Ocean Theory came out of the question, "Is there some way to look at financial markets that does not involve arbitrary input?"
In the late '80's and early 90's Jim worked out the basic core of Ocean Theory. Building upon this core, various structures have followed, and research is continuing along several avenues up to the present. The theory provides tools for trading and investing, and also offers intellectual insights into the nature of markets as well.
Jim noticed that every approach to markets involved some arbitrary input somewhere. To take a simple example, to construct a moving average you have to specify the number of days in the moving average, thus framing the window through which you'll see the market. A 5-day moving average looks much different than a 200-day one.
To take a slightly more sophisticated example, to use an exponential moving average you still have to provide a constant for the exponential, whether it's 0.1 or 0.5 or whatever, and this arbitrary input in turn drastically alters what you see. Then there are various methods to get moving averages to adjust themselves.
In contrast, Ocean uses what's known as the "natural moving average," which dynamically adjusts itself to the market but without being programmed to do so. One way of looking at it is that this is the market's own average of itself. It's remarkable to see.
But the NMA (the natural moving average) is a small part of Ocean. There is also the NMM (the natural market mirror), the NMR (the natural market river) and many other components, all derived from the core foundation of the theory.
The theory allows you to compare—in absolute terms— various different markets in a totally "apples to apples" way. It can directly compare time frames and tell you how long to expect to be in a trade when you enter it.
Or, for instance, if a market has moved up for awhile and then down (or the reverse), the theory can tell you if this is likely to be a retracement in a trend or the beginning of a new trend. It can do this in any time frame.
The theory adapts itself to any style of trading, whether long-term position trading, swing trading or day trading.
Go back to Ocean Theory.
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