
  flowchart TD
    A["Research Goal<br>Find deterministic component<br>in financial markets"] --> B["Concept: Financial Market Geometry"]
    B --> C{"Data: DAX & EUR/USD<br>Historical Prices"}
    C --> D["Compute Tube Oscillator"]
    D --> E{"Test: Fixed Threshold<br>Trading Strategy"}
    E -->|Trading Signal| F["Simulate Trades"]
    F --> G["Outcomes: Consistent<br>Positive Monthly Returns<br>Avg 2%+"]
    G --> H["Conclusion: Prices have<br>deterministic component<br>detectable via geometry"]