I have an idea that has been floating around in my head now for several years. Recently I have quantified that idea into a formula. I hinted at this idea in my last thread and was slammed something pretty good because, as one reply put it, "If you walk into a lions cage with bacon strapped to your ass expect to get mauled."
Those who have belittled in the past will most likely do so again...just to demonstrate their closed minded ignorance. However I am quite certain that this will be my last thread started here so I will reply to any who post with "legitimate" questions or constructive criticism, but ignore the close mindedness and just plain stupid.
What's all the fuss? I believe that I may have developed a "theory of relativity" about the markets. Where everything that we usually measure separately is actually part and parcel of the same thing. Jason Alan Jankovsky (my personal trading guru, and mentor), in his book Time Compression Trading has said there are 4 essential elements to the market; (1) Time, (2) Open interest, (3) Volume, (4) Price. And instead of rehashing this material here, I would like to submit that these elements are actually all relative to each other and therefore all variable within a signal equation...that of strength.
Most of us are accustomed to looking at the market with a single constant and making everything else variable to that constant. The constant we use most often is time. Each chart is a constant time interval. Thus we measure everything else against that time interval, whether it be 5 min, 4 hrs, or weekly. I submit this constant provides too many "false" assumptions. Which, is why we often find systems that work for a short while and then stop working...
We say, "well the market conditions changed" and move on to trying to develop another method that will work in the "new" market condition...I say - This is futile. I say - market conditions NEVER change, they are only relative to each other.
Think about this for a moment...why is it that we must develop at a minimum two methods of trading? One for trending markets and one for ranging markets? Because (say many) market conditions have changed. HOGWASH!! The only thing that has changed is that a particular variable - price - has become more or less stable than it was previously or that its velocity has decreased or increased.
What if there was a formula that took into consideration ALL variables? Price, Time (yes time IS a variable), and volume? One that measures the "true" strength of the market?
Also consider that the market is made up three things...buying, holding, or selling. The human element is also a variable is it not? Humans decide when it is Time to buy, hold or sell. Most do not make that decision every 5 minutes or every 24 hrs...they look at different variable as well...thus the variable of human participation must be considered, and can be calculated as participation in either buying or selling (open interest).
Thus when many people or groups of people participate in the same direction at roughly the same time, the market price moves quickly. If many people or groups of people participate in opposing directions at roughly the same time the market price ranges and goes nowhere. Likewise, if only a few people participate market price can often get whippy and unpredictable because their orders tend to unbalance price but it only take a few more orders to balance it again.
Are each of these scenarios "different market conditions"? Must we then develop 3 or perhaps 4 methods of trading, one for each condition? Is there some tell tale sign that the market is moving from one condition to another? Is there a pattern, or sequential order of conditions? Believe me when I say I don't think there is...and I have done a lot of studying...I have found no pattern to market conditions because there is NONE...it was in front of me the whole time. There is only ONE market condition. One in which all variables are accounted for and balanced against the two driving forces in the market - buy and selling.
I submit that PRICE (the variable that makes us money) is a Result of the other variables in the market...NOT the cause. Whether or not price moves and how fast it moves is the result of strength of participation i.e. more buying than selling or vice versa, and at what size contract.
So here it it is. My "simple" formula. I'm sure some of you out there will quickly code this into an indicator and tell me I'm full of crap...OK. I have coded this idea into three indicators, each with a slightly different point of view (depending on the constant you are using on your chart). Remember, each chart is expressed in some type of constant and will never be completely variable as the market truly is...Time charts have a time constant...obviously, Price constants are often used as Renko or "range charts", where a constant price is seen in each block, brick, or whatever you call it. In these charts TIME is variable but price is not. There are also tick or volume charts where the volume in each chart is constant while time and price are variable. You must consider which constant you are using and "compensate" with the other variables.
Strength = Volume * Price velocity.
Most of this is self explanatory except the velocity part...that is where time becomes a variable. Remember that the measurement of ANY type velocity is the relativity between distance and time. Mile PER hour; Feet PER second; light YEARS.
OK...let the ignorant begin their bashing.
Those who have belittled in the past will most likely do so again...just to demonstrate their closed minded ignorance. However I am quite certain that this will be my last thread started here so I will reply to any who post with "legitimate" questions or constructive criticism, but ignore the close mindedness and just plain stupid.
What's all the fuss? I believe that I may have developed a "theory of relativity" about the markets. Where everything that we usually measure separately is actually part and parcel of the same thing. Jason Alan Jankovsky (my personal trading guru, and mentor), in his book Time Compression Trading has said there are 4 essential elements to the market; (1) Time, (2) Open interest, (3) Volume, (4) Price. And instead of rehashing this material here, I would like to submit that these elements are actually all relative to each other and therefore all variable within a signal equation...that of strength.
Most of us are accustomed to looking at the market with a single constant and making everything else variable to that constant. The constant we use most often is time. Each chart is a constant time interval. Thus we measure everything else against that time interval, whether it be 5 min, 4 hrs, or weekly. I submit this constant provides too many "false" assumptions. Which, is why we often find systems that work for a short while and then stop working...
We say, "well the market conditions changed" and move on to trying to develop another method that will work in the "new" market condition...I say - This is futile. I say - market conditions NEVER change, they are only relative to each other.
Think about this for a moment...why is it that we must develop at a minimum two methods of trading? One for trending markets and one for ranging markets? Because (say many) market conditions have changed. HOGWASH!! The only thing that has changed is that a particular variable - price - has become more or less stable than it was previously or that its velocity has decreased or increased.
What if there was a formula that took into consideration ALL variables? Price, Time (yes time IS a variable), and volume? One that measures the "true" strength of the market?
Also consider that the market is made up three things...buying, holding, or selling. The human element is also a variable is it not? Humans decide when it is Time to buy, hold or sell. Most do not make that decision every 5 minutes or every 24 hrs...they look at different variable as well...thus the variable of human participation must be considered, and can be calculated as participation in either buying or selling (open interest).
Thus when many people or groups of people participate in the same direction at roughly the same time, the market price moves quickly. If many people or groups of people participate in opposing directions at roughly the same time the market price ranges and goes nowhere. Likewise, if only a few people participate market price can often get whippy and unpredictable because their orders tend to unbalance price but it only take a few more orders to balance it again.
Are each of these scenarios "different market conditions"? Must we then develop 3 or perhaps 4 methods of trading, one for each condition? Is there some tell tale sign that the market is moving from one condition to another? Is there a pattern, or sequential order of conditions? Believe me when I say I don't think there is...and I have done a lot of studying...I have found no pattern to market conditions because there is NONE...it was in front of me the whole time. There is only ONE market condition. One in which all variables are accounted for and balanced against the two driving forces in the market - buy and selling.
I submit that PRICE (the variable that makes us money) is a Result of the other variables in the market...NOT the cause. Whether or not price moves and how fast it moves is the result of strength of participation i.e. more buying than selling or vice versa, and at what size contract.
So here it it is. My "simple" formula. I'm sure some of you out there will quickly code this into an indicator and tell me I'm full of crap...OK. I have coded this idea into three indicators, each with a slightly different point of view (depending on the constant you are using on your chart). Remember, each chart is expressed in some type of constant and will never be completely variable as the market truly is...Time charts have a time constant...obviously, Price constants are often used as Renko or "range charts", where a constant price is seen in each block, brick, or whatever you call it. In these charts TIME is variable but price is not. There are also tick or volume charts where the volume in each chart is constant while time and price are variable. You must consider which constant you are using and "compensate" with the other variables.
Strength = Volume * Price velocity.
Most of this is self explanatory except the velocity part...that is where time becomes a variable. Remember that the measurement of ANY type velocity is the relativity between distance and time. Mile PER hour; Feet PER second; light YEARS.
OK...let the ignorant begin their bashing.
