Mandelbrot recognized this fact and showed that all chaotic systems have gaps and that they need to be described using Paretian statistics. Quantum Effects in Markets Another behavior of markets is that they show a clear quantum effect. Quantum systems have many balance states. In the structure of the atom, the electrons can exist in several different energy bands. Movement between these bands is quick and chaotic.
Prices also make quick moves between energy states.
These balance states occur in multiples of 18 points. Notice that around those levels prices tend to congest. Also notice that between those levels the transitions are often quite abrupt. This is further evidence that markets behave in a chaotic nature. A trader can use knowledge of these balance states to stay out of the market until the balance is broken, then enter the market during the transition from one energy band to the next.