RoboForex Peformance Record for the Month of May:
1.8% Profit per Day Compounded over 220 Days
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Jesus.
I established as my personal measure of the extent to which I might regard my approach to trading as credible and the degree of competence I should attribute to how well I can or cannot apply the mechanics of my system as the ability to take a $10,000 Nadex demo account to $100,000 in a (relatively) short span of time by trading my system with wild abandon—a goal which has thus far proved to be beyond my reach.
However, since renting an office (around mid October) from where I can trade (if I choose) 24 hours a day, five days a week, I've been able to study and test various strategies, tactics and techniques with an intensity not possible before, and am now halfway to reaching my goal...
So at this point, I'm hoping I can get to that final figure (without blowing up my account) by mid February, 2024.
(Time will tell.)
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first off, well done.
second, any chance you can give us a general recap up to this point? normally I would just read through the 50 pages but I'm currently working through a 1400 page thread that i don't want to break from.
not asking you for the specifics just a simple style changes, things that helped you along the way, etc...
I wouldn't recommend reading through all 50 pages anyway since you're likely to find my thoughts wandering all over the map with there being little rhyme or reason or a cohesive thread holding them all together.
So as a recap, let me just cut and paste a previously written description of my system, which I call Numerical Price Prediction (NPP). But be forewarned, there are any number of contributors to ET who probably consider anything and everything I write to be equivalent to a pile of manure, so bear that in mind before you read any further...
Copyright © 2023 Fred Duckworth
Numerical Price Prediction is a unique and innovative day trading system that relies on a methodology similar to that used by meteorologist to predict the weather—one based as much as possible on statistical analysis and mathematical probability.
The idea is to gather and evaluate precise, up-to-date, quantitative data and use it to calculate the odds of price reaching designated values within a given time period by patterning the system's elements after the equations, wave functions, and computer models used in weather forecasting.
But, instead of monitoring wind velocity and direction, cloud formations, humidity, temperature, and barometric pressure; it evaluates the synergy between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance levels, trend lines, and market structure, all in multiple time frames—with the result being a graphical depiction of current conditions that traders can then use to help make precise, well-timed trades.
The system incorporates the idea of cycle theory, which holds that cyclical forces, both long and short, drive price movements, and can be used to anticipate turning points. It's also compatible with Edgar Peters' fractal market hypothesis, which views financial markets as fractal in the sense that they follow cyclical and replicable patterns—ones consisting of fragmented shapes that break down into parts which then replicate the shape of the whole.
I used these cycles to generate what some call "baselines" by conducting a thorough analysis to first uncover the cyclical waves formed in the wake of price action, followed by the defining of their general frequencies and magnitudes; and then finally plotting centered moving averages that came as close as possible to approximating the zero amplitude of the corresponding waves/cycles.
Even so, to trade with the clarity and precision I desired required me to carry out an additional step in which I assigned a specific temporal value to each individual baseline and its corresponding or associated price-range envelope(s)—to answer the questions: What moving average best conveys in which direction and by how much price moves every five minutes? Or every thirty minutes? Or every four hours? Or even every day?
And yet, even after this "final" step, their emerged still another aspect to interpreting price action that proved deserving of my consideration which I had not envisioned at all—the concept of "temporal" support and resistance.
In other words, not only do I believe there is a certain amount of distance beyond which exchange rates will typically resist separating themselves from the central tendencies of key price distributions. It seems to me I have also observed that there is generally a limit to the amount of time exchange rates will advance in one particular direction without deviation. I refer to these limitations as temporal support and resistance, and they have proven to be a welcome enhancement to my system.
(AJ Monte does something similar, except his approach incorporates what he calls "stale green / stale red candlesticks.")
Numerical Price Prediction was developed based on the following five biblical principles:
- Test everything and hold fast only to that which proves valid and reliable.
- Systems generally operate at peak performance when the interactions between their component parts evidence strong, healthy relationships.
- The best plans are usually established in the presence of a multitude of counselors.
- Rightly interpreting the signs of the times is an absolute necessity.
- Positive outcomes are typically the result of having made good choices.
In effect, I replaced the advice to "keep your eyes on the road" with a mandate to "focus on your destination," a subtle, yet profound, distinction. Obsessing on the former tends to be constraining—dictating one's movements and limiting the parameters within which one is free to operate, often locking people into notions that are not truly worthy of the reverence bestowed upon them.
But, emphasizing the latter allows folks to be creative and take any route desired, so long as it carries them toward that on which they have resolutely set their gaze.
So, when strategies involving moving average convergence/divergence (MACD), stochastic oscillators, the relative strength index (RSI), the commodity channel index (CCI), the average directional movement index (ADX) and other indicators failed to live up to their reputations, I had no qualms about discarding them entirely and searching elsewhere for the "signs of the times" which, if interpreted correctly, would result in market forecasts of unusual accuracy.
Again, as it turned out, I found that the absolute best "atmospheric barometer" for predicting the direction in which an exchange rate might ultimately be headed was nothing more than a simple moving average, with a handful of key moving averages evidencing superior accuracy in this role.
Nonetheless, there are any number of factors, or "data points" impacting foreign currency exchange rates, with the "Holy Grail" being the ability to unravel the hidden correlations between them. It's a matter of crunching the numbers and doing so in the correct manner, plain and simple.
And speaking of "correct manner," I think I should probably mention that, though one often hears traders stating "the trend is your friend," from my perspective, it would almost surely be more accurate to say that the trend is merely one of several friends!
For it seems to me that what would have to be considered at least equally as important as trend is the location of rates within the entirety of a given asset’s price distribution.
So then, though investors often speak of trend lines, I've ceased to think of trends as being represented solely by lines, and have come to conceptualize them as belts as well, with the location of price within the expanse of values constituting the width of these oscillating bands being just as important (when deciding exactly where to enter and exit positions) as the general direction that each "breadth of values" is headed.
Accordingly, my final decisions on when to buy and when to sell are always made based on the consensus of various input data, sampled in multiple time frames—data which includes baselines, market structure, temporal support/resistance, horizontal support/resistance, price ranges, and reoccurring chart patterns, as stated above.
It is the consensus opinion of all these various factors that determines what I will decide to do in the final analysis. The moves I make depend on what each of these determinants means in light of all the others and how they all will affect and impact on one another. It is the interpretation of each moving part individually—and of all these assorted components as a whole—that constitutes Numerical Price Prediction.
So then, Numerical Price Prediction is all about interpreting what's happening in the moment based on market generated information, which is to say, technical analysis. (I choose not to put my trust in non-market generated information—meaning fundamental analysis.)
It comes down to "ruling reason," which for me, is just another way of saying the numbers, or "the math" if you will—the summation of all those correlating data points that are a part of the market generated information.
Now without a doubt, I've had critics tell me that trading in the way I've just described—especially the way I use moving averages—cannot work because it "contradicts the findings of just about every independent, objective, systematic, statistically significant research-trial ever published on the subject!"
But as far as I'm concerned, it's not about anything I claim. Rather, it's about actual results. But of course, whenever I point to NPP's phenomenal results, they'll tell me that the system will stop working…eventually.
Nonetheless, I have my doubts.
Again, in designing the approach, part of my goal was to come up with something reflective of flight dynamics (which uses the laws of physics to explain how forces act on vessels to govern their performance, stability and control to ultimately determine their velocity and attitude with respect to time).
For with all due respect, if a plane flies the first time you take it out by angling it upward at two to three degrees per second with a maximum angle of 10 to 15 degrees, and does so again the second time you take it out, and the hundredth, and the thousandth, and so on and so on—it's not going to suddenly stop taking flight on some particular day for no reason whatsoever, all things being equal.
The same thing applies to a "numerical" approach to day trading.
To illustrate what I mean when I say "trading by the numbers" and entering and exiting positions based on "objective criteria," here is an except from the last entry I posted today in one of my threads…
Again, this was just a "fun little exercise" to test the robustness of my system and my proficiency in implementing it. The manner in which I reached my target balance was unrealistic in that it required I accept a ridiculous amount of risk. However, this meant making near perfect trade decisions, which was the main point of the effort.
So, from my perspective, this now validates my system, but NOT the way in which I applied it. And now that it's done, I will take the same protocol (which I am already doing) and use it in trading my live accounts in a responsible fashion—abiding by the one percent rule, etc.
And as for "silly" (but not really) little endeavors like the one above, in light of the live trading I'm now doing on a weekly basis, they no longer hold much interest to me in that they've ceased to really serve a purpose in terms of making new discoveries and advancements.