“Music, as long as it exists, will always take its departure from the major triad and return to it. The musician cannot escape it any more than the painter his primary colours or the architect his three dimensions.” – Paul Hindemith

The number three has a power. It has a power in natural systems and in financial systems. This is quite clear in investing and trading data sets, and systems we design. However three is subtle, often something we miss- at first.

The Golden Mean is an example of three or a derivative of three. It arose originally during the Renaissance from mathematicians such as Pythagoras and Euclid. Today we see its use in many areas ranging from geometry and engineering to the arts, particularly photography. It is an example of the Universal– something we discussed recently in the Renaissance Mind article.

The power of three is seen in theology. For example, ‘the Father, Son and Holy Ghost.’ Three or triads are used in writing, such as Rising Tricolon- the rising of tension in three ideas or words. In music triads are used in a set of three notes or pitch classes known as an Harmonic Triad. In nature, such as biology we can find triads of muscular or neuromuscular tissues.

In the financial markets, I have noticed triads in many areas over the years. We will discuss just a couple of examples to make this clear.

First, in the shape of waves in Technical Analysis. That is, charts of market price movements. Wave patterns often move in triads, such as: an up wave, a retracement or counter wave, and then an up wave again. Elliott Waves classically move in a main wave of 5, and then a secondary wave of 3. For example, for an uptrend:

  • Main Wave (5 moves): Up1, Retrace1, Up2, Retrace2, Up3, then usually consolidation or a major retracement or Secondary Wave.
  • Secondary Wave (3 moves): Down1, Retrace 1, Down2, then usually consolidation or a return to the main trend- uptrend in this example.

The power of three is clear in both the Main and Secondary Elliott Waves.

Second, in the design of trading or investing systems. For example, trading systems are often broken into two parts- Set up and then Entry. Within each part we have criteria and these often involve three core items. That is, if you have core rules or guidelines exceeding three in the Setup or Entry criteria, then the system tends to be too complex and it is likely to break down.

The power of three in nature and financial systems is an important insight. In nature three works. It financial data or systems, three works. Three is a clear guiding light- if you look for it. It often exists subtly, underneath more complex items. Three is a Universal. A light for simplicity. A light showing us the way to what works over long periods of time. A light moving us closer to perpetuality.

“Three is a Universal. A light for simplicity.”

By Lee Spano, Creatness International www.creatness.com 

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