{"id":98646,"date":"2016-11-30T19:00:21","date_gmt":"2016-12-01T00:00:21","guid":{"rendered":"http:\/\/countingpips.com\/?p=98646"},"modified":"2016-11-23T19:00:41","modified_gmt":"2016-11-24T00:00:41","slug":"astronomy-and-financial-markets-is-there-any-connection","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/11\/astronomy-and-financial-markets-is-there-any-connection\/","title":{"rendered":"Astronomy and financial markets – is there any connection?"},"content":{"rendered":"
November 30, 2016<\/div>
\r\n<\/div><\/div>

By Admiral Markets<\/b><\/p>\n

<\/p>\n

Dear Traders,<\/p>\n

Biological and psychological research of the past suggests that lunar phases might affect human behaviour and mood.<\/p>\n

I am a price action trader who has never tested these claims in practise\u2026<\/p>\n

…but I do know some things and facts that I think connect astronomy to the stock market in general.<\/p>\n

Unlike astrophysics, the astronomy is a pseudo-science that is, nevertheless, used by many people in their business \u2013 most importantly, trading.<\/p>

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So let’s find out once for all.<\/p>\n

Are Forex and astronomy connected in anyway?<\/p>\n

Fibonacci and the golden ratio in nature<\/h2>\n

The origins of the Fibonacci sequence and golden ratio in Forex are well-known to the architects, artists and technical analysts.<\/p>\n

However, the importance of the golden ratio was recognised further back in ancient history, definitely as far as the Greeks\u2026<\/p>\n

…and, depending on which source is read, as far back as ancient Egyptians and Sumerians.<\/p>\n

However, evidence for the latter is tenuous at best.<\/p>\n

There are many volumes that look at the interesting properties and occurrences of
\nthis ratio in nature<\/a>.<\/p>\n

Some key examples of this are the famous nautilus shell chambers, the sunflower head seed pattern and a galaxy spiral.<\/p>\n

In architecture, the Parthenon of Phidias has a length\/width ratio that is seen as the epitome of classical proportion.<\/p>\n

In other art forms such as fresco and oil painting, these proportions are often seen in the works of Leonardo da Vinci and Salvador Dali.<\/p>\n

An even better example is a human ear \u2013 its length needs to be 1.618 greater than the width to be “in proportion.”<\/p>\n

This corresponds to the relationship between limbs and the ratio of the navel to the feet and total height, as seen in the works of Le Corbusier (Charles Edouard Jeanneret).<\/p>\n

Fibonacci and the golden ratio in Universe<\/h2>\n

<\/p>\n

New research on this subject claim that the golden ratio – 1.618 – can be applied not only to mathematics\u2026<\/p>\n

…but also to physics, chemistry, biology and the topology of space-time.<\/p>\n

Spiral galaxies such as our Milky Way also follow the familiar Fibonacci pattern.<\/p>\n

The Milky Way has several spiral arms, each of them a logarithmic spiral of about 12 degrees.<\/p>\n

As an interesting aside, spiral galaxies appear to defy Newtonian physics.<\/p>\n

As early as 1925, astronomers realised that, since the galaxy’s angular speed of rotation varies with distance from the center, the radial arms should curve.<\/p>\n

The impact of moon cycles on the market<\/h2>\n

\"diagram.jpg\"<\/h2>\n

Source:
\nwww.davidmcminn.com<\/u><\/a><\/p>\n

The diagram above shows the ecliptical position of the north node at the time of all major crises listed by Kindleberger (Appendix B, 1996) for the period 1755-1940.<\/p>\n

For crisis years with no given month, the north node is taken as occurring on July 1.<\/p>\n

For crises given as multiple months, the north node is timed midway between the first and the last crisis month.<\/p>\n

David McMinn<\/a> states that the concentration of the north node in the segments 0 – 45 Eo & 180 – 225 Eo for the timing of major financial crisis is probably linked with the equinox points 0 Eo\/180 Eo, where the celestial equator intersects the ecliptic.<\/p>\n

As the Moon’s nodes move retrograde (clockwise) around the ecliptic, major financial crises are most likely to happen in the few years prior to the lunar nodes reaching the equinoxes.<\/p>\n

Other studies suggest<\/a> the results for mean daily returns around the full moon
\nand the new moon dates from January 2004 to December 2010 can be seen in Table 3 and Table 4 after considering both financial crisis events.<\/p>\n

Specifically, the difference between stock returns of the new moon days and full moon days before and during the crisis are volatile, from around -50% and up to 97%.<\/p>\n

In Table 3, the overall mean daily returns around the new moon are higher, compared to the mean daily returns around the full moon\u2026<\/p>\n

…except for the country of Jordan.<\/p>\n

However, the results in Table 4 show that during the crisis the results for five countries, Argentina, Brazil, China, Malaysia and Mexico contradicted.<\/p>\n

The results of the effect of the lunar cycles
\n is not statistically significant<\/em> on the returns.<\/p>\n

<\/p>\n

Source: Jeeir.com<\/p>\n

How it works: Relation between lunar phases and human body<\/h2>\n

The human body is about 75 percent water and people often ask whether tides are at work inside us.<\/p>\n

The moon and the sun combine to create tides in the Earth’s oceans.<\/p>\n

In fact, the gravitational effect is so strong that our planet’s crust is stretched daily by these same tidal effects.<\/p>\n

The ocean on the side of Earth facing the moon gets pulled toward the moon more than the center of the planet does.<\/p>\n

This creates a high tide.<\/p>\n

On the other side of the Earth, another high tide occurs, because the center of Earth is being pulled toward the moon more than is the ocean on the far side.<\/p>\n

The result essentially pulls the planet away from the ocean.<\/p>\n

Tides are large-scale events, but within human body there is enough water to cause similar effects on a smaller scale.<\/p>\n

Let’s look at them below.<\/p>\n

Lunar phases and emotions in animals: The primal instinct<\/h2>\n

<\/h2>\n

For millennia, humans have wondered if the Moon pulls at us with something more than its reflected light.<\/p>\n

Pliny the Elder observed that, in combination with the Sun, the Moon draws up the tides.<\/p>\n

Pliny and his compatriots also argued that this lunar force \u2013 now known as gravity \u2013 pulls on the moisture in our bodies, within our watery brains.<\/p>\n

That can cause a misbehaviour with animals and some researchers have found that lion attacks on humans were most likely in the 10 days after the full moon.<\/p>\n

Other studies also suggested that:<\/p>\n

    \n
  1. rabbits might stay close to their burrows during the full moon, which they did<\/li>\n
  2. during a new moon in some parts of the world, coyotes howl as a group<\/li>\n
  3. cheetahs and Wild dogs seemed to be more active at night during moonlight<\/li>\n
  4. corals are releasing their gametes at once, a few days after the full moon<\/li>\n
  5. marine iguanas travel from their resting spots to graze for algae at low tide.<\/li>\n<\/ol>\n

    The conclusion of studies is that most species have the innate clock that works synchronous to the moon cycle\u2026<\/p>\n

    …even if the Moon is not visible.<\/p>\n

    How lunar cycles can affect human behaviour<\/h2>\n

    You’ve probably read many times before that full-moon nights are full of accidents, injuries and people in distress.<\/p>\n

    I want to underscore how important the effect on human emotions generally is and that
    \nmaybe<\/em>, in some sense, it can be connected to our subconscious patterns that are engraved within animals and humans alike.<\/p>\n

    You can call these patterns instincts.<\/p>\n

    So, can those instincts go haywire on lunar cycles?<\/p>\n

      \n
    1. In 2007<\/a>, senior police officers in Brighton announced that research had found a correlation between violent crime and the full moon.<\/li>\n
    2. In Sydney, psychiatric patients show similar levels of violence and aggression throughout the lunar cycle.<\/li>\n
    3. Meta-analysis of 37 studies found that the lunar effect accounted for less than 1% of variation in behaviourermed ‘lunacy’.<\/li>\n
    4. Bright light<\/a> of the full moon deprived people who were living outside, including many who had severe mental disorders, of sleep.<\/li>\n<\/ol>\n

      Finally, despite a persistent belief that our mental health and other behaviours are modulated by the phase of the moon\u2026<\/p>\n

      …there is
      \nno solid evidence<\/em> that human biology is in any way regulated by the lunar cycle.<\/p>\n

      On the other hand, it seems that it might affect the human behavioral pattern.<\/p>\n

      Some people can be more emotionally calm while other might appear ecstatic.<\/p>\n

      Lunar cycles and the Forex market are even more emphasised during the full moon due to potential changes in behavioural patterns of traders.<\/p>\n

      In that case, don’t forget the spiral of emotions and use the
      \n      volatility protection<\/a> when trading.<\/p>\n

      Your emotions are you worst enemy and if you can’t
      \n      control your emotions<\/a> you won’t succeed in trading.<\/p>\n

      \"spiral2.png\"<\/p>\n

      Trading Moon cycles and related folklore debunked?<\/h2>\n

      A deep study<\/a> comparing a Moon Phase Strategy (MPS) versus a Sit and Hold Investment strategy on US Equities showed mixed results during back-tested results.<\/p>\n

      The limitation of the study is that the index performance can be impacted by dividends paid out, which the study fails to recognise.<\/p>\n

      Nonetheless, the MPS strategy didn’t turn a negative result to a positive result during the bear year of 2008.<\/p>\n

      The conclusion is that markets are driven by financial facts and expectations\u2026<\/p>\n

      …rather than by the motion of celestial bodies.<\/p>\n

      The exception can be a proof that financial developments in macro and micro scale are caused by the motion of celestial bodies.<\/p>\n

      We haven’t seen that study ever since.<\/p>\n

      I have been a long time member of the
      \n      Forex Factory<\/a>.<\/p>\n

      There, I’ve seen many threads devoted to, for example,
      \n      astro trading<\/a> and planetary cycles trading<\/a>.<\/p>\n

      Feel free to navigate and find if this kind of trading can be beneficial for you.<\/p>\n

      Conclusion: Astronomy impact on Forex and Financial markets<\/h2>\n

      As cosmos impacts the earth, there are still handful of techniques to keep your psyche in check and refrain from reckless decision making caused by cosmic activity.<\/p>\n

      After all, what I have been trying to show is that the lunar cycles
      \ncannot<\/em> determine the outcome of Forex and stock trading\u2026<\/p>\n

      …but they may affect the
      \nindividual mood and thinking<\/em>, which may lead to changes in the stock market.<\/p>\n

      From a trader’s perspective, it is clear to me that further research is required in the field of
      \nbehavioral<\/em> finance to examine the relationship between lunar cycle and investor behavior.<\/p>\n

      Cheers and safe trading,<\/p>\n

      Nenad<\/p>\n

      \"Admiral<\/a>
      \nArticle by Admiral Markets<\/b><\/p>\n

      Source: Astronomy and financial markets – is there any connection?<\/a><\/p>\n

      \n

      <\/a><\/p>\n

      Admiral Markets is a leading online provider, offering trading with Forex and CFDs on stocks, indices, precious metals and energy.<\/p>\n

       <\/p>\n","protected":false},"excerpt":{"rendered":"

      By Admiral Markets Dear Traders, Biological and psychological research of the past suggests that lunar phases might affect human behaviour and mood. I am a price action trader who has never tested these claims in practise\u2026 …but I do know some things and facts that I think connect astronomy to the stock market in general. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-98646","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=98646"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98646\/revisions"}],"predecessor-version":[{"id":98652,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/98646\/revisions\/98652"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=98646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=98646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=98646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}