You Can Predict The Market 100% Of Time

The going joke from this area is, if you live in New Jersey which is full of high ways and interstates. People would say what Exit (on/off car ramps) are you from?

On vacation now in California and trying to trade FX from here. At lease we are killing time till the market starts moving.

I know, I am from the other side of the Hudson and we Nu Yawkers (myself originally) are known for asking just such a question.

I think you are reading the Fosters label after having one too many.

There is no such Frosters. Fosters would sue for trademark infringement if someone came out with Frosters beer.

LOL! My bad on that, poor spelling/typing skills. I should of checked and I wish I could use that reason but not had any drinks yet.

Best Wishes on making pips.
Cheers

there is a 1% chance you can die before you see your trade come into profit

Of course, you are correct. But, trying to get the 'narrow' to perceive the obvious, is often times like trying to get the frog to realize he's sitting in a pot of boiling water. Just because this is a labeled a "trading forum," and just because people call themselves "traders," does not mean that they all of a sudden develop the ability to recognize patterns that don't easily reveal themselves at first glance.

So, yes - you are correct to a large degree, but then the question becomes: What rate of revenue growth is not acceptable to the trader?

It is the rate of revenue growth that determines so-called "success" as a trader. The one who grows their capital over a shorter time interval, is considered "successful." Waiting for larger cycles within normalized market data to complete themselves, would probably classify one as an unsuccessful trader, unless that person initiated an account with an amount that pretty much makes the reason for trading to be moot.

So, to determine the success of a trader, we often times turn to the speed at which they are able to grow capital. That measure is universally accepted among all types of traders, and those who have an interest in watching what traders do in the long run.

Rather than enter at 2.0 and wait between one to two years for the BE cycle to conclude, simply shorten the time frame and use an indicator whose nature is to reveal the natural Cyclical Tendency of Market Price:

http://i49.tinypic.com/23lkzv6.jpg

An indicator designed, developed and tested to clearly identify points in any market where price has the highest probability for changing direction and continuing for a specified number of pips.

On the Y-axis, are the Pips generated by the market. The X-axis contains the periods over which the cycles are most prominent. Green is a Bullish Vector, and Red is a Bearish Vector. The Vector with the greatest Magnitude, has the highest probability for concluding a successful OpenBuy/OpenSell order.

Understanding such a custom indicator is easy. Take special note of two regions of space:

- The Upper Region
- The Lower Region

At the UR, you can clearly see that the Bearish Vector had a high peak of over 325 pips. At the LR, you can see that the Bearish Vector also had the lowest peak of just over 30 pips. In between the UR and the LR, you can clearly see that the Bullish Vectors (high and low peaks respectively) were Subordinate to the Bearish Vectors for the entire cyclical period of 25 units (X-axis).

Therefore, using such an indicator, one can know whether or not their entry at "2.0" is the most appropriate place to enter the market, based on their own requirements for revenue generation (required capital growth timelines).

Note the vectors yet again at 24 time frame at the right edge of the chart (the current bar of data). The indicator clearly shows that this particular currency pair outputs more than 125 pips to the downside and more than 115 pips to the upside. But, there's more. The "more" part is hidden to those that have difficulty seeing related patterns in data.

The "more" comes from the Trajectory Lines at period 21 and 22. The observant trader notes something very interesting between periods 21, 22, 23 and the current bar 24. From bar 21 through 22, the Bullish Vectors had temporary control because their Y-axis output was simply greater than that of the opposite Vector. However, take an even closer look.

From periods 21 through 23, even though the Bearish Vector was producing lower output (smaller pip output), its Vector was actually increasing in Magnitude across the same time periods and emerged back on top at period 23. This tells the trader which Vector is Emerging Dominant during the periods under analysis. Add that information with the information about the UR and the LR for each Vector, and the trader has a much better understanding of when to enter the market, in what Direction to enter the market and what Magnitude (pips gained) should be expected after entry.

Everything in this business begins with research, PT.

I added some additional comments to the bottom of my last post, PT.

You can sure come darn close, PT. I have not traded FX below 91% accuracy in over 3 years now and that was by choice. I've had trade signal from my system that were in the high eighties, but by protocol, I do not accept those entries - although most of them turned out to strike the minimum pip requirement for the day. So, yes - you can come close.

Most importantly, who am I to try to stop you from developing the next truly genius indicator, or trading system that does exactly what all the Naysayer say you cannot do. I like (particularly enjoy) proving them wrong all the time - and year after year. So, let's examine one way I do exactly that with a bit more detailed analysis of the same indicator chart.

Using your general example of entering a pair at "2.0" and then waiting for the cycle (loop) to close on its normal price behavior at a much higher time frame, I introduce the same exact TCD chart, but I take a closer inspection of the hidden information the chart provides. Information that Naysayers simply cannot see, PT.

http://i48.tinypic.com/35kr4v9.jpg

There is a lot to note about this chart. I did not come here to get involved in all that it shows, but given some of the responses to your post, I thought I might lend you a hand in describing how a Trader might get to a near 100% predictive model.

I've added three simple analysis components to the chart:

a) Lines that connect Vector Intersections
b) Drop-Lines at each of the Vector Intersections
c) Cycle Time Frames on the Y-axis (Period Time Frames)

** Note that this would be my initial set-up for gathering inputs into an Fast Fourier Transformation of the indicator data, but I won't bore the forum with such a boring mathematical process, nor is it necessary to drive home the point about probability. **

Take special note of where the Vectors intersect. In this particular sample of pair data, they seem to enjoy intersecting between the 125 pip to 75 pip levels. That's a very interesting parameter that I might come back to, if I have the time later.

The stuff I really want to get to however, are the Cycles between the Vector intersections. Take special note at their repetitive numeric pattern: 1-4, 1-4, 1-4 and 1-5. What does this mean? It means a lot. It means that the intersection of the Bullish Vector and the Bearish Vector, occurs with frequency of somewhere between 1-5 bars (time frames). Note also that there are two smaller sections between the four (4) major frequency periods where the intersections occurred at a much faster rate of speed.

Fast Fourier Transformations, filter out phase relationships as a sacrifice for the speed at which the calculations can be completed. So, there is not much Phase Relationship information on the chart, but you do see these very consistent Frequency Relationships, even with the naked eye. Of course, the typical Naysayer is restricted by their own myopia from seeing any of these relationships, PT. Moving on...

What's very interesting to me in this indicator chart, is what happens AFTER the intersection is made. Either the Bullish Vector, or the Bearish Vector, runs to somewhere near its extreme High, or its extreme Low, before pivoting and returning right back to another point of intersection - which can be known BEFORE it happens through its Frequency.

Did you catch that?

If you can know that something (any darn thing - it does not matter what the event happens to be) is about to happen before it actually happens in this business, then you have what many people would call an "Edge." Well, welcome to one of my "Edges." It is called the Transequential Contiguous Delta, or TCD for short. It was the second prototype indicator that I developed many years ago and it belongs to a class of indicators that I call Delta I.

Notice how important knowing the Frequency of your indicator turns out to be. If you look at the last two Cycles (1-4 and 1-5) you will note that in each Cycle, both the Bullish and the Bearish Vector attempted to enter the intersection early, before the end of the Frequency count. Note what happened each time the market tried to do that. Both Vectors were rejected and sent back down the Y-axis below the 75 pip level. This is hugely important because it tells me that Magnitude also plays a key role in the Timing of pivotal moments in the Life Cycle of a Vector.

This brings Vector Analysis study to a custom indicator design, to help understand the high probability moments in the life of a Trajectory, or Price Vector. With these kinds of indicators, one can come pretty darn close to being "100% accurate" a good portion of the time. In the aggregate, probably above 90% accuracy to a specified target, most of the time.

So, you can enter at "2.0" and wait, or you can study the cyclical nature of price behavior by creating your own pattern recognition indicators and then enter only when there is a high density probability for capturing the number of pips that your requirements demand and within a time frame that is according to your goals.

Just hang in there and continue thinking outside the box. It will help you to bring a level of analysis and study to your indicators that most traders simply will not understand - and certainly not be able to appreciate.

Most importantly, such study will help you trade better and that is what this gig is all about in the long run.

Cheers and better trades.

.......This whole thread is based on the idea of needing to be right 100% of the time... the truth is that you do not need to be right 50% of the time to be a profitable forex trader.........As long as you are right as many times out of one hundred trades as your money management and reward to risk ratio says you need to be profitable you will make it...

.......If you want to be successful at forex you MUST leave your ego at the door... there is nothing impressive about being right x percent of the time. It's not even about being right more than you are wrong.. It's about having a plan that you follow so that when you are right you make up for the times that you are wrong plus some....... It's not about how many pips you capture either .. number of pips tells you nothing about the size of the trade. You can gain 100 pips and lose 10 pips and think you are winning. Unfortunately the 100 pips was 1 dollar a pip and the 10 pips was 10.00 a pip...so you made no one except the broker a profit.

......You are also not considering that while you hold a trade for months.. you have swap to pay.... hopefully you only take trades where they pay swap if you want to wait 4 years to get out of a bad trade........Find a set of circumstances that you like to see in the market and set specific takeprofits and stops. There is nothing wrong with getting in the wrong direction and taking a loss... only with getting in the wrong direction and letting your ego talk you into staying in it until the loss gets so huge that your ego gets trumped by reality.

......When you get it wrong ....Get out... it's easier to make it back on the next trade than to spend all of your mental energy on wrangling with a troublesome trade.. in the meantime you are missing out on good trades.........If nothing else do this.... when you are in a bad trade, and can't decide whether you should be in it or not. your good thinking is clouded .... close the trade. Look at your signals and decide if you really want to be in it.... if so place a pending order or manually reenter a couple of pips better than where you got out to cover the spread that you lost by reopening it

.... You will find that you'll stay out most of the time..... because you know you should... and you will feel that load lifted off of you.....it really works. Stop thinking about whether you are right or not and start thinking about whether you are profitable or not. Because being right 90% of the time does not mean that you are profitable.. You should however be able to predict 100% of the time what YOU are going to do when the market moves a certain way....

.....Rules replace Emotion. If it's a losing strategy you need new rules but be happy that you did not lose because you were not disciplined enough to control your emotions and follow your plan... the fault is in the plan.. not the trader... trade small until you find a plan you trust, then, follow it.

..... Markets change from ranging to trending.... have a plan for each scenario and a rule that tells you which market you are in at the moment...

.....If you want a prediction here it is...
........ "The market is going to go up and down.".......
...... I'm pretty sure that will be true 100% of the time!

.

PipPip Jimdandy

My own view is that perhaps this is all being taken too seriously, but I think it's great to see some different responses to the obvious critical ones earlier

I was not expecting this...

Bravo

I believe it was Alexander Elder who stated that professional traders when unsure which direction they should trade, always decide to trade for consolidation i.e. price returning to where it was.

It makes a lot of sense and not so much of brain power to realize that on many financial instruments, especially currencies this is exactly the case. Some years back I actually tried to build a strategy based on the following assumption:

After each and every breakout price will return to the breakout level. I don't know how far it will go, I don't know when it will be back, but sooner or later it will be back.

I picked EURUSD on M5 and spent several days analyzing the chart and putting it all to the excel file for further calculations. The file is long gone with my old burned down laptop, but as far as I remember I came up with something like that:

If we consider a top as a formation of 5 bars where the middle one's high is the highest, and if a bottom is a formation of 5 bars where the middle one's low is the lowest than we have 97.5% of certainty that if the price goes minimum of 8 pips beyond high/low, it will be back to the breakout level (high/low of the middle bar) before it goes 200pips away from any given breakout.

So the question was: 'how do you make profit knowing that?' My idea was to place a grid of pending orders above every high and below every low. SL for each: 200pips away from high/low. TP for each: high/low. So no matter how many orders were triggered I had 97.5% probability they will be profitable. I posted my 'mind-blowing' idea here on FF with hope that some fellow trader will code an EA for me as I realized that it would be a tremendous amount of work to sit and place pending orders one by one in regular intervals. There was one member who actually offered his programming skills and promised to code it for me but after a while he disappeared from the forum. What I though at the time was: "damn he probably coded it already and is making zillions out of my idea right now!" And so I deleted the initial post cause I didn't want anybody to profit from my idea without me and I did begin to learn MQL4 on my own. So I came up with an EA which actually produced some decent results, but only to a point. Despite using 0.01lot per each pending order placed, these 2.5 breakouts per 100 that went as far as 200pips away, blew the hell out of any account. Furthermore floating loss would make it almost impossible to switch of the EA without making a loss. I made dozens of different versions of that EA but none of them was profitable in a long run (despite several tests which made over 150k out of 1000 initial deposit in a month!). In the end the only good thing that came out of that experience is that I learnt MQL4. Perhaps I'll save you from the struggle I went through. Or maybe not. If you still think this may turn out to be a method to 'conquer the markets' I'll be more than happy to let you know everything I learnt from trying it this way.

I see your point and somewhere deep deep in my mind there is still this belief that there is a way to make tons of pips on regular bases without analyzing the market at all, but using only one undeniable fact: price changes. Meanwhile however let's stick to following the trend on higher TFs.

+1

And even with the tongue firmly in cheek humor, there's a great lesson in the first post. It just sneakily slides in there Gotta be paying attention kids!

I think there is a massive difference between being profitable and growing capital on a scheduled geometric basis. This all gets back to what I wrote about regarding the importance of knowing WHY you are in the business of trading in the first place.

I can place one trade a year, net 100 pips and make the claim that I was profitable that year, which would be absolutely true. Or, I can place 3650 trades per year, net 35 pips per trade on average, re-invest at 90%, increase the size by "X" percent per "N" number of trades, grow capital at a geometric rate and then claim that I've been a profitable trader that year. That too would be a true statement.

Which definition of "profitable" would you rather have. You cannot produce the latter level profitability with the former accuracy rating of 50%. It is just not possible.


Being wrong "X" percent of the time, means you cannot grow your capital geometrically over the same period of time. That's a simple and easy to prove mathematical fact. So, the impressive component to being right "X" percent of the time, means that you can produce a near linear rate of increase, by using the right revenue model and having good trading accuracy.

Unfortunately, while some traders leave their ego at the door, they often times leave their common sense with the same doorman. He usually returns both on the way out, however.


Unfortunately, this is urban legend myth. Here's why. In order to "cut your losers and let your winners run," (the age old colloquialism that you are referring to here), you would need to either have a crystal ball that told you when to exit the winner -OR- you would have to have a systematic way of knowing when to exit the winner. Why? Because by logical extension and definition, it is the "winner" that allows you to make up for the losers.

Since the winners rate of occurrence is significantly less than the losers rate of occurrence (as defined in your model for profitability), then not knowing precisely WHERE the winner gets closed, means that you cannot benefit from compensating profitability that it would afford and that offsets and eventually cures the damage done by the losses.

The flip side of that same coin is that fact that in order to "cut your losers and let your winners run," you would by the very same token need to know precisely WHERE and WHEN the trade has entered the "losers" point of no return level. And, just like the winners level, you would need either a crystal ball, or a very price trading system. Since crystal balls and seers, don't cut the mustard in trading, you would need to produce a very precise trading system, in order to employ the "cut your losers and let your winners run," trading philosophy.

This urban legend myth is one that has floated around for quite a while. But, once you start to analyze the MFE/MAE Ratios of all your historical trades, you can't help but see the fallacy of such a philosophy, for the one seeking to grow their capital geometrically.

Again, this all gets back to my post in another thread about knowing WHY one is even in the business of trading in the first place.


I am quite confused as to why any Trader would on the one hand, enter one trade that is 10 times smaller in PPV on trade number #1, then turn right around and enter a trade that is 10 times larger than the last on trade number #2.

The only way this would make any sense, is if the Trader codes the net/net risk ratio between the two types of trades, directly into their money management model, before entering either trade. And, they would have to make certain that mathematically, each trade that could potentially be made under such a model, fit well within the margin requirements AND their profit requirements on a per trade basis.

Failure to do this correctly, leads to Pyramiding A Loss, which is extremely dangerous and highly undesirable.

I would CAUTION any Trader, that before you go out and start building Pyramids to rival those found on Egypt's Giza Plateau, that you serious consider developing a highly accurate trading system that you can trust before you do. The ancient Pharaohs might be buried underneath those Pyramids, but that's the last place you want to bury your trading account balance.

Pyramiding a Loss, is indeed very unimpressive.



I think PT, was trying to think outside the box. Not necessarily as something one would automatically do, but as an exercise in allowing the mind to take ideas to their logical conclusion.

I think my post to PT, explains in detail why relying on accuracy, instead of extreme periods of time to correct a trade, is a better mode of transportation towards consistent profitability.

I also think you have a valid point - which does state the obvious to some degree.


That's called a Trading Strategy, or a Trading Tactic and I 100% agree with the approach, if you are a manual Trader.


The question is not one of ego, but of WHERE does one decide that it is time to take the loss. That's the question and such questions cannot be answered on a long-term basis with arbitrary stop levels and feelings of good tidings and joy.

Those types of answers can best be derived through the statistical analysis and the empirical evaluation of the conditions that lead to the entry and which ultimately leads to the level at which a decision is made about booking a loss, or holding for a pivot.

Any other approach to making that decision, counting the stars in the sky, noting the migration of elephants across the great plains of Africa, counting sheep, or waiting to see of Orion has fastened his belt, are all nice feel good inputs to the human brain, but they will not produce long-term results that fit a model of consistency for driving in revenues according to a geometric time table and a revenue model designed with the accuracy of the decision making source in mind.


100% true.


Very good advice.


Also, very good advice.


No doubt, it sure will. However, there are three (3) completely different types of markets to consider:

Market 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.

I just a 10 years PIVOT Indicator for backtesting and I'll get back to you with results later, in the meantime, check out the pictures from MARS

Absolutely, jaw dropping!

http://mars.jpl.nasa.gov/msl/images/...t-MAHLI-br.jpg



Pandemonium breaks out at JPL Mission Control:

http://i.imgur.com/B8mDT.gif

They earned it!

Given your reputation and the notes in your FF profile, I assume that your post was intended to be tongue-in-cheek.

without customized indicators you can properly trade....no matter how perfect you're in your predictions.

an astrologer also uses his tools for good measuring for good results/predictions, an numerologist too.....and its obvious ...a trader too.

analysts giving rates for long/short trades daily with SLs and TPs, also uses indicators for calculations...peace out!

A dead clock is right twice a day