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The similarity system

  • #5,381
  • Aug 13, 2014 10:02am Aug 13, 2014 10:02am
Quoting vlady1974
{quote} This is funny, I do not mean to single anyone out but this is the problem with traders, all are fascinated with EURUSDD's results and are visiting the thread that explains the concept or a principle to his fantastic results, but do not get that you should read from the beginning of the thread.
Quote
Similarity is about parity or equivalence across all measuring sticks. If you have a ruler, 100cm = 1meter, no matter what ruler you use. With market prices though, it's a moving object: Price changes value Duration of value changes via Time Prices are dependent on Source (Broker) The theory then is that if you grab a price graph on a 5M chart, and then add any indicator that matches the swings of Price (you must change the settings) In theory, the price and the indicator should be the same. The theory must also hold true for different timeframes. So the 5M / 15M / 1H and 4H should have the same swings relative to their larger timeframe. The moment you have DISSIMILARITY is the trade opportunity because this is arbitrage. Once SIMILARITY is restored, then the trading window is closed.

That is why I love VLADY1974. You are super. That is the whole truth.

This is why when someone asked me what happens after similarity is restored, I refused to fall into that trap!! Thank you vlady1974..

A perfect example is the arbitrage window below.. There is a white on 1hr but none on 30min. That is why I said, UP is coming. We saw how high she went.
Attached Image (click to enlarge)
Click to Enlarge Name: 2a.PNG Size: 306 KB
  • #5,382
  • Aug 13, 2014 10:09am Aug 13, 2014 10:09am
Furthermore:

a) Simple = Price Levels that must be corrected or returned to

b) Intermediate = Price Levels + Timeframe for correction

c) Complex = Probability that price must be at/above/below a price/time


No-one should really start asking "what is the sequence? is it A first then B then C?" That is hard and involves probabilistic calculations in real-time. Start with the basics first and find some indies that support your style and allows you to manually check for dissimilarity.

For newbies, I think the concept of similarity should be applied to an existing trading strategy.

In of itself, it is nothing. It is just a principle. How you apply it is dependent on an edge - a determination by you that something could happen.
Read "Trading In The Zone" - all good traders know that anything can happen and that every moment is unique (ie. different from last time!)

So probabilities is what counts applied with your trading strategy & money management strategy. In other words, if the probability of price going to 3400 is 10% and current price is 3379 and you are SHORT, then you should be building a safety measure to move your stop or takeprofit to a point where you could be wrong. Because ANYTHING can happen, whether you knew about Similarity or not.
A pip is only worth it if you know how much you risked to earn it
  • #5,383
  • Aug 13, 2014 10:09am Aug 13, 2014 10:09am
Quoting vlady1974
{quote} This is funny, I do not mean to single anyone out but this is the problem with traders, all are fascinated with EURUSDD's results and are visiting the thread that explains the concept or a principle to his fantastic results, but do not get that you should read from the beginning of the thread.
Similarity is about parity or equivalence across all measuring sticks. If you have a ruler, 100cm = 1meter, no matter what ruler you use. With market prices though, it's a moving object: Price changes value Duration of value changes via Time Prices are dependent on Source (Broker) The theory then is that if you grab a price graph on a 5M chart, and then add any indicator that matches the swings of Price (you must change the settings) In theory, the price and the indicator should be the same. The theory must also hold true for different timeframes. So the 5M / 15M / 1H and 4H should have the same swings relative to their larger timeframe. The moment you have DISSIMILARITY is the trade opportunity because this is arbitrage. Once SIMILARITY is restored, then the trading window is closed.[/quote]
Exactly!
  • #5,384
  • Aug 13, 2014 10:33am Aug 13, 2014 10:33am
Quoting Eurusdd
There is a white on 1hr but none on 30min. That is why I said, UP is coming. We saw how high she went. {image}
Can you say what does that white X represent on the hour chart? Is that an indicator - if so which one? TIA
Think : Trade : Live Life
  • #5,385
  • Edited 11:11am Aug 13, 2014 10:41am | Edited 11:11am
Quoting stt
{quote} Can you say what does that white X represent on the hour chart? Is that an indicator - if so which one? TIA
It is an indicator modeled on the MAs on the charts. It is supposed to identify windows for the 30min 1hr pair. I said at the beginning of the thread: you should try to use your own indicators, those you are very ok with.

and eurusd is entering into dangerous zone now. She has to fight to close above 1.3368; so buy oppo....
  • #5,386
  • Aug 13, 2014 11:19am Aug 13, 2014 11:19am
EURUSD just created dis-equilibrium at 1.33663. Now watch, if she hits 1.3354 before 1.33663, she will spike up! This type of window will be corrected 100% of the time.

In theory, efficient markets should close these kinds of windows. therefore, eurusd must go above 1.33663 before hitting 1.33547, IN THEORY!!!

FOREX IS efficient? CLOSE !!
  • #5,387
  • Aug 13, 2014 11:30am Aug 13, 2014 11:30am
DO you see eurusd is stationary? TA rules. She is deciding!!!
  • #5,388
  • Aug 13, 2014 11:50am Aug 13, 2014 11:50am
Money managers around the world know that leaving this window open will cause problems. They finally corrected it. Now, they can continue downward.
  • #5,389
  • Aug 13, 2014 11:50am Aug 13, 2014 11:50am
Quoting Eurusdd
DO you see eurusd is stationary? TA rules. She is deciding!!!
What does your probablility say about hitting 1.33530 today?

I sleept all day and missed and the fun...
If you fall, I shall be there. - The floor
  • #5,390
  • Aug 13, 2014 11:59am Aug 13, 2014 11:59am
Quote
The moment you have DISSIMILARITY is the trade opportunity because this is arbitrage. Once SIMILARITY is restored, then the trading window is closed
Quote
.

I would like to a link a more practical approach to this matter; the why and how to deal with it.
Dissimilarity is created by bigger money in the market / causing the market to go out of sync.
Price needs to move in a way to remove this "out of sync" proportion.. To then have price in sync again / similarity.

A very simpe practical approach that reflects above theories would be to trade towards dissimilarity (pull factor), and trade away(push factor) from the source/once similarity appears.

Let me know if this is correct pls eurusdd, vlady, or anyone else.
  • #5,391
  • Aug 13, 2014 12:03pm Aug 13, 2014 12:03pm
The dis-equilibrium corrected fully. Technical analysis rules. I did not even look at the news today but knew very well where this monster is going. believe in your methods and they will pay u back!
  • #5,392
  • Aug 13, 2014 12:07pm Aug 13, 2014 12:07pm
Quoting Robertk
{quote}{quote} I would like to a link a more practical approach to this matter; the why and how to deal with it. Dissimilarity is created by bigger money in the market / causing the market to go out of sync. Price needs to move in a way to remove this "out of sync" proportion.. To then have price in sync again / similarity. A very simpe practical approach that reflects above theories would be to trade towards dissimilarity (pull factor), and trade away(push factor) from the source/once similarity appears. Let me know if this is correct pls...
You are not right Robertk.

There are different kinds of windows depending on the indicator you are using. some times you may have to trade away from the dis-similarity in order to create similarity. for example, we bought today(away from dis-similarity).
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.PNG Size: 304 KB
  • #5,393
  • Aug 13, 2014 12:09pm Aug 13, 2014 12:09pm
Quoting Robertk
{quote}{quote} I would like to a link a more practical approach to this matter; the why and how to deal with it. Dissimilarity is created by bigger money in the market / causing the market to go out of sync. Price needs to move in a way to remove this "out of sync" proportion.. To then have price in sync again / similarity. A very simpe practical approach that reflects above theories would be to trade towards dissimilarity (pull factor), and trade away(push factor) from the source/once similarity appears. Let me know if this is correct pls eurusdd,...
You can do it that way also but only if you can recognize dissimilarity in the first place. I do that sometimes, I consider that counter trend if there is such a thing for this method.
  • #5,394
  • Aug 13, 2014 12:13pm Aug 13, 2014 12:13pm
Quoting Eurusdd
{quote} You are not right Robertk. There are different kinds of windows depending on the indicator you are using. some times you may have to trade away from the dis-similarity in order to create similarity. for example, we bought today(away from dis-similarity).{image}
I keep looking at this image and wondering if you guys are pulling someone's leg. I can't see any similarities nor disimilarities...It is like alien morse code or something. I must be missing something..

If there is something that i should be seeing can you please be kind enough to explain to me? I am really keen to learn about similarities/dissimilarities
If you fall, I shall be there. - The floor
  • #5,395
  • Aug 13, 2014 12:15pm Aug 13, 2014 12:15pm
Quoting Eurusdd
{quote} {quote} That is why I love VLADY1974. You are super. That is the whole truth. This is why when someone asked me what happens after similarity is restored, I refused to fall into that trap!! Thank you vlady1974.. A perfect example is the arbitrage window below.. There is a white on 1hr but none on 30min. That is why I said, UP is coming. We saw how high she went. {image}

OK OK I see what you are talking about!
If you fall, I shall be there. - The floor
  • #5,396
  • Aug 13, 2014 12:17pm Aug 13, 2014 12:17pm
Quoting samaralala
{quote} I keep looking at this image and wondering if you guys are pulling someone's leg. I can't see any similarities nor disimilarities...It is like alien morse code or something. I must be missing something.. If there is something that i should be seeing can you please be kind enough to explain to me? I am really keen to learn about similarities/dissimilarities
Hi. that picture is made up uf 1hr and 30min charts. Both look very similar. Buy there is a dis-similarity. One the 1hr chart there are 4 white symbols. but on the 30min, there are only three. So, the market has to move in a way to create 4 on the 30min(so that both chart are in sync again). The only way that can happen is for price to go UP!!!!
  • #5,397
  • Aug 13, 2014 12:21pm Aug 13, 2014 12:21pm
Quoting Robertk
{quote}{quote}A very simpe practical approach that reflects above theories would be to trade towards dissimilarity (pull factor), and trade away(push factor) from the source/once similarity appears. Let me know if this is correct pls eurusdd, vlady, or anyone else.
I see where you are going. It was a creative suggestion!

The problem is, the Dissimilarity Event is unknown and unpredictable.
You can only measure it and react to it once it's happened.

Perhaps what you are meaning is:
a) DISSIM Event has been tagged or recorded at PRICE DS
b) A major price move needs to occur near or on PRICE DS
c) On sufficient move away from (how to measure???) price will be at PRICE DT
d) Price will then move BACK towards PRICE DS.

That setup then allows you to enter a trade of some sort with respect to (a)
The further away (b) can be measured by any other indicator you have at your disposal: S/R, Pivots, Whatever
Once a reversal back to (a) is confirmed, you at least have a Target

Is this heading in the right direction?
A pip is only worth it if you know how much you risked to earn it
  • #5,398
  • Aug 13, 2014 12:36pm Aug 13, 2014 12:36pm
Quoting Eurusdd
EURUSD just created dis-equilibrium at 1.33663. Now watch, if she hits 1.3354 before 1.33663, she will spike up! This type of window will be corrected 100% of the time. In theory, efficient markets should close these kinds of windows. therefore, eurusd must go above 1.33663 before hitting 1.33547, IN THEORY!!! FOREX IS efficient? CLOSE !!
I'm a bit confused now. It didn't hit 1.335 before she hit 1.336 therefore it won't spike up but going down?! that is what this meant to be?
  • #5,399
  • Aug 13, 2014 12:43pm Aug 13, 2014 12:43pm
Quoting Eurusdd
{quote} Hi. that picture is made up uf 1hr and 30min charts. Both look very similar. Buy there is a dis-similarity. One the 1hr chart there are 4 white symbols. but on the 30min, there are only three. So, the market has to move in a way to create 4 on the 30min(so that both chart are in sync again). The only way that can happen is for price to go UP!!!!
What are these symbols? What kind of indicator is that? What does Tick and CROSS mean?
If you fall, I shall be there. - The floor
  • #5,400
  • Aug 13, 2014 12:44pm Aug 13, 2014 12:44pm
Quoting evrynet
{quote} I'm a bit confused now. It didn't hit 1.335 before she hit 1.336 therefore it won't spike up but going down?! that is what this meant to be?

Naaa. I said the dis-equilibrium was created at 1.33663 and eurusd must go above that number before she tries to hit 1.3354. If she hits 1.3354 before going above 1.33663, SHE WILL SPIKE UP!! EURUSD did what was expected. she went above 1.33663. Now, she is trying to hit 1.3354
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