Dynamic Probability Trade Strategy

[expiated]

...the last bit of clarity provided by this morning’s insights came as a result of my plotting a grand total of TEN moving averages on my five-minute charts!

The ten moving averages I wrote of on Monday have been replaced by the four seen here:

Though on the setup I'm actually using to trade, I only plotted two of them—the red one and the green (now blue) one...

I also added what I am calling a "dead zone." When the candlestick emerged from beneath the bottom of the dead zone to follow the down-sloping red moving average, it was my cue to enter a short position.

When the red moving average hooks north, it will be my cue to buy in that the candlesticks have now ventured "too far" away from the core trend line (which is actually the center of the dead zone, which means that technically, I have plotted not two, but three moving averages on this chart setup).

No wait, there is a short-term moving average I overlooked because it is too light to see very well on the above image and is mixed in with the candlesticks. So that's a total of four moving averages, almost half of the ten I was initially using on Monday.

 

[expiated]

To oversimplify the system, DPT is built on typical price range from the perspective of three different time frames and on the intraday trend.

Since I will not be able to trade full-time again until September, I came up with a workaround solution, a structure-based swing trade approach, as an acceptable substitute.

Nonetheless, in refining its methodology, was repeatedly struck by the obvious fact that a more effective amassing of pips could and would be accomplished via a continuous monitoring of price action in which positions were opened and closed in a timely manner as dictated by the ebb and flow of intraday cycles.

Essentially, I was once again looking at Dynamic Probability Trading, but defined in greater detail. I have therefore returned to this thread to record my observations.

As I view them now, I am assigning the currency pairs a typical day range, as defined by a given simple moving average envelope whose bands I have set at two deviation levels.

I am using a particular simple moving average to track the direction of price between the top and bottom of this range, with a second and third trend line that are more responsive to price changes monitoring fluctuations along the way.

In addition to the day range, I have establish an intraday price range, defined by the most common, the more radical, and the most extreme distances (limits of separation) price is typically willing to separate itself from the simple moving average that tracks the direction of price between the top and bottom of the day range (three distinct deviation levels).

I use a duo of short-term moving averages to track the direction of price between the top and bottom of this second (the overall general intraday) price range.

And finally, I have identified a short-term price range, a narrow simple moving average envelope set at two distinct deviation levels, to define the normal range of movement above and below the previously mentioned duo. The primary function of this channel is to help pinpoint precise position entries and exits.

To track the fluctuations between the top and bottom of this short-term price range channel, I use a second pair of moving averages in combination with a threefold cord of even faster moving indicators.

In terms of establishing price direction at the intraday level, the slopes of the most sensitive moving average used for tracking fluctuations within the day range, and the duo of short-term moving averages used to track price direction withing the intraday price range, must both be headed in the same direction, up or down (with the second, faster pair of, and the threefold cord of moving averages positioned above or below the duo of short-term moving averages, as appropriate).

One can't really say a short-term trend exists unless these three clusters of the most responsive trend lines are all sloping in the same direction. Moreover, it's possible that one of the best indications on when a trend is being initiated is when one observes one or more of the lower panel oscillators breaking out of the upper or lower 0.646 level of the price anomaly channel.

 

[expiated]

Wednesday, August 21, 2019 / 1:30 p.m. PST

Dynamic Probability Trading was an offshoot of Numerical Price Prediction designed to generate gains greater than a handful of (4 to 7) pips at at time. Given that I have probably settled on a final configuration for accomplishing this aim, but have no name for it, I might as well come back and give it this moniker.

I'm not sure what all of those descriptions in my post from June 20th were referring to, so I want to include a visual this time so that in the future, if desired, I will be able to see at a glance what I was talking about.

In place of adaptive price range envelopes, the dynamic aspect of the system is now being supplied by Donchian channels.

This approach is designed to be used as a full-time trading system. The fact that it works even when it is not being employed in this way (I don't have the time for full-time trading right now) is something I find very encouraging. I have high hopes for it meeting all of my expectations, the first being to generate an initial daily profit of $1.80 from a $100 trading account balance on a consistent basis, which is far exceeded by $15.19.

A second goal is for the average profit trade to exceed the average loss trade, and a third goal is to result in a daily success rate greater than 80%, though ideally, I would like to see the success rate remain above 90%.

My hope is that once I finally am able to resume monitoring and managing my positions, the system, which is arguably already working well, will work even better.

 

[expiated]

Wednesday, August 28, 2019 / 8:35 p.m. PST

The term "Probability" has been replaced by "Price Range" as the title for my personal approach to trading the Forex market...

The Dynamic Price Range Trading strategy, an offshoot of the Numerical Price Prediction trading system, evolved from applying two biblical principles to the Forex market: (1) testing everything and holding fast to that which is good, and (2) knowing how to judge the signs of the times.

These two principles led the approach’s developer to reject the use of all technical analysis indicators with the exception of simple moving averages, simple moving average envelopes, proprietary moving averages, adaptive price range envelopes, and Donchian channels.

The goal was to deliver Forex market forecasts by using technical analysis in the same way meteorologists use computer models to predict the weather.

This meant noting precise, up-to-date, quantitative information about market conditions, and interpreting the data to make accurate projections; except instead of using temperature, humidity, air pressure, cloud formation, wind direction/velocity, etc., traders use trend lines, market structure, average price ranges, historical support/resistance levels, and repetitive price patterns to simulate the equations, wave functions/representations, and grid point/spectral and/or coordinate models used in weather forecasting.

But as with numerical weather prediction, there are intrinsic predictability limitations that lead to error growth with time. Consequently, the approach is used almost exclusively for pseudo-swing and intraday trading, with traders evaluating how all the above factors interact and relate to one another to determine where exchange rates are most likely headed in the not-too-distant future.

Another unique aspect of this methodology is how it portrays price behavior. Rather than conceptualize price action as a series of financial transactions roughly tracking the path of one or more trend lines, the strategy/system views price movement as a wave forming a band of a given amplitude that flows with a directional tendency.

Though a buy-and-hold approach is no doubt the most lucrative style of trading for the vast majority of retail participants (and most certainly for long-term investors) Dynamic Price Range trading nonetheless operates out of a conviction that milking the absolute maximum amount of profit out of the market is better accomplished by entering and exiting positions at the peaks and troughs occurring near the two extremes of a wave’s amplitude (i.e., a foreign currency pair's bands).

These levels are thought of as launch pads and landing sites, and were originally defined using multiple simple moving average envelopes. They were later replaced by Donchian channels, but are now represented by a combination of Donchian channels and adaptive price range envelopes.

Another distinctive feature of the system is the rejection of the use of standard trend lines, such as the 10-, 20-, 50-, 100-, and 200-period moving averages.

Each currency pair is instead assigned an “orbit.”

Just as our planet is marked by numerous systems, currents, rotations, and forces—yet all are subject to the same overall trajectory as the earth revolves around the sun—currency pairs too gravitate toward an ultimate destination via a specific circuit revealed by their orbits.

However, such “revolutions” do not fit standard moving averages and must therefore be calculated by uniquely, painstakingly selected ones. Due to their very nature, a trader should (hypothetically) always win in the end so long as he or she is seeking to touch down—as long as his or her landing site—is in the direction of a given asset’s orbit.

The rules for the Dynamic Price Range Trading strategy are as follows…

1. To maximize the percentage of winning trades, do not enter a position unless the trade is aligned with the orbit of the corresponding asset. This is identical to the slope of the instrument’s gravitational trendline.
2. Moreover, positions should not be entered unless price is crossing over the intraday trigger line after having made contact with a launchpad (after having made contact with the floor or ceiling of a Donchian channel).
3. Stop losses and Take-profit targets are calculated using the adaptive price range envelopes. However, positions should not be exited automatically. To let profits run, traders should remain in a given position until touch down is achieved at the designated landing site, AND price begins to reverse back over the intraday trigger line in the OPPOSITE direction.
4. And finally, "the trend is your friend" might be a fair maxim, but the Numerical Price Prediction forecast models suggests that this all depends on context. Accordingly, there are a number of other factors the system requires traders to consider before executing any trade, as listed below:

• Where is the exchange rate located or positioned within the global and universal price ranges?
• Is the rate oscillating inside the local price range, or is it trending to the outside of this region?
• Is price action taking place above or below the gravity line?
• What is the slope of the gravity line?
• Is price action taking place above or below the anchor line?
• What is the slope of the anchor line?
• Is the floor or ceiling (launchpad or landing site) of the Donchian channel (or Donchian channels) flattened out?
• Is the exchange rate crossing the trigger line after having made contact with a launchpad or landing site?
• What is the ordinal configuration of the actionable trend lines (and are they fanning out)?

 

[expiated]

Typical results using the Dynamic Price Range trading strategy...

Updated configuration...