The similarity system

Quoting Atihun

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{quote} you mean like this? {image}

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Quoting MAM.Trader

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kprsa (http://www.forexfactory.com/kprsa) what does it mean "fully resolving possible ransistent bars" ? my code does no calculate that way. Iit only caculates +-n bar span starting from 1 means when I set n=50 it caculates all probabilites from H=+-1 to H=+-50 now after post of juri I should fix the code. unfo my codes are embeaded into my trading code. an EA. so its not possible to share it as an indicator. but if you want to see the code I can share it with you as a raw data (text document) while your code is open source {quote}...

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Quoting blueface

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{quote} Hi,juriFX if you can show us more cases how to use the indi from kprsa?

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Quoting kprsa

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Hi all,
just to say, I fully agree with vlady and LITEchild that there are many ways to trade transient zones. I was shocked the other day when leeshindig showed one way of using the RecurrenceStatistic indicator of which I did not think before, so there is a learning curve for most of us here. Transient zones are linked to essential properties of the Forex chart, they happen in strong trends and as fractals at the end of the price movements. They are cleared in the recurrent zones between the strong trend movements.

As for the numbers, I have tried to explain it several times here and you would be well advised to read the thread at least since Eurusdd introduced them and it would be useful to read the previous comments when I have tried to explain this .

I call fractal bars those bars which have a transient zone at the end (because they correspond to Bill Williams fractals). I call transient bars those that have a transient zone in the middle. All together I call them problem bars. Typically (see posts by hepsibah for examples of opposite strategies) you will want to specify the h and h_right to have a high clearing probability, that means that in the course of the next h_right bars the price will pass through the zone. This is called the full resolving of the problem bar, and it is calculated for fractal type and transient type of bars separately.

The next thingy is what happens if the bar is not cleared. Typically the transient zone is very narrow in price. This price width of the unresolved transient zone is called k. The recurrence statistic calculates the mean width <k> for your selected h and h_right and as well calculates the probability that the price in the future will come down to <k>, 2<k> and 3<k> away from clearing your created zone not including your spread. This can be used for trading as well, since you can set, for example a 99+% probability goal of reaching within, say 3<k>=12 pips away from clearing the zone at H4 timeframe, instead of the, say, 85% probability of fully clearing it. These stats are again calculated for both end-of-the-candle (fractal) zones and mid-candle (transient) zones.

I hope the calculated quantities are clearer now.

Cheers,
k

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Quoting kprsa

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Hi Eurusdd,

I separate the stats for potential transient (for example when the candle closes above the maximum of previous h_left bars) and potential fractal (candle closes below the max of previous h_left bars, even though the high of this bar was higher than the max of previous h_left bars) zones. Both together add up to possible problem bars. Total stats are also calculated.

The resolving of the problem bar means that the potential transient/fractal zone was historically cleared within the next h_right bars (So this implies the zone width k=0). This strong condition is in principle not necessary for trading, one can use your recipe (http://www.forexfactory.com/showthread.php?p=7680220#post7680220) and win pips even if the transient zone is not cleared completely in the future (i.e. ifk>0). The indicator gives the probability of success for this case, as one can take profit for k=<k>, k=2<k>, k=3<k> (here <k> is the historical mean value of zone widthk, one also needs to take into account one's spread/commision here, the indicator does not do this automatically).

Also please note that my notation is slightly different than yours, what you call price+/-k in the Proposition 1 (http://www.forexfactory.com/attachment.php?attachmentid=1491112&d=1408196176), I call price +/- k/2 (i.e. my zone width is k, not 2k).

Cheers,
kprsa

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Quoting kprsa

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Hmmmm, looking at this again after a while, there appears to be an error in my calculation and statement. Sorry.
Let me go step by step and explain both the initial statement and the error I've made.

In your first post the clearance probability of the end-bar (fractal) zone within four bars away from it is 60.48%. That means that within fours bars from the zone's inception, historically in 60.48% of cases the price went through the zone, i.e. a transient zone has become recurrent.

In the situation after 16 hours, the probability has increased to 79.71%, so that means that within the 12 hours following the 4-hour period, additionally 79.71%-60.48%=19.23% of the total number of cases have cleared the zone, and that is the number (<20%) I have given in that post.

However, and this is what I did not take into account before, only 100%-60.48%=39.52% of the total number of cases have remained transient after 4 bars and this is supposed to be our starting point for a strategy. So the calculated 19.23% of the total number make slightly less than 50% (19.23/39.52=48.66%) of the remaining transient zones. Therefore the probability of clearance (within this quite long period of 12 bars) after one has observed that the h=4 zone wasn't cleared, is slightly less than 50%.

So the fractal zone indeed becomes repulsive (there is <50% of chance of clearing it within 12 hours after 4 hours after its inception have passed), but it not as repulsive as I stated previously. Also the R:R ratio needed should be better than 1:1. The probabilities will be improved by additional filters as described in the original post and I still think this is indeed quite tradable.

I hope the calculation is now clearer and I apologize for the error made previously.
Cheers,
k

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Quoting kprsa

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{quote} Hi, I think you mean "fully resolving possible transient zones"? The "transient zones" are the mid-bar transient zones. So they are defined as areas on the candle which has, for example, a higher High than the maximum of the previous h_left candles and the Close of that candle is higher than that maximum (of the previous h_left candles). The true transient ones are those that remain transient after a defined h_right. The resolved ones are when that price are has been retraced in the following h_right. I am not personally interested in your...

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Quoting MAM.Trader

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thank you if not interested then simply dont ask -- last post -- {quote}

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Quoting kprsa

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{quote} Sometimes some people do things even though they do not benefit directly from them. All the best, k

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Quoting leeshindig

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{quote} You are completely correct. A similar concept as what was discussed by mightyone on kreslik forum years ago.. he called them zero lines (where profits or losses are zeroed).. or stop pops as on elite forum.. Zoom out as far as you can go on a 5 min chart and you'll see the same pattern time and time again. An area of supply is "popped" and a high percentage of the time is returned to. Similar to gaps in stocks, hunting for volume. The beauty of what EURUSDD has presented here, originally, is the probability of such events happening and systems...

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Quoting Neio

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{quote} {image} This has always intrigued me so maybe we could initiate some discussion around this to finally clear this up. I don't have a degree in mathematics or anything like that but have studied these statements. Are we really talking about two propositions? My basic understanding is that the first statement (Proposition 1) is saying that price is almost surely recurrent. So there would be k and h figures that someone could pick that would make that statement true. So in theory every price on the chart could be recurrent if we wait long enough....

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Quoting juriFX

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{quote} Look at this chart, could be something worth exploring out {image} Thanks Sciurus for the channel

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Quoting Kiads

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{image} {image} mth

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Quoting LITEchild

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{quote} Eurusdd said it's a good read. And of course it's a good read! How else would you catch fish without bait? I have no problems with the theory. I enjoy a good read too. But are you making money from the theory you are trying to teach? That's the million dollar question isn't it? Why try to teach what is not working for you? I am not in this thread because EURUSDD gave me a good read! I am here because he has shown time and time again that what he is saying works! Period. He has made public several TEs for analysis and review. Fair enough!...

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Quoting iamsovereign

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{quote} If you noticed I was not addressing you in my post, seeing as how you felt like you wanted to respond to what I said. Well that is the nature of this, any thread. And that means ANYONE! got it. Dont really care aout your motives for being here as well. we all have ower reasons. to each his own. Every one here will make there own desions on what works and doesnt work. You can make your own decisions and share them if you shose to do so. Are you getting the message! Please dont bother -or take the time to respond. Im not writing this to...

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Quoting LITEchild

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{quote} And I was neither writing to antagonise anyone, you inclusive. Just saying my free and entitled opinion on issues I felt needed to be addressed. That's all. But unlike you, I do care about motive. And when it becomes glaringly obvious someone has very dark ulterior motives in some postings, I will certainly say something about it. Period.

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Quoting Kiads

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{quote} now i'm second yay.....

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Quoting PiratePip

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To my under standing tz and rz are used in a markov chain theory based on the fact that 97% of the market is recurrent and 3% is transient. Would this be the proper way to diagram the markov chain using the statement above? Or am I completely lost? t=transient zone r=recurrent zone i know that the chance a tz stays a tz is 3% that means the chance of it eventually becoming an RZ is 97%, but is it true that the chance of an RZ becoming a TZ is 3% and the chance of it staying an RZ is 97%? also does any one have a link to the study that shows this...

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Quoting burnssss

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{quote} No absorbent states

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