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The similarity system

  • #5,861
  • Aug 17, 2014 9:31am Aug 17, 2014 9:31am
Draws the zones like this and is totally parameterized

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 46 KB
*** Shoot for the moon. Even if you miss, you'll land among the stars. ***
  • #5,862
  • Aug 17, 2014 9:33am Aug 17, 2014 9:33am
Quoting Freefox
I've just finished coding an indicator that automatically draws the yellow/red zones around fractals. I'll load up up for all to use very soon
Hey Freefox that is exactly what i had hope for. I will be thankful if you provide it.
  • #5,863
  • Aug 17, 2014 9:34am Aug 17, 2014 9:34am
Thank you freefox

Quoting Freefox
I've just finished coding an indicator that automatically draws the yellow/red zones around fractals. I'll load up up for all to use very soon
  • #5,864
  • Aug 17, 2014 9:51am Aug 17, 2014 9:51am
Quoting Freefox
Draws the zones like this and is totally parameterized {image}
can you program a yellow/red for up And red/yellow for down plz
Bottomless wonders spring from simple rules, which are repeated without end
  • #5,865
  • Aug 17, 2014 9:52am Aug 17, 2014 9:52am
Quoting Sciurus
It amazes me that no-one has deciphered eurusdd original post yet. Everyone has jumped on h and run with it, without actually thinking about the implications the original proposition. Here is my take. eurusdd uses set notation. In my interpretation, it reads something like this: At any point in time and on any time frame, either price+k or price-k is recurrent for any given h. Therefor, k is the number of pips (above or below) current price before price becomes recurrent. {quote}
My math isn't great, only high school level. But reading the proposition by EURUSDD again
http://www.forexfactory.com/showthread.php?p=7678605#post7678605

My take is a bit different from yours. i think EURUSDD was trying to establish that,

1) if you take any price at any moment in time, and apply a large enough value of h, that price will be h-recurrent. i.e. no price will be h-transient.
2) the key is to find a sufficiently low value of h , so that the occurrence of h-transient prices become a low (3%) probability event. that this event could be applied to a trading strategy.

obviously , 1) will only be incorrect for the 2 extreme bars in the price history. (assuming there is no price gaps)

and for 2) EURUSDD has already hinted that he would only apply this to 'balanced' markets. so if i understand it correctly, we are just betting the price to go back to 'then-transient' prices to make it recurrent. such bet will have a high success rate because it would be against the market trait for not revisiting them.
  • #5,866
  • Aug 17, 2014 9:57am Aug 17, 2014 9:57am
Quoting limprobable
{quote} can you program a yellow/red for up And red/yellow for down plz

It has got red arrows for down and yellow for up and you can change the color if you want.
*** Shoot for the moon. Even if you miss, you'll land among the stars. ***
  • #5,867
  • Aug 17, 2014 10:06am Aug 17, 2014 10:06am
Quoting Freefox
{quote} It has got red arrows for down and yellow for up and you can change the color if you want.
Thank you freefox :
Bottomless wonders spring from simple rules, which are repeated without end
  • #5,868
  • Edited 11:14am Aug 17, 2014 10:56am | Edited 11:14am
Here's the promised indicator that draws the transient zones around fractals

Attached File(s)
File Type: ex4 Fractal_Zones.ex4   20 KB | 2,133 downloads

It's pretty self explanatory. Not had chance to test it obviously when market is open but should be okay.

May develop it further to identify recurrent zones too but need to work out in my own head first exactly how that would be done and if it would in fact be useful.

Let me know if there are any issues or questions.

Hope it proves useful.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 46 KB
*** Shoot for the moon. Even if you miss, you'll land among the stars. ***
  • #5,869
  • Aug 17, 2014 11:17am Aug 17, 2014 11:17am
Quoting Freefox
Here's the promised indicator that draws the transient zones around fractals {file} It's pretty self explanatory. Not had chance to test it obviously when market is open but should be okay. May develop it further to identify recurrent zones too but need to work out in my own head first exactly how that would be done and if it would in fact be useful. Let me know if there are any issues or questions. Hope it proves useful. {image}
Thanks Freefox. Good luck with your trading!
  • #5,870
  • Aug 17, 2014 11:20am Aug 17, 2014 11:20am
Quoting Freefox
Here's the promised indicator that draws the transient zones around fractals {file} It's pretty self explanatory. Not had chance to test it obviously when market is open but should be okay. May develop it further to identify recurrent zones too but need to work out in my own head first exactly how that would be done and if it would in fact be useful. Let me know if there are any issues or questions. Hope it proves useful. {image}

Many thanks!
  • #5,871
  • Aug 17, 2014 11:51am Aug 17, 2014 11:51am
I have read your posts and I must confess many of you don't get the key trick yet. However, the way you are approaching the idea is also good. That is what I want. I want you to adapt the idea to your own style. But when you see it the way I do, you will get your Eureka moment.

All the best!
  • #5,872
  • Aug 17, 2014 11:53am Aug 17, 2014 11:53am
Freefox thanks a bunch!
  • #5,873
  • Aug 17, 2014 11:59am Aug 17, 2014 11:59am
Quoting Eurusdd
It is very important you know how price got to its current state before you buy or sell. In other words, the HISTORY of price does matter. There are three possibilities. Consider A. Price was increasing before it got to A and the probability it will continue in that direction is greater than 50%. WHy? Because top and bottoms like B occur with probability less than 1%, if you define a period which is greater than three bars. Check it yourself. Therefore, since the probability that B is a turning point is less that 1%, price is expected to continue...

This is a money making Idea: Because top and bottoms like B occur with probability less than 1%, if you define a period which is greater than three bars. Check it yourself. Therefore, since the probability that B is a turning point is less that 1%, price is expected to continue to do what it was doing before it got to B.
  • #5,874
  • Aug 17, 2014 12:01pm Aug 17, 2014 12:01pm
Quoting Baillie
{quote} This is a money making Idea: Because top and bottoms like B occur with probability less than 1%, if you define a period which is greater than three bars. Check it yourself. Therefore, since the probability that B is a turning point is less that 1%, price is expected to continue to do what it was doing before it got to B.
This is why repainting indicators such as ZZ's can make you money.
  • #5,875
  • Aug 17, 2014 12:06pm Aug 17, 2014 12:06pm
Quoting Eurusdd
I have read your posts and I must confess many of you don't get the key trick yet. However, the way you are approaching the idea is also good. That is what I want. I want you to adapt the idea to your own style. But when you see it the way I do, you will get your Eureka moment. All the best!
Hesitated to write this post, awaiting for a tough answer, but with the risk to sound dumb I would give it a go

As I see it, the next candle after the transient on should show us where price is most probable going for the next several candles. So we should buy if next candle is above the transient one, and sell if is below. Could you please let me know if is correct ?

Thanks,
Dragos
  • #5,876
  • Aug 17, 2014 12:15pm Aug 17, 2014 12:15pm
Quoting dragos_
{quote} Hesitated to write this post, awaiting for a tough answer, but with the risk to sound dumb I would give it a go As I see it, the next candle after the transient on should show us where price is most probable going for the next several candles. So we should buy if next candle is above the transient one, and sell if is below. Could you please let me know if is correct ? Thanks, Dragos
I believe this is the answer your looking for:

Quoting Eurusdd
We do not need to understand everything about markov chain: What we need for forex trading are the following.{image} 1: It is clear that NO state(price) is absorbing!!! 2: But, and this is important, At any given time, there is a set of states that are transient!!!, we can find them. 3: NOT all forex prices are recurrent. So, those problem bars are the ones that contain the KEY transient states(price). Once we calculate the the time-interval, we can make a call that the process will return to those prices within the time period!!!
  • #5,877
  • Aug 17, 2014 12:17pm Aug 17, 2014 12:17pm
FreeFox! Thank you so much for the indicator!

Just wondering if this is relevant:
Eurusdd mentioned that knowing where to place your stop loss was important. This was always 10 pips.
A pip is only worth it if you know how much you risked to earn it
  • #5,878
  • Aug 17, 2014 1:27pm Aug 17, 2014 1:27pm
Quoting Eurusdd
I have read your posts and I must confess many of you don't get the key trick yet. However, the way you are approaching the idea is also good. That is what I want. I want you to adapt the idea to your own style. But when you see it the way I do, you will get your Eureka moment. All the best!


Most prices choose to be h-recurrent. That means if you find the correct h then you can trade any recurrent area for next h (time frame) as price in that h time frame has to be in recurrent area. If you're "unlucky" and you choose an area that is transient you should only wait for a price to return in h (time frame) and close the position or even trade it when price is far enough from that area. So in case there you have to close your first trade with a loss you will cover it with a profit of the second trade.

So now who will find the correct h?
  • #5,879
  • Aug 17, 2014 1:39pm Aug 17, 2014 1:39pm
Quoting Eurusdd
{image} The 5-transient prices are represented by the yellow/red zones. Very few of them. The 5 means that within the bars where those prices occur, none of the next 5 bars, behind or in front of the bar in question, passed through those prices. Now, if you get the h and k right, you will find that transient price-zone occur with very LOW -probability. That is prices are h-recurrent almost-surely for some positive h.
Based upon this image the transient zones can be at swing highs or lows but some are not: I would bet most are not, they would appear to be so because of the swings after the zones are created. Look at zones 2,3,4 from the left.

http://www.forexfactory.com/attachme...1&d=1408152401
  • #5,880
  • Aug 17, 2014 1:52pm Aug 17, 2014 1:52pm
Quoting Baillie
{quote} Based upon this image the transient zones can be at swing highs or lows but some are not: I would bet most are not, they would appear to be so because of the swings after the zones are created. Look at zones 2,3,4 from the left. {image}
Actually that is a good point that transient zones don't have to be at swing hi/lo's - they can develop inter-bar and something my indicator won't pickup. I'll have to have a rethink how to capture those type of transient zones and code a modification. Will have to be tomorrow now..
*** Shoot for the moon. Even if you miss, you'll land among the stars. ***
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