Quantum Uncertainty by Kingshuk Ghosh

Let me explain this indicator in simple, practical terms, including the fascinating physics concept that inspired me.
This indicator helps to understand when the market is predictable (safe to trade) versus unpredictable (risky to trade). It shows the probability zones where price is likely to move and warns you when conditions are too chaotic for reliable trading.

The Physics Behind It: Heisenberg's Uncertainty Principle:-
This indicator is inspired by one of the most profound discoveries in physics: Heisenberg's Uncertainty Principle.
What Is The Uncertainty Principle?
In 1927, physicist Werner Heisenberg discovered something remarkable about the universe: you cannot simultaneously know both the exact position and exact momentum of a particle with perfect precision. The more accurately you know one, the less accurately you can know the other.
Simple Analogy:
Imagine trying to photograph a speeding bullet:

Use fast shutter speed → You see exactly WHERE it is (position), but the image is frozen, so you can't tell HOW FAST it's moving (momentum)
Use slow shutter speed → You see motion blur showing HOW FAST it's moving (momentum), but you can't pinpoint exactly WHERE it is (position)

You can never have both perfect clarity simultaneously - there's always a trade-off.
How This Applies To Trading
The indicator translates this principle to financial markets:
In Physics:

Position Uncertainty × Momentum Uncertainty = Always greater than a minimum value
High uncertainty in one means high uncertainty overall

In Trading:

Price Position Uncertainty = How much the price bounces around (volatility)
Price Momentum Uncertainty = How erratic the directional strength is
Total Market Uncertainty = Price Volatility × Momentum Volatility

The Trading Insight:
Just like in physics, when BOTH price position and momentum are uncertain (highly volatile), the market becomes fundamentally unpredictable. You can't reliably know where price will go next because the system is in high uncertainty state.
Why This Matters For You
Traditional indicators often look at price OR momentum separately. This indicator recognizes that both must be considered together to truly understand market predictability, just as Heisenberg showed that position and momentum must be considered together in physics.
When both uncertainties are high simultaneously:

Price could jump anywhere
Momentum could shift instantly
Predictions become unreliable
Trading becomes gambling

When both uncertainties are low:

Price behavior is more regular
Momentum is more stable
Patterns become clearer
Trading becomes strategic

This is why the indicator's core metric multiplies price volatility by momentum volatility - it's capturing that fundamental uncertainty relationship.

Market Uncertainty
The indicator calculates how unpredictable the market currently is by examining:

How much price is bouncing around (price volatility)
How erratic the momentum is (momentum instability)

When both are high simultaneously, the market becomes highly unpredictable. When both are calm, the market is more reliable for trading.
Think of it like driving:

Low uncertainty = Clear road, good visibility, safe to drive
High uncertainty = Fog, rain, poor visibility, dangerous conditions

Probability Bands
The indicator draws colored bands around a central average price line:
White Center Line (Basis)

The average price over your lookback period
Acts as a equilibrium point where price gravitates

Blue Bands (Inner Zone)

Covers about 68% of normal price behavior
Price spends most of its time here
This is the "normal operating range"

Purple Bands (Outer Zone)

Covers about 95% of all price behavior
Price rarely ventures here
When it does, it's unusual and noteworthy

Highway Lane Analogy:

Most drivers stay in center lanes (blue zone)
Few drivers use extreme outer lanes (purple zone)
When someone drives on the shoulder, it's abnormal and signals something is happening

Wave Function Collapse
Another physics concept applied here: In quantum mechanics, particles exist in multiple states simultaneously (superposition) until they're measured - then the "wave function collapses" to a single state.
In This Indicator:
The probability bands represent all the possible states price could be in. When price moves and settles at a specific level, it's like the wave function collapsing - probability becomes reality.
The indicator helps you see:

Where price is most likely to be (high probability zones - blue bands)
Where price rarely goes (low probability zones - purple bands)
When price is in an "impossible" state (outside bands - tunneling)

Price Position
The indicator tracks where current price sits within these bands:

Upper position = Price in the top half (bullish territory)
Lower position = Price in the bottom half (bearish territory)
Extreme positions = Price in outer 30% on either side (potential reversal zones)

Quantum Tunneling Signals
This is another physics concept: In quantum mechanics, particles can sometimes "tunnel" through barriers that classical physics says they shouldn't be able to cross.
In Trading:
When price breaks through the 95% probability barrier, it's "tunneling" into statistically improbable territory - these are marked by triangles:
Green Triangle Up

Price tunneled through the upper 95% barrier
This is statistically rare (happens only 5% of the time)
Often signals price exhaustion or coming reversal downward
Like a particle that tunneled too far and will snap back

Red Triangle Down

Price tunneled through the lower 95% barrier
Also statistically unusual
Often signals panic selling may be overdone
Like a spring compressed too far, ready to bounce

These "tunneling events" are significant because they represent extreme deviations from normal probability - and markets tend to revert to normal.
Entanglement Score
In quantum physics, "entanglement" means two particles are connected such that measuring one instantly affects the other, no matter the distance.
In Trading:
This measures whether price movements are "entangled" with trading volume - do they move together in a connected way?
High Entanglement (above 0.5)

Price and volume move together
Volume confirms the price action
More reliable, trustworthy moves
Like entangled particles - they're truly connected

Low Entanglement (below 0.3)

Price moves without volume support
Suspicious, unsupported movements
Less reliable, be cautious
Like particles that aren't entangled - the connection is weak

Negative Entanglement

Price and volume move in opposite directions
Often signals divergence or potential reversal
Requires careful interpretation


Information Dashboard:
1. Uncertainty Level
Shows current market unpredictability (the core Heisenberg principle calculation):

✓ Normal (Green) = Market is behaving predictably, safe to trade
⚠ High Risk (Red) = Market is chaotic, avoid trading

This is your first checkpoint - if uncertainty is high, don't proceed further.
2. Probability Score
Shows how normal or extreme the current price is:

Percentage shown = Where price sits in the probability distribution
✓ Safe (Green) = Price in normal range (middle 70%)
⛔ Extreme (Red) = Price at statistical outliers (outer 15%)

High percentage (>85%) = Price near the average, stable situation
Low percentage (<15%) = Price at extremes, unstable situation
3. Position Indicator
Tells you which side of the market you're on:

Upper/Lower = Basic location in the bands
→ Neutral (Gray) = Price in balanced middle zone
⚠ Reversal? (Orange) = Price at extremes, watch for turnaround

This helps you anticipate potential support or resistance levels.
4. Entanglement Confirmation
Shows the correlation number and interpretation:

✓ Confirmed (Green) = Volume strongly supports price (>0.5)
⚠ Weak (Orange) = Poor volume support (<0.5)

Always prefer trading when entanglement is confirmed - it means the move is "real" with participant backing.
5. Trade Status - YOUR MAIN SIGNAL
This is the indicator's final verdict combining all factors:
✓ TRADEABLE (Green)

Uncertainty is normal
Probability is safe
Entanglement is decent
Action: Market conditions favor trading

⛔ AVOID (Red)

One or more conditions are unfavorable
Market is too unpredictable
Action: Stay out, preserve capital.


Scenario A: Perfect Buy Setup

Red triangle appears (quantum tunneling down)
Position shows "Lower" with "⚠ Reversal?" warning
Entanglement shows "✓ Confirmed"
Trade Status: "✓ TRADEABLE"
Interpretation: Price hit extreme low with volume support, likely to bounce back to probability zone
Action: Consider long entry with stop below recent low

Scenario B: Perfect Sell Setup

Green triangle appears (quantum tunneling up)
Position shows "Upper" with "⚠ Reversal?" warning
Entanglement shows "✓ Confirmed"
Trade Status: "✓ TRADEABLE"
Interpretation: Price hit extreme high, exhaustion in high uncertainty zone
Action: Consider short entry or exit longs with stop above recent high

Scenario C: High Uncertainty - Stay Out

Uncertainty shows "⚠ High Risk"
Probability shows "⛔ Extreme"
Trade Status: "⛔ AVOID"
Interpretation: Both price and momentum uncertainties are high - market is fundamentally unpredictable (Heisenberg principle in action)
Action: No trading, wait for uncertainty to decrease

Scenario D: Trending Market

Price consistently stays in upper bands
No tunneling signals
Entanglement remains high
Trade Status stays "✓ TRADEABLE"
Interpretation: Strong trend with low uncertainty
Action: Trade with the trend, don't fight it

Scenario E: Choppy, Range-Bound

Price bounces between inner blue bands
Frequent status changes between TRADEABLE and AVOID
Entanglement fluctuates
Interpretation: Market lacks direction, uncertainty fluctuating
Action: Use bands as support/resistance for scalping, or wait for breakout.

Why The Uncertainty Principle Matters In Trading
Traditional technical analysis often looks at indicators in isolation:

"RSI is oversold, so buy"
"Price is volatile, so wait"
"Volume is high, so trade"

But Heisenberg's principle teaches us that multiple uncertainties interact and compound. This indicator recognizes that truth:
When price volatility is high AND momentum is erratic:

You can't reliably predict where price will go
You can't reliably predict how strong the move will be
The combination creates fundamental unpredictability
This is when the indicator says "AVOID"

When price volatility is low AND momentum is stable:

Price behavior becomes more regular
Directional moves become more reliable
The low combined uncertainty creates tradeable conditions
This is when the indicator says "TRADEABLE"

The Probability Wave Function
In quantum mechanics, until you measure a particle, it exists in all possible states simultaneously (superposition). The probability wave describes where it's most likely to be found.
The bands work the same way:

Blue bands = Where price has 68% probability of being (1 standard deviation)
Purple bands = Where price has 95% probability of being (2 standard deviations)
Outside bands = Less than 5% probability (quantum tunneling territory)

When price is in the blue zone, it's in its "natural" superposition state - normal behavior.
When price tunnels outside, it's in an "improbable" state - like a quantum particle appearing where it shouldn't be. Physics tells us this can't last - the wave function will collapse back to normal probability zones. In trading, this means reversion to the mean.
Entanglement and Market Correlation
Quantum entanglement shows us that connections matter - particles don't act in isolation.
In markets:

Price shouldn't move in isolation from volume
When they're "entangled" (moving together), the move is authentic
When they're not entangled (price moves without volume), the move is suspicious

This is why the indicator checks entanglement - it's verifying that the market components are properly connected and confirming each other.

Golden Rules for the indicator:

Never trade during high uncertainty states - When the indicator shows AVOID, it's telling you that fundamental unpredictability (Heisenberg's principle) has taken over. This is non-negotiable.
Reduce position size when entanglement is weak - Even if uncertainty is low, weak volume entanglement means the move may not be authentic.
Respect the quantum tunneling signals - They mark statistical extremes where price has entered improbable territory. Reversion to normal probability zones is likely.
Don't chase price outside the bands - If you missed the tunneling entry, wait for price to return to normal probability zones.
Use the white center line as equilibrium - Like particles gravitating toward lower energy states, price tends to revert to its average.

Heisenberg's Uncertainty Principle teaches us a profound lesson: some things are fundamentally unknowable. You cannot eliminate uncertainty - you can only measure it and decide whether it's low enough to act.
This indicator embraces that wisdom:

It doesn't claim to predict the future
It doesn't promise guaranteed wins
It simply measures current uncertainty
And tells you when conditions are favorable vs. unfavorable

The market, like quantum particles, is probabilistic, not deterministic. You're trading probabilities, not certainties. The indicator helps you identify when those probabilities are in your favor (low uncertainty) and when they're not (high uncertainty).
This is a more mature, realistic approach to trading than indicators that promise to "predict" moves. Instead, this indicator honestly assesses predictability itself.

Remember: Not trading during high uncertainty is just as important as trading during low uncertainty. Preservation of capital is the foundation of long-term success. As Heisenberg taught us, some moments are simply too uncertain to act - and that's okay.

Chart attached: -NSE Persistent, EoD 05/12/25, Day Time Frame.
DISCLAIMER: This information is provided for educational purposes only and should not be considered financial, investment, or trading advice. Please do boost if you like it. Happy Trading.