Duxon's Archive

[expiated]

On February 9, 2014 and May 21, 2015 I commented that despite my ongoing search for the best Forex trading strategy for me personally, I didn’t think I was a hapless newbie endlessly learning something new, getting excited, placing a few losing trades, getting disheartened, rejecting the entire concept as a result, and moving on to the next strategy; perpetuating a never-ending cycle of failure because of neglecting to ever put in the time and effort necessary for a given methodology to become successful. And on October 18, 2015, I again noted this fact, because at that time I believed I had settled on a single technique, and in a sense, I had. For I sight November 2015 as the initial development of the system I still use today.

The above cited system, which I have come to refer to as Numerical Price Prediction (NPP) is now complete.

NPP is now basically built on five moving averages or moving average clusters, categorized as follows:

1. A day-to-day moving average (green)
2. An intraday moving average (white)
3. An hourly triple-moving-average cluster (black)
4. A double-cluster-duo of short-term moving averages (red and blue), and
5. An immediate (fluctuating) moving average (on one-minute charts only)

It has become clear to me that—in my case—trading on one-minute charts is an absolute necessity. I have deleted the day-to-day moving average and intraday moving average from my setup in that I find them to be essentially useless when it comes to my style of day trading, but I have maintained the following:

1. My instantaneous (zero-lag) moving average
2. A fluctuating moving average—with these first two indicators serving to facilitate the process of selecting precise entry points/levels.
3. A short-term moving average fast line for defining the immediate market bias/sentiment. It is at this point that the graphics generated by price action begin conveying pathways of sufficient duration to make the returns generated by acting on them worthwhile. Also, this indicator serves to facilitate the process of selecting precise exit points/levels.
4. A short-term moving average slow line for confirming the immediate market bias/sentiment.
   
5. A nonfluctuating trend line. If not already long before price crosses above this line, a trader had better buy immediately after (if planning to execute a trade at all) since there can be no doubt at this point but that the underlying asset is intraday bullish. If not already short before price crosses below this line, a trader had better sell immediately after (if planning to execute a trade at all) since there can be no doubt at this point but that the underlying asset is intraday bearish.
6. The hourly moving average suggests the direction in which price will, sooner or later, most likely be headed in the not-too-distant future, relatively speaking. However, it is too slow/lagging to have much, if any, impact/influence on deciding whether to buy or sell a given asset at a given moment.

Numerical Price Prediction (Final) Setup - April 26, 2019​

 

[expiated]

I changed the color scheme on the above setup to make it easier for me to "read" what is going on at any given moment:

1. My instantaneous (zero-lag) moving averages (yellow)
2. A fluctuating moving average—with these first two indicators serving to facilitate the process of selecting precise entry points/levels. (alternating red and white battenburg MA)
3. A short-term moving average fast line for defining the immediate market bias/sentiment (red). It is at this point that the graphics generated by price action begin conveying pathways of sufficient duration to make the returns generated by acting on them worthwhile. Also, this indicator serves to facilitate the process of selecting precise exit points/levels.
4. A short-term moving average slow line for confirming the immediate market bias/sentiment (purple).
   
5. A nonfluctuating trend line (blue). If not already long before price crosses above this line, a trader had better buy immediately after (if planning to execute a trade at all) since there can be no doubt at this point but that the underlying asset is intraday bullish. If not already short before price crosses below this line, a trader had better sell immediately after (if planning to execute a trade at all) since there can be no doubt at this point but that the underlying asset is intraday bearish.
6. The hourly moving average suggests the direction in which price will, sooner or later, most likely be headed in the not-too-distant future, relatively speaking (dotted white MA). However, it is too slow/lagging to have much, if any, impact/influence on deciding whether to buy or sell a given asset at a given moment.

 

[expiated]

A total of six people showed up today (Sunday) at the Long Beach Forex Day Traders' first meetup at 2:00 p.m. at Panera Bread in the Lakewood Center Mall.

I am supposedly going to meet again with at least one of the group members tomorrow to go over the use of the MetaTrader 4 trading platform. I am not sure that I will continue this meetup group beyond this month in that most of these guys seem to treat trading as a hobby, and I was hoping to hook up with others like myself—who are totally serious about using trading to (sooner or later) generate a rather substantial income.

 

[expiated]

I am once again trading live, though with an extremely tiny initial balance, which I hope to double every two weeks or so. As of last night and this morning, the picture painted by, the story told by, my charts as they are now configured are quite clear to me and easy to read. Given that I felt my setup was finalized a month ago; that I've made no major changes since then, but have simply fine tuned what I already had for successfully trading Nadex 5-minute binary options, 20-minute binary options, and switching back from trading in that context to successfully trading via a traditional Forex broker (OANDA) using both guerrilla scalping and pseudo swing trade styles, I want to go back to describing what I have here for my own clarity—a final product that seems to cover all the bases for me given how I trade personally.

Foundation Principles of Numerical Price Prediction (NPP):

1. A moving average is the best prognosticator for predicting the direction in which price might ultimately be headed.
2. As with life, one of the major keys to successful NPP trading is a mastery of relationships, or more specifically, of understanding how the configuration of trend lines, price ranges, horizontal support/resistance levels, market structure, and reoccurring price patterns all interact with and affect one another to impact the trajectory of asset values in the not-too-distant future.
3. Numerical Price Prediction duplicates the methodology used by meteorologist (numerical weather prediction) to make market forecasts by collecting precise, up-to-date quantitative information and interpreting the data to make accurate predictions—replacing temperature, humidity, air pressure, cloud formation, and wind direction/velocity with the previously mentioned factors to simulate the equations, wave function representations, and grade point/spectral/coordinate models used in weather forecasting.
4. The level of accuracy attributable to a given market forecast will be governed by the Christian principle of subsidiarity, which holds that operations conducted in immediate proximity are accomplished with much greater efficiently and efficacy than those handled more remotely.
5. Consequently, NPP market forecasts are significantly inhibited by intrinsic predictability limitations, which lead to error growth with time.

NPP Components:

• Universal Price Range Envelopes – Levels 1 and 2
• Trailing Price Range Envelopes – Levels 1 and 2
• Adaptive Price Range Envelopes – Levels 1 and 2
• Hourly Price Range Envelopes

Level 1 = Routine market conditions
Level 2 = Elevated volatility/liquidity

• Universal Trend Line
• Global Trend Line
• Intraday Trend Line
• Intraday Bias Moving Average
• Price Shadow (Trailing) Trend Line
• Hourly Trend Line
• Ebb and Flow Exit Line
• Dynamic Duo Entry Lines

 

[expiated]

In viewing my 15-minute charts this morning I have decided to conceptualize my setup, for the time being, as follows.

I’m using three instantaneous (zero-lag) trend lines, which are suitable for scalping. However, when it comes to practical application, all scalping should actually be carried out using one-minute charts.

Next, I have a threefold cord of what I’m calling fluctuation trendlines. These moving averages are also amenable to scalping.

The threefold fluctuating trendlines are followed by a succession (three sets) of intraday trendlines, with each set of moving averages evidencing a progressively diminished level or degree of fluctuation—though this smoothing out of the lines is also accompanied by a successively greater incidence of lag.

Then finally I have the day-to-day trend lines (though there is one moving average that kind of falls in between, so that there are more-or-less three moving averages assigned to this category).

No, that's not true. I have yet another triple-set of moving averages to suggest the longer-term trend, which might have been translated from a four-hour chart setup and might therefore perhaps reflect the weekly trend.

 

[expiated]

When I began trading, my goal was to figure out how to buy low and sell high. That objective has since morphed into determining how to remain in short positions so long as price is continuing to fall, and in long positions until and unless price has ceased climbing. Consequently, I firmly believe that the system I have developed should not only work in the present, but should continue to work perpetually, so long as up remains up and down remains down.

Between now and September (when I will hopefully be able to return to full-time trading) my plan is to practice using the setup below in accordance with the descriptions that follow, with the only adjustments or modifications made in the meantime being those stemming from insights as how to better use this configuration, which all indications point to being the most refined product of everything I’ve observed between November 2015, when the principles of the system were first established, and the present.

 

[expiated]

Having established a final protocol for position entry and exit points, yesterday I turned my attention to what I think of as "the universal structure of exchange rates." The idea was to begin entering positions such that I could “hang out” for days to rack up dozens if not hundreds of pips’ worth of profit, exiting my positions anytime I liked for massive (from my perspective) chunks of change, and this foray into the concept of universal structure pretty much put a nail in the coffin of my exploring alternative Forex trading systems.

Took some profits along the way to add to daily gains...

So now, as an exercise in summarizing the principles underlying Numerical Price Prediction, I copied an article written by Alan Farley titled “The Perfect Moving Averages for Day Trading” and altered it accordingly…

Day Traders need continuous feedback on short-term price action to make lightning-fast buy and sell decisions. Intraday candlesticks wrapped in multiple moving averages serve this purpose, allowing quick analyses that highlight current risks as well as the most advantageous entries and exits.

Moving averages can also work as macro filters, telling observant traders the best times to stand aside and wait for more favorable conditions.

Choosing the right moving averages can enhance the effectiveness and reliability of technically-based day trading, whereas poor or misaligned settings will likely undermine technical analysis strategies.

The importance of this fact cannot be underestimated, especially given the popular but misguided notion that identical settings will work in all short-term time frames, with traders able to make needed adjustments through the corresponding chart's length alone.

According to this belief, there is a uniformity of moving averages which makes it possible to use identical combinations not only for scalping techniques, but also for buying in the morning and selling in the afternoon—simply by having traders react to different holding periods using charting length alone.

Again, this can supposedly be done by having scalpers focus on one-minute charts; having traditional day traders examine five-minute and 15-minute charts; and having swing traders use the same moving averages on 60-minute charts to extend the process into overnight holds. But from the perspective of Numerical Price Prediction, this is pure folly.

What if an individual were planning to fly a plane, which must normally reach speeds of 135 to 150 miles per hour for takeoff, but for some crazy reason, the person decided to switch the timeframe from hours to days or minutes?

Traveling 135 miles per day would mean going no faster than six miles per hour. At that speed, the pilot would never come close to getting off the ground. On the other hand, at 135 miles per second, the pilot might find himself or herself unable to control the aircraft and headed for inevitable disaster.

Similarly, the parameters traders rely on to decide when to buy or sell a given asset are not independent of each another. A trader must examine relative relationships between moving averages and price, as well as moving average slopes that reflect subtle shifts in short-term, intermediate, and long-term momentum.

Which moving averages provide the perfect fit must be adjusted to each timeframe, with interpretive skills required to use the settings appropriately. It's a visual process where increases observed in momentum offer buying opportunities and decreases triggering bearish moving average rollovers offer sell opportunities.

The process also identifies sideways markets, telling the trader when to stand aside (i.e., when trending is weak, and opportunities therefore limited).

 

[expiated]

Having established a final protocol for position entry and exit points, on Wednesday (June 26, 2019) I turned my attention to what I think of as "the universal structure of exchange rates." The idea was to begin entering positions such that I could “hang out” for days to rack up dozens if not hundreds of pips’ worth of profit, exiting my positions anytime I liked for massive (from my perspective) chunks of change. This foray into the concept of "universal structure" has pretty much put a nail in the coffin of my exploring any other options in terms of Forex trading systems.

In continuing to trade based on the principles of "universal structure" I am seeing my typical returns increase from those appearing in Post #37 to the ones below.

However, the most effective approach to trading Forex from this angle would be to enter and exit on the intermittent waves rather than a buy-and-hold type methodology, but this is going to be somewhat difficult given that I am unable to return to full-time trading at the moment.

Still, if done correctly I suspect the technique could return my daily success rate back to the neighborhood of 90%+, even though I will be shooting for returns of $5.00 or more instead of $2.00 or less, which is why I am going to go ahead and try implementing it anyway.

 

[expiated]

Still, if done correctly I suspect the technique could return my daily success rate back to the neighborhood of 90%+, even though I will be shooting for returns of $5.00 or more instead of $2.00 or less, which is why I am going to go ahead and try implementing it anyway.

I'm planning to make this my last entry to the trading threads here at Elite Trader (except for perhaps a rare post here or there). My system is complete and I should only get better at implementing it with time, God willing. At this point, I can pretty much see it is working exactly as conceptualized; can be used successfully for scalping, intraday trading, or swing trading; and has no facets I can find which I think I can develop further.

 

[expiated]

I'm planning to make this my last entry to the trading threads here at Elite Trader.

I should have written "last daily entry" and "regarding my system." At any rate, I'm noting (for myself) Monday, June 8, 2019 as a day of personal significance. Numerical Price Prediction (NPP) is predicated in large part on the contention that there are certain moving averages in a given time frame that convey the associated trend significantly better than all others, and in fine tuning the application of the system for use with IQ Option Forex binary options, this configuration has become extremely "tight" for my five- and fifteen-minute charts.

I have therefore deleted all other five-minute templates from my files and do not anticipate making even subtle changes to the setup in the future. Given that I believe these trend lines represent the real value of this system, I'm opting not to include any images of them in this post.