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The similarity system

  • #5,801
  • Aug 16, 2014 10:41am Aug 16, 2014 10:41am
Attached Image


Do I get it right ?
the market is not random but anything can happen.
  • #5,802
  • Aug 16, 2014 10:45am Aug 16, 2014 10:45am
  •  Neio
  • Joined Oct 2012 | Status: Can't think outside?Enlarge the box | 688 Posts
Quoting hepsibah
This is getting very interesting! I've attached an indicator (public domain) which should be useful in playing around with different settings for 'h'. It's a fractal indicator where you can choose how many bars go to make up the fractal e.g. if you want 7 bars on either side, set the total = 15 and those on either side = 7. I have used these settings in the example on the M5 chart but this is in no way a recommendation, I haven't had time to play about with it yet to find the optimum. In the example a few things come to light. The first rectangle...

Many thanks Hepsibah,

This indicator is useful because it is possible to highlight the fractals where price has not re-touched within h-bars on both sides (i.e price was transient) - Red arrows on my chart below.

Also you can configure it to highlight bars where price was not recurrent within h bars before the bar closed but where it did return at some point within h bars after it closed. White arrows on my chart.

Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDM15.png Size: 24 KB


Please note I did not highlight those bars where price returned within 2 bars of the target bar close.
An expert is a man who has made all the mistakes which can be made
  • #5,803
  • Aug 16, 2014 11:12am Aug 16, 2014 11:12am
Quoting Eurusdd
This is the heart of the matter and it works on any time frame. I will prove this to you. {image}
Do you think you could possibly send me two examples where you drew the price prediction. I would be extremely grateful...
If you fall, I shall be there. - The floor
  • #5,804
  • Aug 16, 2014 11:17am Aug 16, 2014 11:17am
Hi Eurusdd, Vlady and others ...

I try to understand this. Is my image right ? If price goes up through transient rectangle A, and landed at the top of Recurrent-Area, the price will goes down to A again ?

Thanks

Edit: because of transient rectangle at the left (the level is the same as the top of dark green Recurrent-Area) is very thin, it has big probability the price will go there ?
Attached Image (click to enlarge)
Click to Enlarge Name: audusd-recurrent.jpg Size: 28 KB
  • #5,805
  • Aug 16, 2014 11:24am Aug 16, 2014 11:24am
Quoting vspatrick
{image} Do I get it right ?
You are wrong. You do not know if that region is transient or recurrent yet because it is still forming. What you do though is wait. The moment price goes above that region, you can assume it is transient and then prices very close above it recurrent. Those prices are the ones you will expect a re-visit within at least one of the remaining h bars.
  • #5,806
  • Aug 16, 2014 11:26am Aug 16, 2014 11:26am
Quoting Dewachen77
Hi Eurusdd, Vlady and others ... I try to understand this. Is my image right ? If price goes up through transient rectangle A, and landed at the top of Recurrent-Area, the price will goes down to A again ? Thanks Edit: because of transient rectangle at the left (the level is the same as the top of dark green Recurrent-Area) is very thin, it has big probability the price will go there ? {image}
if price goes above the region before it is done forming, you can assume it is transient and the prices above it recurrent. Those prices are the ones you will expect to be re-visited, not the prices in the region.
  • #5,807
  • Aug 16, 2014 11:33am Aug 16, 2014 11:33am
Quoting Eurusdd
{quote} Everything before the bold is correct. You are not guaranteed longs. What you are guaranteed are re-visits. That is what you should trade!!! If you suspect a zone to be transient and price moves to a region which will then be recurrent, you can then trade the re-visits. But don't try to buy when price hits the top of the suspect zone because the zone is still forming!!!
Eurusdd, based on hepsibahs chart and his h settings could the green and red arrows,(i.e on the open of those bars), be considered the highest probability entries???.../
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot.png Size: 16 KB
  • #5,808
  • Aug 16, 2014 11:42am Aug 16, 2014 11:42am
Quoting Eurusdd
{quote} Everything before the bold is correct. You are not guaranteed longs. What you are guaranteed are re-visits. That is what you should trade!!! If you suspect a zone to be transient and price moves to a region which will then be recurrent, you can then trade the re-visits. But don't try to buy when price hits the top of the suspect zone because the zone is still forming!!!
which statments bellow are correct:

- once h is calculated for a currency pair and time frame is it always valid or needs to be calculated every day/week/month
- h is always the same for any currency pair for same time frame
- h is always the same for any currency pair for any time frame
  • #5,809
  • Aug 16, 2014 11:42am Aug 16, 2014 11:42am
Quoting Eurusdd
{quote}if price goes above the region before it is done forming, you can assume it is transient and the prices above it recurrent. Those prices are the ones you will expect to be re-visited, not the prices in the region.
Thanks Eurusdd.
Another question: Lets say the white candle is the candle on next Monday (not closing yet). The price goes through region, and the region is now transient (even the candle is not closing yet). The area above it (dark green) becomes recurrent area, right ? So, we are waiting for the price goes far enough (up or down), then we put order with target some where in recurrent area ?

Thanks
Attached Image (click to enlarge)
Click to Enlarge Name: audusd-recurrent2.jpg Size: 32 KB
  • #5,810
  • Aug 16, 2014 11:58am Aug 16, 2014 11:58am
Quoting Dewachen77
{quote} Thanks Eurusdd. Another question: Lets say the white candle is the candle on next Monday (not closing yet). The price goes through region, and the region is now transient (even the candle is not closing yet). The area above it (dark green) becomes recurrent area, right ? So, we are waiting for the price goes far enough (up or down), then we put order with target some where in recurrent area ? Thanks {image}
exactly but only the region above is tradeable. Let the probability be on your side.
  • #5,811
  • Aug 16, 2014 12:00pm Aug 16, 2014 12:00pm
Quoting Eurusdd
{quote}exactly but only the region above is tradeable. Let the probability be on your side.
Thank you very much ....
good night all .... see you ....
  • #5,812
  • Aug 16, 2014 12:03pm Aug 16, 2014 12:03pm
Quoting davinci15
{quote} which statments bellow are correct: - once h is calculated for a currency pair and time frame is it always valid or needs to be calculated every day/week/month - h is always the same for any currency pair for same time frame - h is always the same for any currency pair for any time frame
If the forces of demand are very close, almost equal then there is a way to find the optimal value for k. That is why I trade only eurusd because demand and supply are almost equal. That is the strengths of bulls and bears are almost equal in every state of the market.

How you calculate k is up to you. That will differentiate you from another person applying the same principle. Keep that secret.
  • #5,813
  • Aug 16, 2014 12:15pm Aug 16, 2014 12:15pm
Why do I keep reading "restaurant area" when I see "recurrent area" ?
  • #5,814
  • Aug 16, 2014 12:18pm Aug 16, 2014 12:18pm
Quoting shiva
Why do I keep reading "restaurant area" when I see "recurrent area" ?
because restaurant you will visit many times soon when you start making those six figures regularly...

You need to start calculating your hitting probability.
  • #5,815
  • Aug 16, 2014 12:22pm Aug 16, 2014 12:22pm
Quoting Eurusdd
{quote}because restaurant you will visit many times soon when you start making those six figures regularly... You need to start calculating your hitting probability.
I don't eat much really, but, liquid food is another story altogether
  • #5,816
  • Aug 16, 2014 12:30pm Aug 16, 2014 12:30pm
Wow, it is difficult for me to close my eyes ... I hope this is my last question before sleep ....
I think i got it now. But, if there is only 1 region at upper, and 3 or 4 region at lower of current price. We must take each upper and lower, or ??

Thanks
Attached Image (click to enlarge)
Click to Enlarge Name: audusd-recurrent3.jpg Size: 30 KB
  • #5,817
  • Aug 16, 2014 12:36pm Aug 16, 2014 12:36pm
Quoting Dewachen77
Wow, it is difficult for me to close my eyes ... I hope this is my last question before sleep .... I think i got it now. But, if there is only 1 region at upper, and 3 or 4 region at lower of current price. We must take each upper and lower, or ?? Thanks {image}
No!! focus on the zone price is concerned with. the current price should guide you. The whole thing is simply. This and the DNA are the two tools one needs to develop revolution! I gave you people just the idea. You can modify it the way you want. But there are even more powerful things. That i keep for heaven. Nice weekend.
  • #5,818
  • Aug 16, 2014 12:38pm Aug 16, 2014 12:38pm
Quoting Eurusdd
{quote} No!! focus on the zone price is concerned with. the current price should guide you. The whole thing is simply. This and the DNA are the two tools one needs to develop revolution! I gave you people just the idea. You can modify it the way you want. But there are even more powerful things. That i keep for heaven. Nice weekend.
Great ... thanks again Eurusdd. Have a nice weekend too ....
  • #5,819
  • Aug 16, 2014 12:43pm Aug 16, 2014 12:43pm
Hi to all,
Eurusdd,
I'm a little sick, but I am following the thread.
The main idea is the search for recurring areas. Maybe that's your "omega".
If the candle is inserted into recurring area have high probability.
The numbers are very powerful jajajj.
I kinda liken it to the convergence of a series. There comes a time when the transition probabilities are very small and then assume recurrence.
I now will read more carefully, your assumptions.
Thank you very much.
  • #5,820
  • Aug 16, 2014 12:52pm Aug 16, 2014 12:52pm
Quoting Eurusdd
{quote}If the forces of demand are very close, almost equal then there is a way to find the optimal value for k. That is why I trade only eurusd because demand and supply are almost equal. That is the strengths of bulls and bears are almost equal in every state of the market. How you calculate k is up to you. That will differentiate you from another person applying the same principle. Keep that secret.

hello all, am i right in assuming that Proposition 1 http://www.forexfactory.com/attachment.php?attachmentid=1491112&d=1408196176
is only valid for markets that tends to moves in ranges? and that transient prices are harder to find in higher TFs?
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