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The similarity system

  • #9,741
  • Oct 1, 2014 10:49pm Oct 1, 2014 10:49pm
A new gem discovered using the TZ and probability theories presented here.
This one focuses more on longer term trends & requires minimum followup + it has set Stop Losses.

I have managed to manually back-test each and every trade on the eur/usd chart for the period ranging from Jan 2010 till September 2014.

I will do my best to backtest further into the history, and include other pairs also.

The stats so far:

Total Number of Trades : 137
Long Trades: 68 of which 28 are profitable
Short Trades: 69 of which 30 are profitable

As you may have noticed, this system is different from the other one when in comes to the % of winning trades.
However, what is interesting is that despite the fact that the winners are less than the losers, the total amount of pips that this system has generated is 3,100 pips for the above mentioned period (i.e. the average value of a winning trade is much higher than that of a losing one).
  • #9,742
  • Oct 1, 2014 11:00pm Oct 1, 2014 11:00pm
Before I continue explaining further about this method, I will need you to focus on the statistics that I'm providing in order to understand the conclusion that I will eventually reach.

The latest signal provided by this system was a Sell signal in mid September @ 1.287
The signal is still in effect with a current SL @ 1.277
So basically its a free 100 pip ride at the moment

There is no set TP, your exist is when you decide to close your position or when your SL gets hit. The best part is that the SL is adjusted with time (in the above case, it will get lower than 1.277 eventually as long as 1.277 is not reached).
  • #9,743
  • Oct 1, 2014 11:27pm Oct 1, 2014 11:27pm
So am I bearish on the Euro? Hell No! I am as bullish as it can get.

However, if I knew about this method earlier, you can bet that I would have shorted 1.287, but unfortunately this was just recently discovered and the back-testing took some time.

Should you sell here? I wouldn't advise, but if you do, make sure to get out if we reach 1.277

Should you buy here? Despite my bullishness (due to many different factors), I wouldn't recommend buying before getting above 1.277.
I currently have one huge buy stop order at 1.277.

Is it worth waiting for 1.277 if you are very bullish? It's better to be safe then sorry, the signal is still bearish as long as we are below 1.277.
I will explain in my next post why it is worth waiting + the projections that you should expect for the eur/usd in case the above level is taken out.

Keep in mind that 1.277 will keep on being adjusted lower as time passes. So the more time the euro spends lower, the better the long entry will be.
  • #9,744
  • Oct 1, 2014 11:44pm Oct 1, 2014 11:44pm
So what to expect if 1.277 gets cleared?

In the past 5 years (the period that I managed to back-test so far), the number of Sell signals has been always equal to the number of Buy signals for every given year.

There has always been a very clear pattern that evolves around some numbers which I will refer to from now on as 'Inflection Numbers' (1.277 in our example)

The pattern shows that for every given year, the there are 10 main moves (5 on the short size and 5 on the long side) that will be created from the inflection points.
Those moves are proportionally equal in magnitude for both long and short signals.

The magnitude of those moves/waves in no particular order are the following:
500+ pips
300+ pips
200+ pips
200+ pips
100+ pips

So based on statistics, each year 5 undisturbed moves will happen (from infliction points) on both the short side and the long side no matter what the trend was during that year!
  • #9,745
  • Edited Oct 2, 2014 12:05am Oct 1, 2014 11:55pm | Edited Oct 2, 2014 12:05am
So far, what we have for this year is the following:

Short Side
500+ Pip move - Done
300+ Pip move - Done
200+ Pip move - Done
200+ Pip move - Done
100+ Pip move - Done

Long Side
500+ Pip move - Not yet
300+ Pip move - Not yet
200+ Pip move - Not yet
200+ Pip move - Done
100+ Pip move - Done

Since the year has not much left before ending, each coming Inflection Number will have a very high probability of being the one that will trigger one the above large moves.

For now keep an eye on 1.277, I will update it once/if it changes (i.e becomes smaller/lower).
  • #9,746
  • Oct 1, 2014 11:59pm Oct 1, 2014 11:59pm
i expect to see price at 1.3650 during the next 10-12 months
Don't use both feet to test the depth of the river
  • #9,747
  • Oct 2, 2014 12:08am Oct 2, 2014 12:08am
I hope that you guys will find the above posts useful.

I hope that you'll manage to take advantage of what is presented, and maybe even give your ideas to make it better and more accurate.

Good Luck
Jay
  • #9,748
  • Oct 2, 2014 12:11am Oct 2, 2014 12:11am
Quoting FX-Jay
I hope that you guys will find the above posts useful. I hope that you'll manage to take advantage of what is presented, and maybe even give your ideas to make it better and more accurate. Good Luck Jay
Amazing stuff Jay and it looks like price has started turning up.
  • #9,749
  • Oct 2, 2014 12:20am Oct 2, 2014 12:20am
Quoting Strawbale
i expect to see price at 1.3650 during the next 10-12 months
If what I mentioned holds true, then we can expect 1.33 before year end.

I'm sure the 'Euro Parity' guys and QE guys will jump in and ridicule this post just as they did the gbp/usd was at 1.71.
Everyone that was calling for a lower pound was called crazy because there was a rate hike coming!!
Today the UK rate hike talks are still the same yet the Pound is 1,000 pips lower.

All the luck to whoever believes that the USD is sustainable at current levels
  • #9,750
  • Oct 2, 2014 12:53am Oct 2, 2014 12:53am
hahaha
Don't use both feet to test the depth of the river
  • #9,751
  • Oct 2, 2014 1:02am Oct 2, 2014 1:02am
Quoting FX-Jay
I hope that you guys will find the above posts useful. I hope that you'll manage to take advantage of what is presented, and maybe even give your ideas to make it better and more accurate. Good Luck Jay
Yes, thank you Jay for those posts. Like you say, it’s hard to believe that EU can retrace so much with the current fundamentals and so many bears around calling sub 1.25, but anything can happen in forex. Let’s wait and see. (EU still dropping as I type)
You reap what you sow.
  • #9,752
  • Oct 2, 2014 3:43am Oct 2, 2014 3:43am
missed my swings. looking to take a swing short 1.2660/70 ish targeting below 1.2576
  • #9,753
  • Oct 2, 2014 3:50am Oct 2, 2014 3:50am
hi
i am new to this thread anybody tell where i can get freefoxs transient zone indicator
  • #9,754
  • Oct 2, 2014 3:57am Oct 2, 2014 3:57am
Quoting wealthpro
hi i am new to this thread anybody tell where i can get freefoxs transient zone indicator


http://www.forexfactory.com/showthread.php?p=7686119#post7686119
  • #9,755
  • Oct 2, 2014 5:24am Oct 2, 2014 5:24am
Quoting vlady1974
{quote} I think you have it slightly mixed up. Transient = in passing = happens infrequently Recurrent = re-occurs = happens again Therefore, Transient Price = happens once or not often Recurrent Price = happens alot or is returned to alot Zone = Range of Prices.
Hi the Transient zones are found normally at turning points... At what point do you identify or qualify a zone recurrent. Example, in a down trend u will find Tzs supporting price. May that zone be classified recurring when later price goes below the Tz level.
My help is in the name of the Lord who made heaven and earth.
  • #9,756
  • Oct 2, 2014 5:38am Oct 2, 2014 5:38am
Quoting Albertdkpllh
{quote} Hi the Transient zones are found normally at turning points... At what point do you identify or qualify a zone recurrent. Example, in a down trend u will find Tzs supporting price. May that zone be classified recurring when later price goes below the Tz level.
The best definition to date is the original one given by Eurusdd. For a given price at time P(t) within a timeframe T..... prices can be found to be h-recurrent.
So in other words:

If you chose h=10 for any of the supplied indicators, then when a TZ has been identified:
a) Prices within the TZ are transient for 10 bars
b) Prices outside the TZ are recurrent for 10 bars
c) But on expiry of h.... ie. any price movement after 10 bars, it is possible that price movement can enter the TZ range of prices from the right (which is now no longer valid outside the h bars after the TZ central bar, otherwise known as the Right Side h value). You could define it as recurrent until another new TZ emerges. It is possible for TZs to overlap.

With (c).... once it has expired, some of the folk here have demonstrated that the level retains a certain memory - sort of like S/R in that price can eventually return to it and then react to it. The return will obviously be made from another point on the chart... so that's one trading opportunity. Then there's the reaction when movement arrives at that point: either bounce or go through, so that's the next trading opportunity.

None of these post-TZ events have anything to do with the original identification of that TZ... we don't have any further info from Eurusdd on this. But many of the guys here have observed behaviour around these TZ ranges well after they have expired.
A pip is only worth it if you know how much you risked to earn it
  • #9,757
  • Oct 2, 2014 6:04am Oct 2, 2014 6:04am
Quoting vlady1974
{quote} The best definition to date is the original one given by Eurusdd. For a given price at time P(t) within a timeframe T..... prices can be found to be h-recurrent. So in other words: If you chose h=10 for any of the supplied indicators, then when a TZ has been identified: a) Prices within the TZ are transient for 10 bars b) Prices outside the TZ are recurrent for 10 bars c) But on expiry of h.... ie. any price movement after 10 bars, it is possible that price movement can enter the TZ range of prices from the right (which is now no longer...
There is an additional condition to calculate the recurrent area.
This condition should be able to evaluate the end zone price in order to increase the odds. Without this condition, true recurring area is not calculated.
  • #9,758
  • Oct 2, 2014 6:16am Oct 2, 2014 6:16am
Quoting vlady1974
{quote} The best definition to date is the original one given by Eurusdd. For a given price at time P(t) within a timeframe T..... prices can be found to be h-recurrent. So in other words: If you chose h=10 for any of the supplied indicators, then when a TZ has been identified: a) Prices within the TZ are transient for 10 bars b) Prices outside the TZ are recurrent for 10 bars c) But on expiry of h.... ie. any price movement after 10 bars, it is possible that price movement can enter the TZ range of prices from the right (which is now no longer...
Thanks a lot Vlady. Do you use the condition to calculate the recurrent area burnssss is referring to?
My help is in the name of the Lord who made heaven and earth.
  • #9,759
  • Oct 2, 2014 6:18am Oct 2, 2014 6:18am
@Vlady...I mean for the calls that u make with precision sometimes...
My help is in the name of the Lord who made heaven and earth.
  • #9,760
  • Oct 2, 2014 6:30am Oct 2, 2014 6:30am
Quoting burnssss
{quote} There is an additional condition to calculate the recurrent area. This condition should be able to evaluate the end zone price in order to increase the odds. Without this condition, true recurring area is not calculated.
Oh cool! I didn't know that you'd progressed on that front.
Excellent! Well done - I know you'd been working hard on that front for ages! Is that to do with Special Agent K? (from Men In Black - sorry bad joke)
A pip is only worth it if you know how much you risked to earn it
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