written by Sergey Tarassov
Scaling definitions
Let's start with the definition of price chart scaling. We can use this definition: this is a procedure of finding the appropriate parameters for paper that is used to show this price chart. The classical example of well scaled price chart is the Gann's soy beans chart; it is scaled $8 per inch and 8 trading days per inch (this chart is proportionally decreased in size for a better view) :
You can see that W.D. Gann used trend lines here with inclination 45 (1x1), 63 (2x1), 26 (1x2), 75 (4x1), 14 (1x4) degrees - let's call these angles Gann angles; the whole price chart is constructed from these trend lines. The price chart scaled this way $8 per inch, 8 trading days per inch - makes these trends clear. Your eyes, your brain easly see these trends. Like paper helps you to read this price chart, the grid here is not just a simple grid; it provides some information regarding the trend. This is convenient environment for your eyes/brain. If we modify price scale a bit, it smashes the picture:
or this:
From the point of view of a mathematician, these trends are still present here, but your eyes/brain feel more comfortable with the first chart.
Scaling Key definition
In this particular case, trend lines based on Gann angles play the main role. IMHO the legend of this kind of scaling may be decribed this way: reveal dominant trends in the price chart and try to modiy the paper parameters to make these trends coincide with Gann angles. Later we will call this procedure: Scaling based on Gann angles or Scaling Key = Gann angles
Paper Price/Time ratio (P/T) definition
We need one more definition for our further work - Paper P/T ratio or P/T ratio. Suppose we have some price chart, we draw 45 digrees line there and calculate a ratio between the price and time increment alongside this trend line. Like in tis example, 45 degrees line represents P/T ratio $1 per 1 trading day or P/T=1 $/d:
For example, 51 trading days correspond to $51 price increment. De facto, the process of scaling can be considered as a procedure of finding appropriate paper P/T ratio.
Now let's show how to conduct scaling procedure with Timing Solution. The examples below show the scaling of your price chart with several scaling keys:
Example #1:Scaling Key=Gann angles
Now