Impulse Trends Research using Swings and Statistics

This thread will act to contain the findings for Impulse Trends Research. New posts would come in as soon as new findings are confirmed. This itself IMO can be used as an independent trading system.

Participation Requirements
If one wishes to participate, one should have the following;
1-Your own swing indicator.
2-Skill to code well and gather statistical data.
3-Ability to make up your own conclusions and objectively compare it with the work here.
4-Do not bring in bits and pieces of work with lacking logic, but bring forward through and clear cut work, that was well thought out and executed.
Otherwise I strongly recommend one to stand aside and just allow the thread to run its course.

Baseline Work Required
I am assuming anyone who wants to try this here have their own swing indicators. I will not release my latest swing indicator formula anymore (currently MMLCv18)

Definition of Impulse Trends according to swings;
1-for each swing on the higher timeframe (M30 x 6 period swings), calculate the last 20 swings behind it price wise, what is the std dev *3
2-if the swing is >= std dev *3, mark this as impulse. Otherwise mark as non impulse
3-classify these impulse swings into subtypes
<=4 as "s"
<=5 as "m"
<=6 as "x"
>7 as "xl"


4-for each impulse swing, zoom back into into lower timeframe (M5 x 6 period swings). One can see the shape of the impulse swing, how it forms, and it has a somewhat parabolic shape to it.




...and sometimes it doesn't, but that's all right.

Current goals and ideas on breaking down these 'ideal model trends'
-From a statistical POV and fractal POV, Impulse Swings seen from a lower timeframe implies higher timeframe is taking control. This is one of the 'secrets' of multiple timeframes; how higher timeframes affect lower timeframes and vice versa.
-Happens about 15% of time, you do not want to be on the wrong side trading these or otherwise get margin call real bad.
-You want to identify catch these early and fast, before they start and as they build up.
-Inversely, this means the other 85% of the time, you can afford to 'trade against the trend' and be forgiven for taking the wrong side.
-Any negative development of these 'ideal model trends' easily implies 'trend is ending'. This is now easier to spot.

Currently use of manual trend swings seem to be very telling;


So are support / resistance zones;


And sometimes both can be used at the same time;


Unfortunately, these are still manual methods with loose rules. The goals now are to;
-Breakdown each type of Impulse Swing into Individual Components, from start to end.
-Classify each Individual Component.
-Develop clear cut criteria / hard rules for both positive and negative development.

Identification of Key Lagging Swings. This is more of a responsive tool, less of anticipatory (which I would bring in later). Nevertheless this tool is very important because it provides structural stability, that can be easily identified and also exploited for trading. I took this idea from Ray Barro's book, but modified it to use 110% and 90%. If I am correct, Barros uses 120% and 80%. I don't find the statistical difference significant. I did some gathering of statistics of how swings react to these zones in general. What is more important is now we can see better, if a trend is going to continue or reverse after lagging happens.

If you understood the foundations of the previous MMLCs, then you should have an easy time understanding this.






Comparing all the XL size trends. Comes with all shapes and patterns, but the key lagging swing principle holds.

New day of the year. Not bad, this swing didn't become 2.5 std dev, but the pattern rhythms a lot with the earlier pattern...

Left = M30 Higher Timeframe
Right = M5 Lower Timeframe


... and this upswing ended. Time for downswing to occur. Lets see how well this one runs.


... first key lagging swing zones created in lower timeframe, and broke out occurred in the same direction as higher timeframe swing direction.

You brought out a big issue when I read your study and finding.

What is a trend?
What is a swing trend?
What is an impulse swing trend?

Trend is a concept.
Swing trading is another concept.
Impulse leg in wave counting or price action analysis is another concept.

Most of traders love to catch an impulse leg of price rise/fall.
So, we need to know if next price move (or leg or swing) is an impulse type of price action?

Common methods:
1. forecast on technical.
2. forecast on fundamental, or news, etc.
3. impulse indicator.
4. wave counting.
5. volatility forecast.
6. price channel breakout, or fake out.
7. Dr. Alex impulse trading system.
8. Others

When somebody loss big money, then, a nice impulse leg (swing) will happen. eg. Brexit, gbp-usd lost out big bids from George Soros and associates. Sorros and Japanese pension fund lost huge, then, cable got impluse crash down.

Chinese centre bank verbal intervene USD-CNH, so, an impulse drop happen yesterday!

You can read my take regarding news here :
http://www.forexfactory.com/showthre...ws#post8592528
So no, I don't worry about news or big players anymore.

What I work on are no longer concepts or theories, but actual work that are heavily backed by statistics and numbers.

And no, I don't exactly do those 8 things. Specifically what I am doing is looking for repeatable and precise price/time structures across multiple timeframes. I am not in the business of prediction, but look for probabilities. I let future price take care of itself while I use statistically backed swings and zones to correctly read what is happening now. You can look at my previous works and you might understand better.

FYI please consider the Participation Requirements from post #1. I would appreciate it in advanced. Thank you.

Felt that I am wrong after watching yesterday's and today's swing price action, that >= std dev *3 would actually yield better results;

>= std dev *2.5 higher timeframe view


>= std dev *3 higher timeframe view


>= std dev *3 lower timeframe view


Turned out that the tuning is worth it.


Remember this? http://www.forexfactory.com/showthre...64#post9082564
Now compare to this :

Why do trends run or/and stop?
-Because of external pressure / higher timeframe influence
AND
-Because of internal pressure / lower timeframe influence

MF-V and Ray Barros generally teach the same thing, just different wording;
-Trend will continue until a reversal pattern happens. Hence why differentiating a continuation pattern VS a reversal pattern is important. Both of these patterns start with a lagging pattern, but end differently.
-Trend will stop or at least struggle, when there's a higher timeframe related pattern influencing the current swing e.g. 2nd swing retracement of a standard 1-2-3 swing pattern

iDoubleStoch says about the same thing : http://www.forexfactory.com/showthre...re#post7763212

Now we can specifically see that lower timeframe is good for entries and exit, while higher timeframe provides the overall trade context. The goal here as usual, is to ensure none of these are done manually. To reduce human error, hence improve trading results.

The purpose of this thread is to investigate the internal pressure / lower timeframe influence, but I would only give some notes/hints regarding external pressure / higher timeframe influence. I already have it, just that I decided I won't be discussing any further than this post.

Adding another zone, this time its to anticipate where the end of Key Lagging Swings can be. These zones are a type of 'moment of truth' type of zone. NicoleFX explains this well; http://www.forexfactory.com/nicolefx, http://www.forexfactory.com/showthre...20#post7741320









Try applying them to the normal swings too;

hope relativity back to force after research but disappointed here there is no indicators

I am always researching. It never stops.

I won't provide indicators, but I've provided instructions of how to construct swings (older version but still good) in a couple of threads I've started.

http://www.forexfactory.com/showthread.php?t=565169
http://www.forexfactory.com/showthread.php?t=597050

Life aren't all about indicators thou. The ability to self-construct them also brings me the advantage of measuring and analyzing anything I want. That's part of the research process I do that often goes undocumented. What you see from my posts are just a small part of all the hours I've put it, to weed out what works, what somehow works and what doesn't

Further research reveals the following after overlaying 2 types of swings together.
-5 period swings plotted using 10 pip range bar data (10 pips is statistically the most efficient price range) : the thinner lines
-5 period swings plotted using M30 time bar data (M30 is statistically the most efficient time period) : the thicker lines

There are 2 primary types of impulse trends.
Time Lag Price Efficient : the classic parabolic trend where price takes its own slow time to build up and shoots its way out.


Price Lag Time Efficient : clear structures of internal zigzig within a swing, as if there's a trend channel.


Both indicate the relative relationship between higher and lower timeframe and how they interact with each other via interplay of time/price dominance. Both require different ways of recognizing the early signs and trading them well. Both are indeed good trading opportunities in their own right.