Today LIGO announced discovery of Gravitational waves. What method was used to determine the source location of the waves?
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According to their paper, the source location was primarily determined by the 6.9 ms difference in arrival time between LIGO's two detectors. Since the speed of propagation of the gravitational wave is known (gravitational waves travel at the speed of light), the known difference in arrival time narrows down the source direction to being along a particular circle.

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1Gabriel, see page 3 of the paper where you can read this: "With only two detectors the source position is primarily determined by the relative arrival time and localized to an area of approximately 600 deg² (90% credible region) [39,46]." – John Duffield Feb 11 '16 at 21:05
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3That cannot be the entire story, since the attributed location (under 'Sky Location' in the LIGO Open Science Center page) is significantly localized within that circle. Presumably the polarization of the wave, and its interaction with the different orientations of the detectors, give further information about the propagation direction, but it would be good to hear from an expert about how this works exactly. – Emilio Pisanty Feb 13 '16 at 21:03