In Mandelbrot multifractal modeling, trading time is a nonuniform transformation of clock time that concentrates modeled price variation into turbulent intervals.

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for all the world, appear predictable and bankable. But a financial market is especially prone to such statistical mirages. My mathematical models can generate charts that—purely by the operation of random processes—appear to trend and cycle. They would fool any professional “chartist.” Likewise, bubbles and crashes are inherent to markets. They are the inevitable consequence of the human need to find patterns in the patternless. ### Rule V. Market time is relative. There is what one may call a relativity of time in financial markets. Early on, but mostly when developing the multifractal model, I came to think of markets as operating on their own “trading time”—quite distinct from the linear “clock time” in which we normally think. This trading time speeds up the clock in periods of high volatility, and slows it down in periods of stability. Mathematically, I can write an equation showing how one time frame relates to the other and use it to generate the same kind of jagged price series that we observe in real life. This is how the successful forgery shown among the previous charts was made. It is almost as if dealing rooms need, besides the standard row of wall-clocks showing the time in Tokyo, London, and New York, a fourth clock showing “Greenwich Market Time.”

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There is what one may call a relativity of time in financial markets. Early on, but mostly when developing the multifractal model, I came to think of markets as operating on their own trading time, quite distinct from the linear clock time in which we normally think. This trading time speeds up the clock in periods of high volatility and slows it down in periods of stability. Mathematically, I can write an equation showing how one time frame relates to the other and use it to generate the same kind of jagged price series that we observe in real life. This is how the successful forgery shown among the previous charts was made. It is almost as if dealing rooms need, besides the standard row of wall clocks showing the time in Tokyo, London, and New York, a fourth clock showing Greenwich market time. This last point highlights an important subtext of this book. Market professionals know far more than they even realize.