Funny Looking Rectangles & Useless Drivel

If you look at the EURUSD for the past 166 1 hour sessions.
5 fall lines has yet to be being touched, making the return rates to be 97%.

I know of a few systems that can create lines that can achieve this, knowing this itself is not enough.
Knowing when to enter towards which attraction points, and managing the risks involved is the Key.

Interesting stuff and I would love to see more. I note you are a new member but you talk about your other threads and your years of trading. Could you explain why you are a new member and point us to the other threads you mention.

Attached is an indicator i've written for the B2I funny rectangles. Use only on 1 min chart.

To be frank, you need decent skills in data analysis and programming, to develop the style of trading the thread starter uses.
Otherwise, go pick up such skills or find another approach.
This is not the only way to make money, but i do think this is the kind of approach to getting deadly accuracy.

hi rand yap, i'm using the 15 min chart for this and taking the high and low for the day, is there a way for the indicator to do this?

thank you, appreciate it.

Hi Rand,
I'm not familiar with a txt file for MT4 how do we install it? Thanks.
Bat

Just remove the extra .txt extension

iDoubleStoch,

OK I just re-read this whole thread and the other one about Randomness of the market.

I can see that these rectangles can be deadly accurate.

Need some more clues re the OS1 moving average. It seems to have a long term pull on the market. Tried up to 4000sma on 1 minute charts. But I think I'm missing something (probably a whole lot of something but I like puzzles.)
More clues please?????:nerd:

its extremely accurate- atleast 9/10 times it hits the fall line.

The only problem is working out the entry.
should be able to, hopefully with more experience.

Thanks mate, absolutely brilliant. I love the way you leave the fall extending until "touched".

Seems to me the next step for someone wanting to implement the rectangle idea by itself, if you're happy with 70% win rate, is to find a consistent entry point that has 1:2, or 1:3, or even better risk\reward. If this can be traded almost any hour, 20-24 times a day, as long as market is not trending, which should be 80+% of the time, it should be profitable enough to pursue.

Just waiting on the next feed. Getting hungry

Hi doji star,
Those are pertinent questions, unfortunately i don't have answers to. our rectangles are similar but like idoublestoch said, the market phase is important and he described 5 market phases. I don't know what phase we currently are and what indicators are used to determine the phases. These are questions for idoublestch if they're not beyond the scope of what he's teaching and the amount of info he's willing to divulge. I just know price hits the fall line more than 90% of the time. Entry and SL need clarification.

I think if there's a way to know ahead of time what the top (or bottom for buying) of the box is going to be to start trading towards the fall line, we could open a trade there...otherwise...

Thanks for the indicator, Rand Yap.
Please if you can, help develop one for higher TFs especially daily on a 15min chart because you can have tradeable range on a daily chart as opposed to 1min TF where the distance between price and fall line is 3-7 pips.

I agree with you but that is almost impossible. Unless you conclude that top and bottom for the day would have been made before certain time, say 1 or 2pm ET. This is true most days when there are no economic data like fomc or NFP. You can also start trading toward the fall line as soon as price is outside the box. Better still, wait for price to hit S/R, pivot points, fib lines etc and then trade toward the fall line. But there are also other factors at play such as the proprietary MAs and OS1 which we are not privy to.
I'll keep drawing the boxes and observing how price behaves in and outside the box and how it gravitates to the fall line until we get more info.

Angelofx:

I wanted to post your B2i discovery first, because depending on what bucket shop retail FX platform you were using, it probably failed to strike the target. Take a close look at what you posted yesterday:

http://i61.tinypic.com/4six.jpg

On my charts, it just missed the target by a fraction. Close is only good enough in horseshoes and political rhetoric. This one failed. The question is WHY?

- Is the indicator junk?
- Was the pattern not identified properly?
- Was the pattern identified properly but not validated correctly?
- Was the Market Phase out of synch with the pattern?
- Was there significant market moving News?
- Was there another Technical Influence with Bigger Magnitude?

Recall, when I talked about the need for Synchronizing the inputs that go into any calculation you make about trading, whether those inputs are technical or fundamental. You picked a 24 Hour B2i pattern to trade. I looked very good at the start and it demonstrated some "tendency" to behave according to the long standing history of the pattern. However, what you need to see here is what I've been discussing online for now many years, that ALL good trades must have these four (4) components baked-in and they need to have as much synergy as possible:

- Timing
- Direction
- Magnitude
- Probability

Obviously, this thread is about one (1) indicator concept. It is not intended to supplant an entire trading system. I am a Systems Trader, not a single indicator trader. This is only to demonstrate an indicator concept and its potential for repeatability. Magnitude was the big game changer on this one. However, it was the Magnitude of another B2i that we did not account for yesterday.

Take another look at your B2i in this broader context:

http://i61.tinypic.com/bjaoav.jpg

This is the 1 MN B2i Pattern plotted on a D1 chart. Last month's B2i is on a 230 pip tear to the downside and continuing through its Fall Line at $1.70464 with very good momentum. However, notice the "tendency" to the UPSIDE that GBPUSD still produced in the D1 B2i that you picked yesterday. It just missed its upside Fall Line. The lesson to learn here is two fold:

1) Multidimensional Analysis does matter
2) Larger Time Frames need to be accounting for in your decision making calculus

Now, let's look at the exact same D1 (24 hour) B2i Pattern from the M5 chart perspective with a really good long-term directional indicator, OS1:

http://i61.tinypic.com/2dqpymp.jpg

Notice that during the entry phase, OS1 Green Line was Above price and Above the Fall Line. Also, notice that price demonstrated its tendency to behave within historical parameters as it attempts a run on the Fall Line price level of $1.69947 and kisses the OS1 Green Line in the face before turning back under the influence of the 1 MN B2i. Also, notice the structure of the OS1 itself and recall that OS1 is nothing but a Double MA with a very large period for both the Fast and Slow Periods (plus some optimizing inputs that I cooked up myself). So, it is a really good long-range "Stabilizing" type of indicator - meaning that when there is a lot of conflicting input from multiple indicators within the system, OS1 is allowed to have more weight and more influence in the final trade signal output.

Now, here is a look at the M1 level:

http://i57.tinypic.com/2mo5kec.jpg

Here is what can inspire a trader to become a Systems Theorists and to realize the importance developing good Algorithmic Trade Decision Logic skills. Recall one of the B2i Rules:

- If price is Below OS1 Green Line (your best long range moving average directional indicator) at pattern validation time (when the patter completes) and Fall Line is Above price, then the tendency for price to move towards Fall Line has higher probability.

You see price attempting to make a move to the Fall Line but stalling abruptly just short of it. Why? Take a closer look at the configuration of OS1 throughout the period from 0000 hrs to to point where it just misses the target. Notice how close together the two OS1 lines are (Red and Green? That's an indication of price consolidation in that time frame and at that price level. It also indicates that if Daily Volatility is maintained in the next session, there will be an explosive move typically in the direction of the Green Line (Green over Red = Long, Red over Green = Short, typically).

The other very important note is that OS1 is called a "Stabilizer" type indicator for a good reason in my system. That is because it rarely sees massive deformation in the stability of its lines and price rarely crosses from the Green side to the Red side without recoiling back to the Green side. The OS1 lines do cross each other, but the crossing mechanics historically happen AFTER both lines have been separated by a large distance between them. Typically, the price behavior just BEFORE an OS1 cross-over includes price turning into the Green Line, matching its trajectory for a period of time, then challenging the Red Line in a noticeably smoother trajectory as price makes the cross first, followed by the crossing of both lines. That behavior is not present here. What you see here is a sharp move in price against a fairly stable downside OS1 directional trajectory. That results in the rapid recoil of price back in-line with OS1 to the downside.

That last paragraph is a lot to digest and it comes from a massive amount of study on price behavior in and around long range moving averages. You are going to have to take the time to digest that last paragraph, as there is a LOT of valuable information therein relative to: How To Properly Use Long Range Moving Averages.

When you put all of this together, you get the move you saw today in the GBPUSD. It underscores the need to know your indicators and their limitations, think logically about how they relate to each other and how their synergy can be used to your advantage as a trader. This gets into System Theory and Systems Optimization, which is a fairly large subject, but I hope you get the broader idea here, of using logically using multiple tools to help you determine the Magnitude in multiple time frames and how to go about weighting the various inputs to a trade decision.

This is the stuff that separates really experienced traders from novice traders. Going inside the logic of how you make trade decisions as a technical trader, is Trade Logic Development. There are a lot of Software Developers out there who understand how to develop software. Trade Logic Development is a different world. A single Concept or Idea leads to Mathematical formulas. Mathematical formulas when Integrated lead to Mathematical Functions. Integrated Mathematical Functions lead to Indicators. Integrated Indicators lead to Signals. The Integration of Signals lead to Decision Oriented Algorithms. Integrated Algorithms lead to Trade Logic and full blown Decision Support Trading Systems.

If we are going to be Technical Trades, then we really do have to be "Technical" in our approach and that means measuring, quantifying, balancing and integrating the inputs we use in the decision logic (at a minimum). I'd actually like to teach a course on Trade System Development someday, but I've never been able to find that kind of time. I do believe it is both Science, Art and Philosophy and I am very much intrigued by the subject of Trade Systems Theory.

Here is what my Trade Signal looks like:
http://i61.tinypic.com/206j7o9.jpg

Notice how every signal output has a "Magnitude" indication in percent (%) form. That's ultimately where this post leads. B2i has not only a Signal (Long or Short) but a Magnitude Indicator attached to it (i.e., 87%) as well. B2i is deeply embedded in the system at the Integrated Function level as just one part of an overall system. You don't even see it on this GUI signal panel.

This is a close-up of a Stack on the panel:
http://i58.tinypic.com/2e5sky0.jpg

There are seven (7) of these Stacks on the panel for visual reference. I trade the JPY basket and the system uses input from all seven (7) major JPY pairs. You can see that all time frames are represented. Down below you see the Probability Cluster. That is where all the "magic" happens. Basically, I am a believer in using Density Probabilities to determine a lot about the characteristics of price at any price level: Historical, Present and Future.

Here is the advanced version of OS1:
http://i59.tinypic.com/29pz38h.jpg

This is basically OS1 with a lot of enhancements. This Bar changes color as the percent magnitude changes in the long range directional behavior of the market. Red is the Downward probability and Green is the Upward probability. OS1 is called the Trajectory Bar in the system and I can simply glance down and look at the magnitude numbers or simply check the color of each bar and that tells me what the directional bias is for the market over the next 24 hours.

Anyway, I hope that was as clear as mud. Relax, you won't get this all in just few days. We are looking at just 1 of 117 indicators here, outputting 1,200+ parameters that are all evaluated in real time to produce a GO / NO GO decision. We can't replicate that in a single indicator concept. But, you can start to understand how important good input integration is to making good trading decisions.

hi doublestoch,

if i want to trade the boxes on 1 hour charts, is it better to use two days worth of data to draw the box?( the high and low of two days)
I find that using two days is more accurate.

What are your thoughts?
thank you.

geez...worse than inputting on the FMS...

Is it a good guess to say the parallelogram is using the same basic concept as drawing an ab=cd pattern, without having to have a b-c leg defined in the middle? Or is it just the bcd part? .... \_ ...?

Hello Rand:

I call it Digital Geometry and B2i is one of several DG type indicators. It just happens to be one that I can share right now. This is its prototype version 1.0. It is currently in version 5.x within the overall trading system. Back when I used to do mostly system development all day long, I would take mid-day naps and listen to theta and beta frequency aural tones while contemplating a problem to be solved. Often times, I would ask my subconscious to come up with a new idea about price behavior before going to sleep at night. Sometimes, I'd be awaken at 3am with a new idea or concept that I had never had before. Most of the ideas that I have worked on came through long hours spent working on raw data and looking for relationships in price by reducing each number to a point in two dimensional space within a downward flowing hierarchy as new prices enter form the top of a two dimensional structure and flow downward into history. I ran all kinds of "thought experiments" in various ways, trying to stoke creativity and view price in ways that were not obvious to the naked eye.

The underlying principle is the inverse of chaos: Stability. That's a philosophical belief system about market price that not many share. I don't believe that prices "wants" to be chaotic. I believe that price "wants" to seek equilibrium - not just the known technical definition of equilibrium, but literal non-movement. In other words, I don't believe that prices "wants" to go anywhere. I don't believe that is the true nature of "price."

People drive price. People are moved by Greed and Fear. People don't want to put their money at risk in the aggregate. Therefore, there is a built-in market component of "do nothing" and "leave price right where it is." Again, that's a philosophical stance that comes out of my opinion - not derived from a technical white paper that I wrote on the subject of The Mechanisms of Market Behavior (the title of a book that I've never gotten around to writing and probably never will - oh, maybe I should not say that - maybe someday).

B2i does have a connection to another indicator that I developed called Distinct Vega. Distinct Vega is one of the very first primal set of core indicators that has become entire ubiquitous and deeply embedded in the system. It simply measures prices' tendency to move from the Open of any time frame to the Highest High and Lowest Low. It then measures prices' tendency to move from the Highest High to the Close and the Lowest Low to the Close. That's all it does basically. That provides significant historical metadata about price in ever dimension of time that is relevant. In a simple mathematical function, it then coordinates that data with the Open to Close data within the same bar of reference to determine the unique and Distinct Volatility ("Distinct Vega") of the instrument being observed.

B2i Version 1.0, comes along and introduces an Intersection in the future, predicated on the first half of Distinct Vega. I cannot disclose B2i Version 5.0, which introduces other Intersections and other Projections based on Distinct Vega as well. I always leave my production work off limits for discussion in public. However, Version 1.0 is the forerunner to Version 5.x, without question.

Distinct Vega, is another one of those Einstein inspired "Thought Experiments." It is simply a way to measure what price is doing in ever bar and in every dimension of time. This is what caused me to create my idea of Price Vectoring into my work and when that happened, the flood gates of ideas opened up and lead to many years of systems development.

In my philosophical belief system "Price," is not what most traders think it is. Most traders see $1.69558 and call that "Price." I don't see that as price. In fact, I don't see price at all, I see Price Vectors which are spread out over periods of time, somewhat (not exactly) like Electrons are spread out through space about the nucleus of an atom in the form of Probability Patterns. So, "Price" dissolves into Patterns and those patterns of a definite location in time, as well as a specific Shape with its boundaries always in a state of continuous flux.

Price is like a Cloud in the sky. Continuously moving. Continuously changing its Shape. Continuously changing its Density. Continuously changing its Location. When I'm targeting a so-called "Price" level, I'm targeting the center of a cluster of Projected Price Vectors, together having a specific Density and thus a specific degree of Probability for existence in a specific Location.

It is all about Probabilities and relevant Historical significance.

Thanks, Batavier.

Shift the starting point for the primary lines to the Open price. Yours are floating around inside the bar. They should be anchored (in this version of the indicator) to the Open. Everything else look ok.