DislikedSome thoughts before I nap
The more I think about it the more I feel like correctly developing states is just as hard as correctly developing a good tool to map price.
For example your wave tool is created in such a way that each bar or wave, in order to register, has to be "significant"; a term which you ultimate had to define yourself.Ignored
To clarify;
1-The bars are created using a "significant" value, to determine the best range bar value to use.
2-The waves tool is generic at 1 period and is applied to the range bar chart(treat this as 1st level of price frame)
3-Wave lengths are then statistically extracted to determine what is the significant period to use
4-The wave tool is reapplied again using the significant period (treat this as 2nd level of price frame)
5-Repeat 3 and 4 to determine the next price frame level. Personally I stop at 3rd level.
DislikedI think a "correct" wave tool does the following:
-correctly maps price (not too much distortion of missing highs/lows)
-follows mechanical rules (RB/modded BS swings)
-offers the user a way to actually trade from them (ratios)
-offers a pattern (freq. dist./awareness of: number of continuation moves, trouble areas, make or break areas, areas of no return, turning points, etc).Ignored
DislikedAt a glance states run into the same issue of "tailored to fit". I think it's impossible to say that one persons classification of states is better than another's, although their states should match up in some scenarios (strong trends).Ignored
http://www.forexfactory.com/showthre...73#post5911673
Quoting iDoubleDislikedMarket Type 1: Vertical (Bullish, or Bearish)
Market Type 2: Horizontal (Channeling)
Market Type 3: Transitional (Unstable)
Everyone is familiar with a Type I and Type II market, and most Traders believe they have a strategy, tactic or a system for dealing with both types. However, the dominant market type is Type III. It is in effect a more higher percentage of the time than either Type I, or Type II. Thus, is behooves the Trader to understand the market that dominates every chart.
A Type III market condition is one where price itself is going through a shift in phase and momentum (either From or To) a Type I, or a Type II market. It is the market behavior just before the Horizontal channel is formed, and just before either the Bullish Vertical or Bearish Vertical is solidified.
Without a doubt, Type III is the most illusive market type to nail down with a degree of specificity, and it happens to be the market type where most Traders lose the vast majority of their capital. Only the Bermuda Triangle holds more mystery and more lost vessels.
Everyone is searching for the so-called "holy grail" of trading, yet precious few even know where the problem is located. The problem for the discovery of the "holy grail" is located in the Traders Bermuda Triangle, otherwise known as: The Type III Market.
Find a compass that enables you to circumnavigate the Traders Bermuda Triangle, and you will have found your "holy grail." More precisely - if you can know the Start and End points of the Type III Market, then you can know the Beginning and Ending of every "trend," and the Beginning and Ending of every "channel."
Impossible to know, you say? No. Not impossible. But, it is not simply sitting there on the superficial surface, just waiting for you to discovery its existence either.
The Transition Phase is the most important phase of Price Behavior in existence - bar none. Develop an indicator, or a set of indicators that helps you map that very specific price behavior, and you will discover a whole new realm of trading has just opened up to you, that you never knew existed before.
Hogwash, you say?
When you start developing a sequence of indicators that help you identify and measure the Transition Phase (Type III), then you will also discover a world of trading where the Hogs actually wash themselves and the horses run forever.Ignored
DislikedQuestion: What qualities are in a "correct" state? Likely something that answers "yes" to your two questions haha
I'm thinking this is something that one learns from actually creating states and working through them (aka the need from going from 3 states to 6? lol) but I feel like there are a couple of different sets one could use that would in theory work:
1. trend/expand/squeeze (with or without it's extensions)
2. moving/flat (exhale/inhale)
3. strong bullish/bullish->flat/ flat/bearish->flat/strong bear
etc and of course even if we were...Ignored
DislikedLastly perhaps BB isn't the way but I feel like you have to use averages in some fashion. After all, since price is in a state, it must be in a state compared to something else right? How else would you be able to tell the difference between an expand or flat, if it weren't for knowledge of previous sizes of said states? {image}Ignored