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Trading Focal Points -- "A Leap Of Faith"...

  • #41
  • Mar 23, 2022 4:17am Mar 23, 2022 4:17am
Thank you for the thread i have searched all around forexfactory for focal points, but i was still lost till i came here... i follow this thread diligently and efficiently... once again thank you..
  • #42
  • Mar 23, 2022 4:20am Mar 23, 2022 4:20am
Quoting apples1978
Using the DSS Bressert.ex4 as a possible over sold / brought indicator to show your swinging back to the target point?
You're not getting it. Don't try to shoe-horn the Focal Points algorithm into your existing shoes. Set aside market structure, over sold / bought, support / resistance, supply demand, whatever. Set aside your biases and re-read my initial posts until the light bulb goes on.
  • #43
  • Mar 23, 2022 4:25am Mar 23, 2022 4:25am
Quoting FundedCoffee
I would think from just observing that there might be a need to further seperate focal points into major and minor focal points. The big yellow circled are major focal points The squares are minor focal points Would that make sense? @Pairsboy @Robots4me I am closely following this Thread but I likely wont write much, I know that I dont know anything about this. I might ask some stupid questions here and there though if it doesnt disturb the Thread.
I know what you mean -- and we can address that shortly. For sure some Focal Points are prettier than others -- though I'm not sure of the value of categorizing them by strength. There is a lot of discretion here. They are new to me, as well. But the more I look at charts then the easier it is to spot them and decide which guesstimated Target Prices I'll take a stab at.
  • #44
  • Edited 4:48am Mar 23, 2022 4:32am | Edited 4:48am
Quoting FundedCoffee
I would think from just observing that there might be a need to further seperate focal points into major and minor focal points. The big yellow circled are major focal points The squares are minor focal points Would that make sense? @Pairsboy @Robots4me I am closely following this Thread but I likely wont write much, I know that I dont know anything about this. I might ask some stupid questions here and there though if it doesnt disturb the Thread.
even stupid questions have to be answered

this allows me (and others) to deepen their analysis and knowledge of the tools and methodology

there are 2 kinds of "stupid " questions : the real ones and the false positive

example of "false positive" -" in your message 222 you wrote such statement which seems different and slightly contradictory with what you wrote in your message 111"

or " Hurst wrote this table in Profit Magic page 57 (see table) I have not understood why he choosed etc" which shows that you have read Profit Magic, at least page 57.

it is not a "stupid" question, it is asking for precision

example of real stupid questions :

hello. it seems very interesting. Could you summarize quickly the Cycle Analysis and the use of Focal Points for Trading profitably.because I have not too much time to invest for studying that. And have you an EA which does the job ? Thanks in advance
  • #45
  • Mar 23, 2022 4:46am Mar 23, 2022 4:46am
Quoting FundedCoffee
I would think from just observing that there might be a need to further seperate focal points into major and minor focal points. The big yellow circled are major focal points The squares are minor focal points Would that make sense? @Pairsboy @Robots4me I am closely following this Thread but I likely wont write much, I know that I dont know anything about this. I might ask some stupid questions here and there though if it doesnt disturb the Thread.
I was thinking some more about your question and the way I answered. I need to think about this some more. Focal Points are new to me -- I have about a 24-hour head start on you. But I know and trust @parisboy, and my earlier discussion with him really grabbed me. So I decided to jump in with both feet. As far as I know mine is the first MT4 Focal Points indicator. There is no "standard algorithm" for detecting Focal Points. I am in uncharted waters. I think I may need to modify and improve the way I'm detecting and identifying Focal Points. We are looking for 4 crossing lines -- but they don't necessarily have to cross EXACTLY at the same point -- which rarely, if ever, occurs. There needs to be some room for the crossing to "breath". As for exactly what that means, that is what I need to look into further inorder to come up with a codable rule.
  • #46
  • Mar 23, 2022 4:56am Mar 23, 2022 4:56am
stupid real messages and my answers

https://www.forexfactory.com/thread/...7#post12857407

https://www.forexfactory.com/thread/...5#post12864515

https://www.forexfactory.com/thread/...1#post12868291

https://www.forexfactory.com/thread/...9#post12868579
  • #47
  • Mar 23, 2022 5:06am Mar 23, 2022 5:06am
Quoting parisboy
stupid real messages and my answers https://www.forexfactory.com/thread/...7#post12857407 https://www.forexfactory.com/thread/...5#post12864515 https://www.forexfactory.com/thread/...1#post12868291 https://www.forexfactory.com/thread/...9#post12868579
Hello @parisboy, honorable sir, I have a question: Could you summarize quickly just for me the Cycle Analysis and the use of Focal Points for Trading profitably because I have not too much time to invest for studying that. And have you an EA which does the job? Thanks in advance...
  • #48
  • Mar 23, 2022 5:10am Mar 23, 2022 5:10am
Quoting robots4me
{quote} I was thinking some more about your question and the way I answered. I need to think about this some more. Focal Points are new to me -- I have about a 24-hour head start on you. But I know and trust @parisboy, and my earlier discussion with him really grabbed me. So I decided to jump in with both feet. As far as I know mine is the first MT4 Focal Points indicator. There is no "standard algorithm" for detecting Focal Points. I am in uncharted waters. I think I may need to modify and improve the way I'm detecting and identifying Focal Points....
My 2 cents on the subject.It is a "breadth" / tolerance problem.

I am totally illiterate in coding. But I think what I call "operative statistics" could help to take a decision for coding

a) we have to determine which price bar is crossed by CMA 16, 32, 54 , 128, 256
b) then we choose which Focal Point we want to Analyze ex ; FP 163264128
c) then we measure the number of bars between CMA 128 crossing with price and the others CMA intersections with Price.
d) we determine the parameter which includes "most of" what we visually determined as Focal Points

or we reverse engeneered the process we test "what if I use 1, 2, 3 bars distance ?"
  • #49
  • Mar 23, 2022 5:29am Mar 23, 2022 5:29am
Quoting parisboy
{quote} My 2 cents on the subject.It is a "breadth" / tolerance problem. I am totally illiterate in coding. But I think what I call "operative statistics" could help to take a decision for coding a) we have to determine which price bar is crossed by CMA 16, 32, 54 , 128, 256 b) then we choose which Focal Point we want to Analyze ex ; FP 163264128 c) then we measure the number of bars between CMA 128 crossing with price and the others CMA intersections with Price. d) we determine the parameter which includes "most of" what we visually determined...
Quoting parisboy
It is a "breadth" / tolerance problem.
Yes -- "tolerance" is a better word. The current indi does check for SMA bar crossings. However, I've noticed that crossings don't necessarily fall within the High/Low or Open/Close of a bar. Sometimes they occur above a bar or below a bar. So, I'm going to try a different approach. There are 6 possible SMA line crossings: 16x32, 16x64, 16x128, 32x64, 32x128 and 64x128. I will keep track of each of these line crossings. And then I will loop through all the bars and count how many crossings occur at each bar's ** timestamp **. If a bar's ** timestamp ** has 4 crossings then I will call that a Focal Point. Let's see how that looks...
  • #50
  • Mar 23, 2022 5:38am Mar 23, 2022 5:38am
Why you do not need High Mathematics , Fourier Transform and the like to identify Cycles in Price Action
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  • #51
  • Mar 23, 2022 5:46am Mar 23, 2022 5:46am
Quoting parisboy
Why you do not need High Mathematics , Fourier Transform and the like to identify Cycles in Price Action {image} {image}
Okay -- and where are the Focal Points? Are they buried in there someplace? What's the connection between Cycles and Focal Points?
  • #52
  • Mar 23, 2022 6:03am Mar 23, 2022 6:03am
Why you do not need High Mathematics , Fourier Transform and the like to identify Cycles in Price Action

a) Envelopes are the FIRST Tool showed and used by Hurst in his book Profit Magic (1970)

Hurst used Envelopes to show Cyclicity in price Action, determine Trend(s) and average duration of Cycles.

Remember that in 1970 nobody as you and me had access to big computer mainframe. Hence the use of Envelopes hand drawn on chart paper.

b) okay Parisboy but right now in 2022 we all have a powerful computer, even if we do not understand how Fourier Transform (or others) works, we punch "enter" and we have all the cycles (frequencies, vibations etc) at work i Price Action.

you are 100 % right

c) moreover Hurst himself used Fourier Transform and Spectral Analysis to justify his "Nominal Model". Isn't it a proof of the validity of the Fourier Transform (or better likes) ?

see Profit Magic - Chapter 11, see also Appendix One
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  • #53
  • Mar 23, 2022 6:16am Mar 23, 2022 6:16am
Why you do not need High Mathematics , Fourier Transform and the like to identify Cycles in Price Action

this an exemple of a spectral analysis which was the basis from which Hurst told us hat he based its "Nominal Model"

if you study closely the output - the frequencies at work within the data - you see that the real question is not to get the frequencies at work in the data , but how to assemble, to classify these frequencies to use them in your trading.

Envelopes , if not perfect, give you a "robust but not bad'" answer to this question

Envelopes have choosen for you and give you an End-Product very close from reality
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  • #54
  • Mar 23, 2022 6:24am Mar 23, 2022 6:24am
Quoting parisboy
Why you do not need High Mathematics , Fourier Transform and the like to identify Cycles in Price Action this an exemple of a spectral analysis which was the basis from which Hurst told us hat he based its "Nominal Model" if you study closely the output - the frequencies at work within the data - you see that the real question is not to get the frequencies at work in the data , but how to assemble, to classify these frequencies to use them in your trading. Envelopes , if not perfect, give you a "robust but not bad'" answer to this question Envelopes...
Could you elaborate about the connection between the CMA´s focal points and the envelopes?

Are they Traded together? Is that something completely different?
  • #55
  • Mar 23, 2022 6:38am Mar 23, 2022 6:38am
Quoting robots4me
{quote} Okay -- and where are the Focal Points? Are they buried in there someplace? What's the connection between Cycles and Focal Points?
Hurst did not used "Focal Points" but he gave us the First Brick : the intersection of the Full Period Moving Average and of the Half Period Moving Average to calculate a Target Price and confirming a Top or a Low.

But Hurst wrote (page 98) "This quality of the Half Period can only work, of course if the price-motion model is a correct representation of stock price fluctuations. That it does work - time after time - is very powerful evidence indeed for the validity of the model"

It is where is the link between Cycles and Focal Points .

You use 5 successive Centered Moving Averages of Period linked by a factor 2 to generate Focal Points.
To use the quality of Half Period / Full Period intersection allowing you to calculate an operative Target Price you need that these Centered Moving Averages describes Price Action the most closely possible (with reasonable tolerance) Otherwise you go nowhere.

In short your Cyclic Model (parameters) have to be operative.

Do you think the 16/32/64/128/256 is "operative" ?

PS: note that 140 is closed from 128 by 10 %
  • #56
  • Mar 23, 2022 6:43am Mar 23, 2022 6:43am
Quoting parisboy
{quote} My 2 cents on the subject.It is a "breadth" / tolerance problem. I am totally illiterate in coding. But I think what I call "operative statistics" could help to take a decision for coding a) we have to determine which price bar is crossed by CMA 16, 32, 54 , 128, 256 b) then we choose which Focal Point we want to Analyze ex ; FP 163264128 c) then we measure the number of bars between CMA 128 crossing with price and the others CMA intersections with Price. d) we determine the parameter which includes "most of" what we visually determined...
@parisboy -- what do you think about defining a Focal Point as a crossing of SMA(128) and SMA(32). Visually it looks good and it greatly simplifies this tolerance issue -- in fact, it may go away. We've already agreed that SMA(128) is king. Plus, identifying which Focal Points to trust already requires a fair amount of discretion. We can continue fiddling with this later, but for now I think that 32x128 is the way to go, unless you strongly disagree.
  • #57
  • Mar 23, 2022 6:46am Mar 23, 2022 6:46am
Quoting parisboy
{quote} Hurst did not used "Focal Points" but he gave us the First Brick : the intersection of the Full Period Moving Average and of the Half Period Moving Average to calculate a Target Price and confirming a Top or a Low. But Hurst wrote (page 98) "This quality of the Half Period can only work, of course if the price-motion model is a correct representation of stock price fluctuations. That it does work - time after time - is very powerful evidence indeed for the validity of the model" It is where is the link between Cycles and Focal Points . You...
thanks for the explaination, this clears up many things to me actually.
  • #58
  • Mar 23, 2022 6:50am Mar 23, 2022 6:50am
Quoting robots4me
{quote} @parisboy -- what do you think about defining a Focal Point as a crossing of SMA(128) and SMA(32). Visually it looks good and it greatly simplifies this tolerance issue -- in fact, it may go away. We've already agreed that SMA(128) is king. Plus, identifying which Focal Points to trust already requires a fair amount of discretion. We can continue fiddling with this later, but for now I think that 32x128 is the way to go, unless you strongly disagree.
Here is what the indi looks like when a Focal Point is defined as a crossing of SMA(32) and SMA(128). It looks almost perfect to my eye. Plus, the tolerance issue goes away.

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  • #59
  • Mar 23, 2022 6:51am Mar 23, 2022 6:51am
Quoting robots4me
{quote} @parisboy -- what do you think about defining a Focal Point as a crossing of SMA(128) and SMA(32). Visually it looks good and it greatly simplifies this tolerance issue -- in fact, it may go away. We've already agreed that SMA(128) is king. Plus, identifying which Focal Points to trust already requires a fair amount of discretion. We can continue fiddling with this later, but for now I think that 32x128 is the way to go, unless you strongly disagree.
I think we have to test all options to be serious and to know (we have a great coder on this thread! )

CMA 16 gives us only forewarning of a potential Change in Trend

Hence it leaves us 32 and 64. It would be useful to compare both solutions on a kind of backtest even empirical.
  • #60
  • Mar 23, 2022 6:56am Mar 23, 2022 6:56am
Quoting parisboy
{quote} I think we have to test all options to be serious and to know (we have a great coder on this thread! ) CMA 16 gives us only forewarning of a potential Change in Trend Hence it leaves us 32 and 64. It would be useful to compare both solutions on a kind of backtest even empirical.
Okay...

Another simplifying assumption I'd like to propose: You should only trade in the same direction as the SMA(128). What do you think?
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