Fractal Market Hypothesis

The Fractal Market Hypothesis suggests that financial markets are organized in a way that similar patterns rotate across different time scales, much like fractals in nature. It emphasizes that market behavior results from a diverse mix of investors with varying time horizons—from quick traders to long-term investors—creating complex, self-similar fluctuations. These patterns help explain why markets can appear chaotic yet often follow certain structures. Unlike traditional theories assuming perfect efficiency, this hypothesis recognizes the market's fractal nature, where short-term and long-term dynamics influence each other, leading to periods of stability and turbulence.