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Channel-to-pivot approach

  • #21
  • Apr 18, 2017 4:17am Apr 18, 2017 4:17am
GBPJPY just closed - I'm up 1.5% for today :-)
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  • #22
  • Apr 18, 2017 6:22am Apr 18, 2017 6:22am
...and long GBPUSD was a good call, too...

The reward:risk concept is directly proportional to how we perceive trend/bias: the long bars are longer in totality than the short bars are short in total in an up trend and vice versa in a short trend. No matter, if there are 5 long bars and 30 short bars, if the long moves add up to 50 pips and the shorts to 30 pips, the trend/bias is long.

Applied to the Reward:Risk concept: the profitable trades are more profitable in total than the loss making ones in total. That's why you can have a win:loss ratio of 5:30 or 14% of profitable trades only but still remain in net profit.

Conclusion: Identify a trend and follow it.
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  • #23
  • Apr 21, 2017 3:26am Apr 21, 2017 3:26am
For some bias reference today.
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  • #24
  • Apr 21, 2017 3:28am Apr 21, 2017 3:28am
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  • #25
  • Apr 21, 2017 3:45am Apr 21, 2017 3:45am
Choosing my pairs, I'd always couple upwards and downwards biases and reconfirm the bias on the pairs' charts themselves, e.g. short USDCHF. Personally, I'd be avoiding the GBP until there has been a correction towards the Line-Of-Best-Fit.

From a timing of entry perspective, I'd chose those indices where strength percentages are below 38.2% for downwards bias and above 61.8% for upwards bias.
Then I switch to the chart of paired indices and check for price in relation to pivot levels and either go in at market just to participate or set limit orders on respective levels.
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  • #26
  • Apr 21, 2017 8:33am Apr 21, 2017 8:33am
Following up on one of the previous posts: in order to counter the situation of entering just when adverse excursion / retracement turns the overall bias around (remember: the trend is your friend until it bends), I combined Fibo retracement with regression standard errors. The index weights and the corresponding pair price need to stay below the minimum (bias down) or above the maximum (bias up) of fibo lines and 2 standard errors. I ran a few examples with EUR and JPY which have been moving strong yet not for long the last few days and it would have kept me out.
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  • #27
  • Edited 3:23am Apr 25, 2017 2:44am | Edited 3:23am
Sentiment confirming trend ? Or a prophet for the outcome of the French elections ? There has been an inverse relationship between the EUR and the GBP until the election hype began. Theresa May's announcement was interpreted in favor of the GBP which means in favor of the EU. I have been avoiding EUR and GBP pairs these days, despite their strong moves, and I'll come back when the turmoil has faded.

Nevertheless, this is a good example of the GBP apparently confirming it's recent tectonic shift. Price retraced back to the first std error just to revert back strongly.
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  • #28
  • Apr 25, 2017 2:52am Apr 25, 2017 2:52am
...but it is interesting to see, that for those pairs without significant impending news, the surprising moves ALWAYS happen in the prevailing direction... see NZD now and as above in post #24. The trend IS your friend.
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  • #29
  • Apr 25, 2017 4:11am Apr 25, 2017 4:11am
...the same seems to apply for AUD after its 3 day retracement. Good bounce off the 23.6% level.
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  • #30
  • Apr 26, 2017 3:39am Apr 26, 2017 3:39am
Hindsight at its best: I managed to code a routine that iterates optimal dispersion while mimicking my own visual perception of how many samples to consider for the regression. This allows me to completely automate the bias perception.

For visualization purposes have a look at the attachment: you'll see the resulting "optimal" regression for the NZD index. Above that you can see the pair NZDUSD "gloved" by lines, which is the part of the algorithm mimicking my own perception. It is non-parametric and dynamic. I have been working on this for a long time, so I'm quite happy for today...
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  • #31
  • Apr 26, 2017 3:43am Apr 26, 2017 3:43am
Quoting !iii!
Hindsight at its best: I managed to code a routine that iterates optimal dispersion while mimicking my own visual perception of how many samples to consider for the regression. This allows me to completely automate the bias perception. For visualization purposes have a look at the attachment: you'll see the resulting "optimal" regression for the NZD index. Above that you can see the pair NZDUSD "gloved" by lines, which is the part of the algorithm mimicking my own perception. It is non-parametric and dynamic. I have been working on this for a long...
Hi
have you ever tried the pitchfork? the strategy works pretty much the same ...but only on one level
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  • #32
  • Edited 4:07am Apr 26, 2017 3:57am | Edited 4:07am
Quoting TudorIoan
{quote} Hi have you ever tried the pitchfork? the strategy works pretty much the same ...but only on one level
I looked at all sorts of predictive and descriptive indicators. They all have the same issue: how far back in time / up in time-frame shall I go to derive a perception. For pitchforks it's the same: which anchor points shall I pick to draw the fork? Unless blatantly obvious, not 2 people would look at the time series the same way. What I am trying to achieve is to eliminate the discretionary part to the largest extent and doing that without parameters / dynamically.
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  • #33
  • Apr 26, 2017 3:59am Apr 26, 2017 3:59am
It's a bit like following a wave backwards and when you are far enough away from its source you walk it back and determine its relevance.
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  • #34
  • Apr 26, 2017 4:09am Apr 26, 2017 4:09am
Quoting !iii!
It's a bit like following a wave backwards and when you are far enough away from its source you walk it back and determine its relevance.
Yeap, one need experience to deterimine a trend ...
But if you get the trend right, you can apply the parallel multichannel or the pitchfork and have a nice series of successful rebounds at every level.
...and with a proper RR and MM...
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  • #35
  • Apr 26, 2017 5:01am Apr 26, 2017 5:01am
Quoting TudorIoan
{quote} Yeap, one need experience to deterimine a trend ... But if you get the trend right, you can apply the parallel multichannel or the pitchfork and have a nice series of successful rebounds at every level. ...and with a proper RR and MM...
Exactly, and that's what I refer to with "channel trading" or "level hopping". The breakthrough I hope to achieve with the method mentioned above is to know and avoid the period when bias is shifting (no-mans-land) vis-a-vis of identifying another opportunity for re-entry. If you are already in the range, you might still get out profitably by sticking to one direction, but those beautiful swarm trades with each position closing positive are endangered.
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  • #36
  • Apr 27, 2017 11:16am Apr 27, 2017 11:16am
For the fun of it: the Uber-Index. It is based on the "wave-walk-back" algo mentioned above. It does repaint in the sense that a move beyond local minima / maxima erases them (sort of straightens out the wave jitters), but it's good enough for live traders to get a snapshot at the market. Compare it with the famous CCfp ;-)
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  • #37
  • Apr 27, 2017 11:23am Apr 27, 2017 11:23am
5 MIN view
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  • #38
  • May 1, 2017 3:37am May 1, 2017 3:37am
So while I'm trading the currency channels and pivot levels, I am experimenting with my new indicator dubbed Uber-Index. It visualizes individual currencies as waves started from the current price (=source), where they are most fuzzy, backwards to where they reveal legs of strength or weakness. I'm not entirely sure yet, if I'm falling for some hindsight bias or lucky coincidences, but the relevance of Fibo ratios as to when currency pairs are likely to take off into a particular direction is striking.

See the example below: I drew the turning points of both JPY and USD indices onto the USDJPY chart (see JPY 1/2 and USD 1/2). I then drew Fibo levels for both currencies from their respective turning points. The vertical line in magenta shows when 23.6/76.4 levels are broken on the Uber-Index - i.e. a change of bias is underway (ahead of the weekend gap up...). The horizontal line in magenta is the confluence of the 50 level derived from the USD turning points and the 23.6 level derived from the JPY ones acting as support going forward.
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  • #39
  • May 1, 2017 4:12am May 1, 2017 4:12am
Uber-Index with raw index data
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  • #40
  • May 1, 2017 4:37am May 1, 2017 4:37am
Specific for USD and JPY example mentioned above
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