Introduction

Dr. Glen Brown’s Nine-Laws Framework treats markets as open quantum systems. Law 1: Correlation Regime Transition (CRTL) senses “phase shifts” in volatility and correlation via λ = DAATS ÷ |Corr| and dynamically widens stops only when regimes truly change. In Strategy 1: Global Momentum Scalper, GATS exploits swift micro-trends on M1 (confirmed through M5, M15, M30) using:

• Color-coded EMA zones
• Heiken Ashi Smoothed (HAS) candles & time bars
• MACD & Global GMACD
• DAATS & MEMH overlays
• ITrend, ADX, PATS-Stop confirmations

Below you’ll find:

• Definitions of all indicators and their quantum analogies
• Derivation & implementation of Law 1’s dissipator logic
• Full default entry/exit/stop-loss/profit-target rules
• “Quantum Narratives & Observer Effect” section
• GATS configuration snippet
• Live EURUSD case study
• Calibration guidance, best practices, and a glossary

1. Core Definitions & Concepts

1.1 Color-Coded EMA Zones

• Momentum Zone: EMA 1–8 (Lime Green)
• Acceleration Zone: EMA 9–15 (Medium Sea Green)
• Transition Zone: EMA 16–25 (Pale Green)
• Value Zone: EMA 26–50 (Light Gray)
• Correction Zone: EMA 51–89 (Light Coral)
• Trend Reassessment Zone: EMA 90–140 (Salmon)
• Long-Term Zone: EMA 141–200 (Brick Red)

1.2 HAS Candles & Time Bars

HAS candles average OHLC to filter noise: Blue bull, Red bear. HAS time bars color the background on M1, M5, M15 for trend clarity.

1.3 MACD & Global GMACD

• MACD: Fast 15, Slow 25, Signal 8
• Global GMACD: Ensemble across M1→M43200; all three components (Signal, Trend, Major) must align.

1.4 DAATS & MEMH

• DAATS: Stop = Multiplier × ATR(n), where n = EMA-zone boundary (8,15,25,50,89,140,200); Multiplier = 15–16
• Death-Stop Anchor: Intraday trades anchor at M60/M1440 DAATS = 16 × ATR(1440)
• MEMH: Market Expected Moves Hypothesis = 0.6375 × DAATS
• Break-Even Point: BEP = 0.32875 × MEMH (32.875% of MEMH)

1.5 Confirmatory Indicators

• ADX Wilder: ADX ≥ 18 → strong trend
• ITrend: Heiken Ashi–based oscillator; Green > Red → bullish momentum
• PATS-Stop: Minor support/resistance; below price = buy zone, above = sell zone

1.6 Risk & Reward

• Risk per trade: 0.01%–1% of equity
• Profit target: 5 × StopDistance (→75×ATR(n) or 80×ATR(n))

2. Law 1: Correlation Regime Transition (CRTL)

Purpose: Detect genuine regime shifts—pause new entries and widen stops only when volatility & correlation jointly spike.

2.1 Formulation

λ = DAATS ÷ |Corr|
if λ > λ_c:
  StopMultiplier = 1 + γ₁·(λ − λ_c)
  PauseEntries = true
else:
  StopMultiplier = 1
  PauseEntries = false

• λ_c = 1.5
• γ₁ = 0.2 (tune 0.1–0.3)
• Corr = 50-bar Pearson corr of M1 returns vs volatility proxy

2.2 Implementation Steps

1. Identify current EMA zone; set n = zone boundary.
2. Compute ATR(n) and DAATS = Multiplier × ATR(n).
3. Compute Corr and λ = DAATS ÷ Corr.
4. If λ > 1.5, StopDistance = DAATS × [1 + 0.2·(λ−1.5)] and pause entries until λ ≤ 1.5 for 3 bars.

3. Strategy 1: Global Momentum Scalper Defaults

3.1 Buy Criteria

1. Price in bullish EMA zone (above EMA 8 or 15).
2. HAS candles & time bars (M1–M30) are Blue.
3. ITrend: Green > Red.
4. ADX ≥ 18.
5. GMACD (all three) bullish.
6. PATS-Stop below price.
7. λ ≤ 1.5.

3.2 Sell Criteria

1. Price in bearish EMA zone (below EMA 25 or 50).
2. HAS candles & time bars Red.
3. ITrend: Green < Red.
4. ADX ≥ 18.
5. GMACD bearish.
6. PATS-Stop above price.
7. λ ≤ 1.5.

3.3 Stop-Loss & Profit-Target

• Base Stop: DAATS = 15 × ATR(n) (or 16 × ATR(n))
• Adjusted Stop: ×[1 + 0.2·(λ−1.5)] when λ > 1.5
• Death-Stop Anchor: M60/M1440 DAATS = 16 × ATR(1440)
• Profit Target: 5 × StopDistance
• Break-Even: 0.32875 × MEMH

3.4 Quantum Narratives & Observer Effect

Our GATS engine is the market’s quantum observer. Each indicator sample (EMA cross, HAS color, ADX reading) is a measurement operator collapsing price superpositions into a single outcome. A sudden regime shock (λ > 1.5) acts as a Lindblad-style decoherence channel, extinguishing minor fluctuations and preserving only the dominant trend.

• Measurement Operators: Indicators project the market state into actionable signals.
• Entanglement: Multi-timeframe confirmations (M1 & M5 acceleration zones) require joint measurement.
• Decoherence: Regime thresholds rapidly remove micro-noise, enforcing trend purity.
• Observer Effect: Executing orders alters liquidity—your measurement shapes the future state.

4. Superposition Scalping: Synthesis

“Superposition Scalping” merges Law 1’s regime-sensitive stops with Strategy 1’s micro-momentum entries. Trades enter only under λ ≤ 1.5 with tight DAATS stops. If λ spikes, stops widen—keeping positions alive until profit target or widened stop executes. Entry pauses avoid whipsaws during shocks.

4.1 GATS Configuration Snippet

// EMA Zone ATR Periods
EMA_ZONES = [8,15,25,50,89,140,200];
DAATS_MULT = 15;

function onBar(M1) {
  let zone = getEMAZone();
  let atr  = ATR(zone);
  let daats = atr * DAATS_MULT;
  let corr = Math.abs(correlation(returns, volProxy, 50));
  let lambda = daats / Math.max(corr,0.001);

  let canEnter = (lambda <= 1.5 && barsSinceShock >= 3);
  if (globalBuy() && canEnter)  enterLong();
  if (globalSell() && canEnter) enterShort();

  if (inPosition()) {
    let stopDist = daats;
    if (lambda > 1.5) {
      stopDist *= (1 + 0.2*(lambda - 1.5));
      barsSinceShock = 0;
    }
    setStopLoss(stopDist);
    setProfitTarget(stopDist * 5);
    setBreakEven(0.32875 * (0.6375 * daats));
  }
}

5. Live EURUSD Case Study

Date: July 28, 2025 | Timeframe: M1 (anchor M60)
Equity: $100 000

5.1 Pre-Trade Conditions

• Price in Acceleration Zone (n=15; ATR=0.00012)
• DAATS = 15×0.00012 = 0.00180 (18 pips)
• Corr = 0.6 ⇒ λ = 0.00180÷0.6 = 0.0030 (<1.5)
• HAS blue, ADX=22, ITrend green>red, GMACD bullish, PATS below price

5.2 Execution & Shock

1. 10:15 ET – Conditions met → Enter Long @ 1.0960.
2. Initial stop = 18 pips (1.0942); target = 90 pips (1.1050).
3. 10:18 – Vol spike: ATR→0.00025; DAATS→0.00375; Corr→0.5 → λ=0.0075 (>1.5):
   New stop = 18×[1+0.2×5]≈36 pips (1.0924).
4. Position remains “in superposition” and hits target → **+90 pips**.

5.3 Results

• Profit: 90 pips ($900)
• Max adverse excursion: 36 pips
• Risk ≤ 0.5% equity

6. Calibration & Best Practices

Backtest λ_c (1.2–1.8) and γ₁ (0.1–0.4) over 6–12 months with heatmaps for Sharpe vs. max drawdown. Validate EMA-zone ATR periods per asset class. Ensure volatility proxy alignment. Always anchor intraday stops on M60/M1440 to avoid spread noise.

7. Glossary of Key Terms

• ATR(n): Average True Range over n bars.
• DAATS: ATR-based trailing stop scaled by quantum rules.
• λ (Lambda): Regime factor = DAATS ÷ |Correlation|.
• Superposition: Coexisting stop scenarios until measurement.
• Entanglement: Joint conditions across timeframes.
• Decoherence: Rapid suppression of micro-noise after shock.
• Observer Effect: Algorithmic actions altering market state.

8. Conclusion

“Superposition Scalping” merges Law 1’s CRTL dissipator with the Global Momentum Scalper’s full default logic, offering tight control in calm regimes and resilient survival through sudden shocks. By making GATS the quantum observer, you collapse market superpositions into precise, profitable outcomes.

About the Author

Dr. Glen Brown is President & CEO of Global Accountancy Institute, Inc. and Global Financial Engineering, Inc., with 25+ years in proprietary trading, algorithmic systems, and risk engineering. He holds a Ph.D. in Investments & Finance and created GATS and the Nine-Laws Framework.

Business Model Disclaimer

Global Accountancy Institute and Global Financial Engineering operate as closed proprietary trading firms. No external advisory or trading services are provided.

Risk Disclaimer

Trading involves substantial risk. Past performance does not guarantee future results. Use these strategies only within well-defined risk parameters and professional oversight.

Published July 31, 2025

#SuperpositionScalping #Law1 #GlobalMomentumScalper #QuantumRisk #GATS #DrGlenBrown