Funny Looking Rectangles & Useless Drivel

1. .

Doesn't matter if it's momentum based on not. Some of the good momentum indicators out there were never to designed to measure momentum in the first place! I use indicators in non conventional ways all the time. Your screenshot clearly captured momentum deceleration which I was curious to explore further. I pick nuggets from different ideas and try to combine them in unique ways that make sense to me and enough to suggest high probability setups. Doesn't have to have anything to do with the maths or the tech, or the stats.

2. .

B2i is just an apparently tradeable pattern. One of lots detectable on charts. Some more tradeable than others. I believe idouble drew attention to these in order to illustrate to those who says patterns either do not exist on charts, or if they do, that they are not tradable, and he has done exactly that. By the way an honest appraisal of multiple charts show lots of instances too where the B2i does not behave true to form with respect to price, which is characteristic of lots of other patterns too anyway, so in my opinion, it's still neither here nor there...

3. .

Honestly, It's not just the fall line that has the uncanny ability of being hit. Almost any LINE you draw using any given algorithm will be hit eventually! How you trade this with any degree of consistency is another matter entirely.

4. .

I do not know. And it makes no difference to me whatsoever. But you understand all these and came up with a logic to work on, so good for you! As long as it's making you money consistently, that's all that matters.

5. Like I said earlier, I just pick nuggets here and there that are relevant to my level of understanding and that I feel I can incorporate in a consistently tradable and profitable methodology. As long as I work out a way I can make money with it consistently, I don't care if it's conventional or not. The B2i concept reinforced my belief in an intrinsic relationship between the the highs and the lows. The jury is still out on the relevance of the open price. So I try to focus more on defining my own H-L algo and make it as consistently tradable and profitable as possible. The key phrase and most important belief every idea is '...consistently tradable and profitable'. That is my logic.

i think the way i have replied is crude. Which is not intended as i was not focusing. Sorry. What i actually meant was..

This is not a momentum based indicator.
It is based on my personal understanding about B2i was regards to the following:
Why is it drawn as such?
What is the significance of the fall line?
Why is it that the fall line has an uncanning high probability of being hitted?
Why is it that when you go to the one tick movement, the fall line becomes the close?
Why is it that when you start going further up in time frames, the fall line deviates from the close?
What does the deviation means?
Does the angle, width, height of the rectangle makes a diff? what does these parameters signifies?

I try to understand all these and came up with a logic to work on. i am sure you can do it better.=)

Many thanks to iDoubleStoch and a standing golf clap for Rand Yap for the MT4 indicator.
I really appreciate your input and have been using Yap's indicator for a week or so, studying it and trying to figure out the mechanics.

 

1. It seems the boxes are created in blue and if the price violates the projected Fall Line inside the box, it will invalidate itself and turn yellow. Is that correct, or does the Fall Line move from Support to Resistance (which seems to occur according to my observation...)?
2. If the O:L or O:H lines are created with a pinbar, the return move is generally much stronger.
3. The initial prices are created at the start of the hour as per the indicator but it seems that large banks and other major money use the start of the hour to set the price in motion the way they want it to go. How does that idea square with finding patterns out of "randomness" if price is being deliberately moved at the start of the pattern?
4. How long after price moves outside the box do we know the pattern has failed?

iDoubleStoch's OS indicator looks to be a 2800M SMA (28 days in the phase of the moon, which is natural, times 100 units of time, which is digital or man-made...).
I figure one way to use the indicator is to look for possible turning points on the H4 or Daily, then wait for a box to form on M1, using Yap's indicator to pinpoint a near-exact bottom or top almost to the pip (minus the spread...). That way, an excellent entry can be made for longer-term trading, using the "Novice Stop" as, well a Stop.

Please tell me where I am wrong about this.
Again, many, many thanks.

Very interesting thread. Thank you to all for contributing. I hope we can keep the momentum up.

Saver0, any chance you can add the fib blades to the BoxMaker?

Seems to me there is the framework here to create an ea. I dont say that lightly, I appreciate the effort required to do so as there are a lot of 'gaps' in the logic. hmmm food for thought...

So essentially the only way this system would work is if it can be assumed that the markets are not random and that people are indeed creatures of habit; that large positions will protect and enhance their trade.

For instance, the central banks and their cronies would try to move the markets but they obviously can't do it constantly. Therefore, this idea also depends on the acceptance that markets are indeed manipulated, or at least attempted to be manipulated.
In normally trending market movements (not necessarily the ones we are experiencing today where any jawboning is ramped to the nth degree...), the big money will attempt to move the markets at the beginning of the hour and near the half hour. I think it can be shown that volume is elevated at the turn of the new hourly candle.

Then smaller institutional traders and retail traders will trade Reflexively off of the push by the big money. The Fall Line will correspond to what is essentially the median price pushed by the bankers. A trade back to the Fall Line is akin to the same notion that pairs will try to trade back to the Weekly Pivot, either long or short, before resuming a trend or reversing from there.

If markets were truly "random" (and they obviously are not as long as someone with a lot of money has something at risk...), then the system will work reasonably well. If there were no Reflexive action in the markets at all, the success rate would probably be around thirty percent, due simply to luck.
I could recommend trading only in the direction of the main trend and not expect reversals of the overall movement of the pair.

No need to apologize. It is often times impossible to interpret the prose of another in such online mediums. I type many things that get misinterpreted by some.

That's right. It could be part of a segment of momentum being made manifest in the market at any given time, but it was not intentionally designed to be a momentum indicator. In fact, it was not intentionally designed at all. It was stumbled upon while doing creative research. Sometimes, I know what I am looking for and create an indicator based on an articulated theory I might have, and other times, I have no idea what I am about to stumble upon until it happens. I wake up one morning and boom there it is - or boom nothing at all and back to the drawing board.


It is not a bad question - in fact, that's the kind of question those interested need to be asking themselves. At the time, I was doing research on a completely different indicator, trying to optimize it (Distinct Vega). Out of nowhere, something told me to Mirror two of the Vectors within the Distinct Vega Indicator such that an inclosed geometry with symmetry was the result. This came from another idea that I was working on at the time involving a concept that I called Vector Symmetry (a topic I have not discussed here in this thread or in public before). You'd have to understand how I use the term "Vector" in my trading model in order get the reasoning behind why I would have then have an epiphany to "Mirror" the O:H/O:L Distinct Vega Trajectories to form a geometric shape that I later called the B2i.

[I can't tell you how my brain works. I can only show you the results of how my brain works. Same for anyone else who creates concepts.]

B2i is drawn that way because that's what the market produced. It made a move from an Open price UP and it made a move from that same Open price DOWN within a given period of time. The market does what it wants to do. I just track its behavior and search for repeatable patterns, triggers and structures within the context of my concept of Price Delta (the movement of price between two or more price points in raw OHLC data).

It is simply a different way to look at the markets. This is not traditional TA. This is a completely different horse and buggy. In fact, at this point, such technical analysis as this might even be decades ahead of its time. I've never seen anyone doing what I do, including those who are conventionally known as Quants.

If Quants know what I was really doing underneath, they'd start salivating like Pavlov's Dogs at the potential. Quants are doing a lot of different things, but one of the things they do is try to exploit the differential in Timing between multiple computer networks because not all trading firms are playing with the same degree of back-office technology. Their models work on Millisecond timing and they're trading frequencies cannot be matched in the Retail world. If a Quant could simply develop an understanding of Distinct Vega alone, they would enter a new world of algorithm design that would be quite scary to his competition. Delta Trading is ripe for exploitation in the world of Quant Trading.

This subject has little to no meaning in Retail Forex, however. I was just making a point about how far ahead of its time, Delta Trading seems to be.


That which the market gives it. The market decides the degree of significance.


Precisely because Patterns Do Exist In The Market and Price Has Structure. Those people in other threads who tell you otherwise, need to get comfortable with the idea because that's ALL the market does - all day long - each and every single day of the year - year after pattern repeating year. It blows my mind that some Traders can't see the repeatable patterns in the market on a routine basis. It tells me that they have not done the homework and really don't care to do the homework.

Paying attention to price while it is still inside the box is also important. Does price have an internal strike on the Fall Line from inside the box (as defined)? Where is the Harmonic Fall Line relative to the Neutral Fall Line - how much distance is there between them? How has price behaved relative to BOTH of those lines while inside the Box?

If price has structure and that structure has not yet been completed, then what's the probability that price will complete the structure while others sit around clueless about whether or not patterns exist in the market?

What you are trying to figure out here, is the Probability of Structure Completion. This opens the door into the world of Density Probability (another topic that I only briefly touched upon). When you have probabilities clustered FAR ENOUGH AWAY from the current LOCATION of price within a Historically Significant Pattern - then you have High Density Probability for price to move in that direction of the location that clustering of probabilities.

You can't do this in your head - you have to build tools that help you visualize Density Probabilities. I use Excel. But, you can also do this in MQL.



For the same reason that when you slice the Arrow of Time sufficiently, Time itself ceases to exist and all you are left with is Space - no more Space Time. Thus, all prices become one price. This tells you the important role that Timing has on your trading and it opens the door to studying the effects of Time on Direction, Magnitude and Probability on Price itself. It further instructs you that the only indicators that matter are those that feed your model with information about:

Timing
Direction
Magnitude
Probability

A good technical Trader has at least one solid indicator covering each of these critical dimensions of the market. All good trading systems cover these dimensions. All consistent Traders are well informed about these dimensions. Gamblers don't care about any of this stuff - in fact, they think it to be silly and quite useless. That's what makes them one dimensional Traders. They can only trade when the market is either strong bullish or strong bearish. They get eaten alive when the market enters Transformations (as defined in this thread above). They are not optimized in what they do as Traders. They are not the best of the best.

Delta Trading can move you from average Trader to well above average Trader, but you have to put in the homework.



For the same reason that Entropy in the universe increases the further way in Time you move from the Singularity (the Big Bang). Just as the Universe expands, the structure of B2i expands through Time increasing price volatility by definition and shifting the Fall Line away from the Singularity from which it was derived, the Open price. The Fall Line moves through Price Levels with Time as the structure of B2i expands, but the Fall Line's relative position ALWAYS remains the same. Similarly, though the universe expands through Space Time, Gravity remains the same and uniformly distributed through Space - its relative force remains constant.

The Fall Line is Gravity. That is why I am able to apply a "version" of: F ~ M1 (M2) / d2.

A very familiar proportional equation to any first year Physics Student. This was a theory of the market that I had long ago, but it took quite a while before I was able to locate a market structure in which to apply it. When you start to apply the Harmonic Fall Line into the equation, you can really begin to see the gravitational-like effects its has on price and the impact on the d-Squared component starts to make a lot more sense. In the equation, "F" denotes the real-time attraction between Price and the Fall Line while inside the B2i structure. Inside the structure, the base of the equation is not divided, but multiplied by d. Outside the structure, 'd' converts to d-squared.

So, the real key is getting into the trade before price exists the structure. I could not share all of that in this thread because doing so, requires your ability to accurately predict the final extreme point of the B2i structure and you cannot do that absent additional indicators. So, I stuck to Version 1.0 of B2i, where the entry comes AFTER price as exited the box.

These are advanced trading concepts that I only discuss in prose - never in full detail, as I am not divulging my trading edge.


Yes, and you should always note these structural attributes within the context of larger size B2i in higher time frames above the one you are trading. Angle, width, height are all relative. More narrow structures with steep angles clearly indicates a faster moving market with stronger Direction. However, within a larger B2i structure that is shallower and wider, you have to take into account price relative to the larger B2i Fall Line. As the Arrow of Time moves forward entropy increases (as stated illustrated above), so volatility increases relative to larger B2i time frames as well. Relative price movements in larger B2i time frames will appear to be moving more slowly when compared to smaller B2i time frames. So, steep angled and narrower B2i in smaller time frames are the building blocks of larger B2i structures and need to be accounted for in any decision analysis.


You are thinking about some of the right aspects of B2i which is good. More importantly, you are thinking - which is a far cry better than many who claim that patterns just don't exist in the markets. Clearly, those are people who have yet to put on their thinking cap.

I'm not "back." I was just drifting through.

B2i is an Indicator having five (5) generations of development (Version 5.x). Version 1.0 is displayed here. It is not a system as I define Trading Systems. Trading Systems in my mind are far more robust and highly organized. You can build a system around an indicator concept, but that's not what this thread does. I realize that most "Traders," don't really know what a real Trading System looks like, but if you were to take any source code for any full-blown software application and go line-by-line, module-by-module through the code, you would see a "systematic" approach to delivering application functionality that ranges from the way the software appears on your screen, to the way it interacts with the underlying hardware in your hands. That's a Systems.

In Trading, there is no textbook out there that defines what a system looks like. There is no seminar or boot-camp that accurately defines a Trading System. Why? Because, no one has truly defined what Trading System actually means. I've done that and came up with the following definition that I've been developing for many years:

A Trading System must (at a minimum) define and account for the following market conditions/realities:

Timing
Direction
Magnitude
Probability

Why? Because, you cannot trade consistently without these components defined and accounted for. Try to trade without accounting for Timing and you get entries that are either too soon or too late. Try to trade without accounting for Direction and you get drawn and quartered. Try to trade without Magnitude and you either miss the exit or you fail to maximize profit potential. Try to trade without Probability, and you are guessing without the benefit of historical and empirical evidence for the trade's sustainability to a specified target. Thus, these four (4) components function at a level that makes consistent trading results at least plausible.

The "Systems" comes into existence when you have properly Integrated these four (4) market components together through the algorithmic and logical linking of their respective Input/Output to a singular Trade Signal that yields consistent results - to a specified target. That's a Trading System.

If you are not doing that, it is my opinion that you either have a Trading Methodology or Trading Tactic. Both of which can very profitable, but not nearly as optimized for long-term profitability as a fully integrated trading system covering the four (4) fundamentals above.

B2i would be considered a Trading Tactic for the purposes of this thread, given the other elements woven into it such as the Harmonic Fall Line (adding the Fibonacci Fan Projections), Early Entry Concepts (adding Distinct Vega to Predict the last extreme point in the structure) and the Positive or Negative Fall Lines respectively. You can do a lot with B2i itself, but in an of itself, it would not qualify as a Trading System.


All technical trading systems by definition already include all fundamental market inputs. No matter who moves price or for what reason price is moved, technical trading systems have to use the data the market produces - which includes all fundamental data that others reacted to by entering and closing positions.

Whether a pattern exists in the market or not, depends on what the empirical analysis of the market data reveals. Market Theorists may lie, but the market data (if it is true market data) cannot lie and will always tell the truth about where price has been. The technical analysis does not need to know whether a fundamental input causes more buying or selling, but it does need to be able to discern whether or not a pattern emerges out of that buying or selling, and whether or not that pattern is trade worthy.

If the empirical analysis reveals no trade worthy pattern, then I don't force one into existence. Either there are logical links that start somewhere in the past and move to the right side of the screen on a consistent (reliable) basis, or there are not. The moment I start forcing such patterns into existence is the moment I begin practicing Alchemy. There should be no delicate balancing act required to see real patterns driven from real empirical data and those patterns created in the mind but without historical support. If it is real, then it will show up in history and it will project likewise into the future. If there is no historical connection then the only reality that pattern has will be in the mind of the Trader who created it.

So-called "Trends" are patterns. They never get defined that way. People always call them "Trends." However, the Transformations in Market Phases underneath the "Trends" are unseen by the typical Trader until it is too late in most cases. So, trading in the direction of the "Trend" is fine, until that "Trends" stops "Trending." From that point, the typical Trend Trader either holds on too long waiting for the "Trend" to resume not knowing it is over, or they panic stop, exit the position and wait for what they believe to be another "Trend." Unfortunately, currency markets are not "Trending" most of the time.

Currency markets spend a lot of their time in Market Phases 2 through 4 (as defined above in this thread). What does the "Trend Trader" do in these conditions? Sit on the sidelines waiting to participate in another Market Phase 1 or 5. A Delta Trader, on the other hands was trading the Transformations all the while - optimizing profit potential while reducing risk at the same time.

Delta Trading is StealthTrading. It is the most clandestine form of trading I know. The more clandestine in your entry and exist you can be in the markets the better. The less others know about your entry and exist the better. When they cannot see you coming or going, that's when you are trading at your best. When they have to guess at your entry and your exist, you are StealthTrading.

When you are trading with the herd - they can see you and they can manipulate you. They cannot see me coming. They don't know when I am going to strike, nor do they understand why. You can follow the herd and get branded, corralled, bought & sold, then sheared like a goat when someone decides to run your stops or test your pain threshold.

My Trading Philosophy is take whatever you can, whenever you can and then get the heck out of dodge city. Re-load and do it again when nobody else is looking for you to do it. StealthTrading without the herd mentality.

Not back. Just passing through.

I have not checked any of these indicators loaded into this thread yet. I'll have to check them out and follow-up.

Hi Double, I have been messing around with the boxes and fans based upon your postings, they are FAN tastic, in my opinion.
I took the fan concept and reduced the fan to 61.8 as your pics show.

Well, I had an idea to add a -61.8 to the fan so it projects that level as an equal deviation. I plot them as you suggested, following the swings until the 1D completes, any TF from 1HR to 1 min. I plot 2 fans for each 24 hr period like the B2i box; O:H, O:L with the 61.8 touching the HI or LO respectively.

The results are interesting to say the least, I was wondering if you had tried this concept before, and if you had, is there anything you could share concerning any results?

I am posting a pic for visualization.

Here is another concept I dreamed up this week, use the 12:00 Wednesday candle as the end of box limit and project from the open of the week.
Red vertical line is the 12:00 candle. 1/2 Week projection.

Hello Baillie. I do use Fibonaccio Reciprocals (the negative of a ratio). They are one of my most competitive advantages the way I deploy them. So, good on you for getting creative enough to even ask such questions in your research! It puts a smile on my face to see someone allowing their mind to explore the possibilities. This is good theoretical development work and very important creative thinking. Nicely done. Next comes the really fun part which is figuring out how to develop trade logic behind your discovery.

Yours is a different approach than mine and THAT is the whole point. It is supposed to be different than mine! As long as you can develop trade logic out of it, THAT is what matters. Congratulations on thinking outside the box! Precious few ever do.

Though I do not see the box draw on screen or the associated Standard Fall Line, I do see some good creative thoughts about Fibonacci Fans. I can interpolate where the B2i projection lines would be given the time frame you selected and would say that in order to get good projections of B2i Extreme Points (O:H and O:L for the selected B2i time frame), you have to have a way to measure price behavior inside the B2i structure. For that, I use Distinct Vega and a host of what I call Bar Vector based indicators, to really dial-in the location of both extremes. Then I can more confidently project what the completed structure will look like and start taking preemptive action as price demonstrates degrees of respect to certain Fibonacci Fan Ratios. That's my approach.

However, I would say that your concepts are worth you spending more time investigating. The use if reciprocal fans (especially) is a really smart idea and I am glad you found it on your own and through your own creative thought process!

Is DV a probability thing? Meaning, one can get meaningful data from price behaviour inside the rectangle (actually it's more like a rhombus to me), for instance if a 1H rhombus is halfway there, I can assume the probable range and direction/shape and the respective fall line from the empirically deduced probabilities calculated on historical price behaviour inside 1H rhombuses, if you will?

In and of itself it is not a probability calculation. You have to create the density probability for each leg in DV by simply using DV output for each leg through some desired period of history (some number of bars of historical data). O:L, O:H, L:C, H:C and O:C produce the Deltas for each DV dimension. Thus, you get a 5:1 derivation of price within a single bar of data. A highly efficient use of market data. BTW - You can then apply the calculation matrix against any Indicator output as well per bar and really start to see what the heck is going on inside your own Indicator designs. DV is not a difficult concept, but it is necessary to begin the process of better understanding the Magnitude of a pair across all time frames.


Yes. That's what your other indicators are supposed to be providing you while price is moving inside the structure - for the more advanced entries before the structure completes. In this example the D3 B2i was just sitting there out in the open and easily seen. The indicator concept DV that I shared in this thread is a Delta based indicator that provides historical Trajectory and Vector information about the pair inside each time frame.

You can go back and calculate as many bars as necessary, but use enough bars to provide relevant information about current Price Action. Too big a data set and your DV becomes too slow. To small a data set and your DV becomes too sensitive. I use between 28 to 21 days worth of DV in my own system, but that fits my agenda and my not work for others.

http://i58.tinypic.com/es9qxi.jpg

An M5 chart was used to plot this D3 B2i on EURJPY after today's news blast that sent price tumbling. You can get use the same D3 B2i structure, while using D1, H4 or H1 DV output to help with better understanding how the trajectories and vectors are shaping up in real-time (depending on where you are able to run your DV calculations). An MT4 Indicator that calculates DV for you is great to have and its output can be used inside an EA, or its outright formula can be used in an EA as well - it depends on the developer.

Harmonic Confluence Fall Line level is just about intercepted. Price still below all three (3) indicators and price tracking the lower projection line nicely towards both Fall Lines.

http://i58.tinypic.com/24nlhea.jpg

Internal strike on Harmonic Fall Line for roughly 24 pips. Price remains inside the structure, so all of this is gravy at this point. Target two now the focus more than 100 pips away from the Early Warning Entry Window (less than 81 pips potential right now).

The issue on this structure is the fact that the Intersection of both top and bottom projection lines extends way out into the weekend. That is because this was a D3 B2i (3 Daily Bars) to begin with. Given the location of price well below the standard Neutral Fall Line, I'd have not many issues with holding this through the weekend, something I don't typically do unless there is good justification for doing so - if I were in it for the long run. If I thought that 20-40 pips were enough for one trade, I'd allow a bit more movement towards the standard Neutral Fall Line and then call it a trade. Either way, the structure has nice digital geometry and the OS1 sits really high inside the structure with a nice big gap between itself and price, which improves the likelihood of having the correct Directional peg on the trade.

So, Timing, Direction and Magnitude all looked good from the start. Probability is unknown because I do not have this loaded in my system as a one-off trade, but you would do your own Probability calculations using the historical data that such structures present in the market.

http://i57.tinypic.com/nvcvva.jpg

Hi Double, what is the smallest box size we should consider on the 1 min chart? Or minimum bar count if any?

It depends on your goals as a Trader. What is the smallest profit potential vs the largest risk potential you are willing to take? If the structure is too small to provide the number of pips you require as a Trader, that that's structure is too small for you. The size of the structure is determined by the length of time between the Open (starting point) and the last extension point established by the market that you select (either the Highest High, or the Lowest Low).

The size of the structure depends on the Magnitude of both Primary Legs drawn from the Open to the Highest High and the Lowest Low. That sets the Sizing of the structure. What sets the Timing of the structure is WHEN the last extension point (either the Highest High or the Lowest Low) is established. If the last extension point is established 33 minutes after the Open, then you have an M33 B2i. If the last extension point is established 3 Days after the Open, then you have D3 B2i.

The chart you use to plot that structure is for visualization purposes. I like to use either the M1 or the M5 most times when demonstrating this stuff, because people can see the price action within the B2i structure in lower time frames. So, there is Structure Size controlled by the Magnitudes in both Primary Legs and there is Structure Timing controlled by the time of the last extension point (either Highest High or Lowest Low).

The potential risk/reward comes from the Size of the structure and the opposing Magnitudes in the Primary O:H and O:L legs. You consider those structures that yield the potential profit you seek or greater.

Thank You Double! Appreciate the explanation and the time you spend helping others break into a different point of view.