Duxon's Archive

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Tuesday / May 26, 2020

My goal now is to standardize Numerical Price Prediction so that I could hire and train virtually anyone to use its methodology successfully. Toward this end, I am testing the following as the system's first and most important rule...

The above strength of trend indicator signals when buying and selling is acceptable, but does not indicate exactly when trades should be executed—a role filled by a second lower-panel indicator designed to signal temporary pullbacks.

 

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Wednesday / May 27, 2020 / 11:55 AM PST

The above strength of trend indicator signals when buying and selling is acceptable, but does not indicate exactly when trades should be executed—a role filled by a second lower-panel indicator designed to signal temporary pullbacks.

I had to do a lot of "over trading" to finalize and combine the two lower panel indicators I mentioned in the above post, so I was happy to merely walk away having escaped the unwelcome prospect of ending the day in negative territory...

It took me roughly 19 trades to arrive at the final parameters, which signaled the five trades that I actually should have executed.

The vertical green lines indicate when it was the right time to buy and the vertical red lines indicate when it was the right time to sell (i.e., when the brown "entry" oscillator either peaked or bottomed out on the half of the channel that was opposite the black "strength of trend" oscillator while the black oscillator was located to the channel's exterior. (Actually, it was only four trades, since the first one doesn't quite qualify.)

The green circles show the ideal locations for pocketing profits from long positions and the red circles show where the graphics suggested exiting short positions.

 

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Wednesday / May 27, 2020 / 6:50 PM PST

Even though you have pretty much quantified how to employ the Numerical Price Prediction trade system, there is still a certain amount of nuance to its application. Consequently, if and when you do hire others to execute trades manually on your behalf, you might want to authorize trainees to make only one or more specific types of trades and not allow them to make any others until and unless they have been certified and cleared to do so.

For the sake of simplifying explanations, the following vocabulary will be used…

TERMINOLOGY:

• The Worm: The XXXXX XXXXXX XXXXXX (the tube)
• The Snake: The XX-Period SMA Envelope at XX% and XX% deviation (the local price range)
• The Tunnel: The XX-Period SMA Envelope at XX% and XX% deviation (the daily price range)

Trade Strategy #1:

The optimum time for trading is when the slope of the Snake, as conveyed by the (black) Snake oscillator, is greater than XX or less than -XX, with fixed maximum and minimum levels at -XX and XX respectively. Under these circumstances, positions should be entered when candlesticks are positioned on the far side of the Worm—the side that is away from or opposite the direction in which the Snake is sloping. This can be verified using the lower panel (brown) Worm oscillator, which will be positioned on the half of the Price Anomaly Channel that is also opposite the direction in which the Snake is sloping.

Trades should be executed just as the (brown) Worm oscillator begins to form a crest or trough, as appropriate. Positions should be exited (profits pocketed/gains locked in) just as the oscillator begins to form a crest or trough on the other half of the Price Anomaly Channel—the half that coincides with the slope of the Snake—just as the candlesticks begin to turn back and into the Snake.

Trade Strategy #2:

Under normal (non-trending) conditions, the maximum local price range as defined by the (green) Snake oscillator will not extend beyond the -XX or XX setting of the Price Anomaly Channel, with fixed maximum and minimum levels of -XX and XX. It is therefore justifiable and relatively safe to look for 5-pip trades as price is rejected at these levels of statistical support/resistance, as signaled by the initial formation of peaks or troughs as appropriate. (NOTE: This does NOT apply when an asset is trending strongly given that pullbacks under such conditions will more than likely be fleeting at best and possibly insufficient to offer more than a couple of pips profit, if any pips at all.)

Trade Strategy #3:

If the Snake is clearly evidencing a bullish or bearish bias/sentiment as observed by/with the naked eye—if it is undeniably sloping upward or downward, even though it is not to the degree required by Trade Strategy #1—enter a long or short position as appropriate when price is located on the far side of the Worm away from or opposite the direction in which the Snake is sloping in the same manner as described in the second paragraph of Trade Strategy #1. Exit such positions in the same manner as describe in the second paragraph of Trade Strategy #1 as well.

For all of the above strategies, gauge where to set stop losses based local price ranges as defined by the upper or lower bands of the Snake.

 

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It is therefore justifiable and relatively safe to look for 5-pip trades as price is rejected at these levels of statistical support/resistance, as signaled by the initial formation of peaks or troughs as appropriate.

An alternative tactic that could possibly be just as reliable (or nearly so) but more profitable might be to set the take-profit target at the baseline from which the Snake is derived rather than at a mere five pips.

 

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Friday / May 29, 2020 / 12:40 AM PST

Ideas for rules currently under consideration for NPP lower-panel trade tactics/techniques...

Look to enter positions when the red or brown oscillators (or both) clear the "Chop Zone." But before doing so, verify that the slope of the Worm (not pictured) is headed in the same direction as the trade. Bear in mind that a trade signal from the brown oscillator is of more significance and apt to last longer than a trade signal from the red oscillator.

The signal is good only so long as the brown oscillator is making forward progress. As soon as it begins to retreat, it is time to exit the position.

A trade signal from the black oscillator further justifies entering positions, but it is valid only so long as the brown oscillator remains on the same half of the Chop Zone coinciding with the black oscillator’s position. (Under these conditions, it is not always necessary for the brown oscillator to be making forward progress to remain in the trade.)

No trends backed up by significant momentum have occurred so far today, yet you have generally been able to make small trades successfully by entering positions strategically based on projected price ranges and the trajectory of key baselines.

This approach to micromanaging your positions has also enabled you to achieve an Average profit trade that is greater than your Average loss trade.

 

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Friday / May 29, 2020 / 6:15 PM PST

Today I discovered I had not incorporated what looks to me to be a rather definitive envelope in my lower-panel trade strategy, which meant slightly adjusting (recalibrating/reconfiguring) the panel’s configuration.

Basically the technique will now consist of simply entering positions whenever the green oscillator exits the interior of the Chop Zone—long positions when it crosses above the channel and short positions when it crosses below it...

(P.S. The above chart and panel are not related to one another.)

 

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To facilitate the task of teaching others how to use Numerical Price Prediction successfully, I've begun the process of preparing instructional materials that break down every technique, tactic, or strategy separately so as to clearly illustrate exactly how each is applied, starting with the simplest trade to understand...

So then, the easiest strategy to execute is to enter a position whenever the green oscillator exits the lower-panel "Chop Zone," buying when it crosses over the top of the channel, and selling when it crosses below the bottom of the channel.

The time to exit a given position is as soon as the oscillator starts to reverse direction (i.e., begins losing ground). The initial moment this occurs is not always immediately apparent, but on a fully loaded chart as used in real life, there will be additional indicators plotted to help signal when this might be happening.

However, in the above image, the areas that represent precisely when traders would ideally enter and exit each position have been shaded pale red and pale green.

(Here is the unaltered chart...)

 

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As its second major (and one of its simplest, most basic) strategies, Numerical Price Prediction identifies buying and selling opportunities at or near levels it conceptualizes as Primary Zones of statistical support and resistance (which are calculated/calibrated based on historical data and reoccurring price patterns).

Here is one example...

And here is yet another...

 

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A third, bit more nuanced tactic for executing trades is to buy or sell currency pairs at or slightly beyond levels which Numerical Price Prediction conceptualizes as Secondary Zones of statistical support and resistance—opportunities identified below by red and green squares...

(Since this is obviously a bullish market, the safest way to approach the technique in this case is to ONLY enter long positions!)

Note that unlike what happens when an investor uses a buy-and-hold approach to generating income via the financial markets, a trader using these methodologies has multiple opportunities to reap profits again and again within the same limited area and time period—thus compiling a significant net return (as opposed to fluctuating in and out of profit territory, as would be experienced by the buy-and-hold investor).

 

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The fourth and final NPP tactic for buying and selling foreign currency pairs, and by far the trickiest and most difficult of all, is designed to "milk" money out of the market even during periods of low liquidity/volatility by entering positions on one side of the "Worm" and pocketing gains on the other.

In the example that follows, there is clearly a slightly bullish market bias, so without question, in this situation a trader would ONLY be buying (on the underside of the Worm) and then exiting upon the candlesticks having made contact (or having almost made contact) with the top side of the Worm...

Theoretically, by using these four techniques effectively/properly, there is no reason why a trader should not be able to walk away from every single day of trading without at least a little bit of profit.