Use the bands of the dynamic/self-adjusting seven-minute price range envelope (NOT the standard moving average envelope) and/or the 12-minute temporal support/resistance levels for selecting BOTH the entry AND the take-profit parameters. (This is the technique you used just now to collect $8.00 from a bearish AUDJPY Knock-out.)
Numerical Price Prediction Challenge
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Thursday | May 12, 2022 | 4:35 PM PST
The 45-minute price range envelope has been looking kind of "rough" lately, and because of this, I'm going to try using the 70-minute price flow for a bit to see if it doesn't give me a clearer picture of where price might ultimately be headed. (Past experience leads me to believe that the 60-minute measure is too susceptible to insignificant price fluctuations as well.)
That said, it appears to me that a number of pairs might be in the process of reversing direction, including GBPJPY and GBPUSD. Consequently, I just purchased a GBPJPY bullish knock-out and will be checking back later on to find out what happens with it.
The 45-minute price range envelope has been looking kind of "rough" lately, and because of this, I'm going to try using the 70-minute price flow for a bit to see if it doesn't give me a clearer picture of where price might ultimately be headed. (Past experience leads me to believe that the 60-minute measure is too susceptible to insignificant price fluctuations as well.)
That said, it appears to me that a number of pairs might be in the process of reversing direction, including GBPJPY and GBPUSD. Consequently, I just purchased a GBPJPY bullish knock-out and will be checking back later on to find out what happens with it.
The outcome of the GBPJPY bullish knock-out was a full $100 settlement payout...
I also cashed in on the available gains from my USDCAD position. Assuming the -$45.00 sell price meant a full $100 settlement payout would have resulted in $55.00 profit, I went ahead and pocketed $20.00 of that potential amount...
These results seem to confirm my thought that, based on the price action I have observed over the last two days, the most profitable way to trade Nadex knock-outs using the Bias Overlap Six-minute Strategy is as follows...
If we label the side of a price range or simple moving average envelope that is opposite or away from the direction of the slope of its associated baseline/trend line as the "back," then the best time to enter a position is when candlesticks are painting on the back half of the 70-minute price range envelope (if possible), AND forming at the back end of the 1¾-hours temporal support or resistance level, AND at the back end of the ten-minute price range envelope, AND at the back end of the 12-minute temporal support or resistance level, as appropriate, AND at the back end of the dynamic seven-minute price range envelopes, as in these two examples...
Hence the term, "bias overlap."
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What is Numerical Price Prediction?
Updated Description for May of 2022
Copyright © 2022 Fred Duckworth
Basically, Numerical Price Prediction (NPP) is a logic-driven system based almost entirely on statistical analysis and mathematical probability—transforming trading from a somewhat subjective endeavor reliant on a certain amount of guesswork to an objective process of determining nearly inevitable outcomes. It is a unique and innovative day trading strategy that evolved out of an effort to abide by five biblical principles:
To my surprise, applying the principle of "testing everything and holding fast to that which is good" led me to reject many strategies wholeheartedly endorsed by any number of trading gurus, such as Elliott waves, Fibonacci ratios, harmonic patterns, pivot points and the like.
So 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.
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.
From there, my goal was to devise a methodology similar to that used by meteorologist to predict the weather. Again, one based as much as possible on statistical analysis and mathematical probability. The idea was to gather and evaluate precise, up-to-date, quantitative data and then use it to calculate the odds of price reaching designated values within a given time period—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; I evaluated the synergy between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance, trend lines, and market structure, all in multiple time frames.
This resulted in graphical depictions (i.e., computer models) of current conditions I could then use to help make precise, well-timed trades. So, in essence, NPP is a key-levels-system designed to reveal where the big multinational financial institutions are most likely entering and exiting positions with liquidity (thereby reversing market direction). Put quite simply, it pinpoints the pivotal zones where buying or selling pressure is greatest.
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.
So then, the notion that there are no "best" moving averages to use when trading is not one to which I subscribe. Again, at the heart of my system is the use of carefully selected baselines which I calculated in the manner explained above. (By baselines, I mean painstakingly selected moving averages able to rightly discern whether price is rising, falling, or maintaining its altitude within a particular time frame.)
However, it is not enough, in my opinion, to stop at merely determining which are the best moving averages to use when trading charts of a given time frame. To trade with the clarity and precision I desired required me to carry out one final step in which I assigned a specific temporal value to each individual baseline and its corresponding or associated price-range envelope—to answer the question: 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?
Determining the specific moving average that best represented price movement for each of the major time intervals along with their corresponding price range envelopes seemed to be the final step I needed to carry out in order to complete the development of my trading system to my full satisfaction.
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.
It all comes down to correctly interpreting the relationships between market structure, horizontal support/resistance levels, temporal support/resistance levels, reoccurring price patterns, typical price ranges in multiple time frames, and prevailing trends, also in multiple time frames.
NPP does this, in part, by viewing the Forex market from a slightly different angle than what has been the norm. Rather than simply conceptualizing price action as a series of financial transactions more-or-less represented by trend lines (or baselines), it also views price movement as cutting wide swaths of values via wave-like patterns across the domain of the corresponding asset, forming bands of quantifiable amplitudes that flow with directional tendency.
This results in a sort of dynamic-price-range-trading technique in which the decision to enter or exit a position is determined by the peaks and troughs occurring near the extremes of the above-mentioned belts, close to their maximum amplitudes.
The protocol is as follows…
First, establish that the asset under consideration is clearly evidencing an upward or downward trajectory as conveyed by a designated band of values (i.e., belt or price range envelope). If this is not the case, do not trade it.
Next, wait for price to reach a key level, where market structure, reoccurring price patterns, typical price ranges, temporal support/resistance levels, and the amplitude of the corresponding price wave is at or near its maximum value.
Go ahead and enter trades as price bounces off these key statistical support/resistance levels, especially after being confirmed by the designated "trigger" line(s), but only after considering the slopes of all related measures to ensure structure supports the decision being made.
And finally, take profit when price reaches the far side of the price wave that initiated the above transaction.
This is a relatively simple, yet extremely effective approach to day trading. As of today, when applying the system, I am using as key measures the 70-minute simple moving average envelope at 0.30%, 0.43%, 0.63% and 1.00% deviation; the 10-minute price range envelope at 0.14% deviation, the dynamic seven-minute price range envelope at 0.08% deviation; the two-minute price range envelope at 0.03% deviation; the two-minute baseline; and the six-minute baseline.
I will just briefly mention that one of the key "signs" I'm seeking when scalping is for the six-minute baseline to maintain a parallel course with the upper (blue) or lower (red) band of the dynamic seven-minute price range envelope when the band is sloping up or down (NOT when it is level/horizontal, obviously) and for the candlesticks to maintain their position above or below the (green) 2-minute baselines, as appropriate.
And if the candles are painting to the outside of the envelope, so much the better. In fact, if the candlesticks are not yet forming on the outside of the seven-minute price range envelope, I probably shouldn't be in the trade.
HOW DO YOU KNOW WHEN THE INTRADAY PRICE FLOW IS REVERSING DIRECTION?
Updated Description for May of 2022
Copyright © 2022 Fred Duckworth
Basically, Numerical Price Prediction (NPP) is a logic-driven system based almost entirely on statistical analysis and mathematical probability—transforming trading from a somewhat subjective endeavor reliant on a certain amount of guesswork to an objective process of determining nearly inevitable outcomes. It is a unique and innovative day trading strategy that evolved out of an effort to abide by five biblical principles:
- Test everything and hold fast only to that which proves valid and reliable.
- Systems operate at peak performance, at least in part, when the interactions between their various components evidence strong, healthy relationships.
- The best plans are typically established in the presence of a multitude of counselors.
- Being able to rightly interpret the signs of the times is an absolute necessity.
- Positive outcomes are usually the result of having made good choices.
To my surprise, applying the principle of "testing everything and holding fast to that which is good" led me to reject many strategies wholeheartedly endorsed by any number of trading gurus, such as Elliott waves, Fibonacci ratios, harmonic patterns, pivot points and the like.
So 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.
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.
From there, my goal was to devise a methodology similar to that used by meteorologist to predict the weather. Again, one based as much as possible on statistical analysis and mathematical probability. The idea was to gather and evaluate precise, up-to-date, quantitative data and then use it to calculate the odds of price reaching designated values within a given time period—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; I evaluated the synergy between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance, trend lines, and market structure, all in multiple time frames.
This resulted in graphical depictions (i.e., computer models) of current conditions I could then use to help make precise, well-timed trades. So, in essence, NPP is a key-levels-system designed to reveal where the big multinational financial institutions are most likely entering and exiting positions with liquidity (thereby reversing market direction). Put quite simply, it pinpoints the pivotal zones where buying or selling pressure is greatest.
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.
So then, the notion that there are no "best" moving averages to use when trading is not one to which I subscribe. Again, at the heart of my system is the use of carefully selected baselines which I calculated in the manner explained above. (By baselines, I mean painstakingly selected moving averages able to rightly discern whether price is rising, falling, or maintaining its altitude within a particular time frame.)
However, it is not enough, in my opinion, to stop at merely determining which are the best moving averages to use when trading charts of a given time frame. To trade with the clarity and precision I desired required me to carry out one final step in which I assigned a specific temporal value to each individual baseline and its corresponding or associated price-range envelope—to answer the question: 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?
Determining the specific moving average that best represented price movement for each of the major time intervals along with their corresponding price range envelopes seemed to be the final step I needed to carry out in order to complete the development of my trading system to my full satisfaction.
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.
It all comes down to correctly interpreting the relationships between market structure, horizontal support/resistance levels, temporal support/resistance levels, reoccurring price patterns, typical price ranges in multiple time frames, and prevailing trends, also in multiple time frames.
NPP does this, in part, by viewing the Forex market from a slightly different angle than what has been the norm. Rather than simply conceptualizing price action as a series of financial transactions more-or-less represented by trend lines (or baselines), it also views price movement as cutting wide swaths of values via wave-like patterns across the domain of the corresponding asset, forming bands of quantifiable amplitudes that flow with directional tendency.
This results in a sort of dynamic-price-range-trading technique in which the decision to enter or exit a position is determined by the peaks and troughs occurring near the extremes of the above-mentioned belts, close to their maximum amplitudes.
The protocol is as follows…
First, establish that the asset under consideration is clearly evidencing an upward or downward trajectory as conveyed by a designated band of values (i.e., belt or price range envelope). If this is not the case, do not trade it.
Next, wait for price to reach a key level, where market structure, reoccurring price patterns, typical price ranges, temporal support/resistance levels, and the amplitude of the corresponding price wave is at or near its maximum value.
Go ahead and enter trades as price bounces off these key statistical support/resistance levels, especially after being confirmed by the designated "trigger" line(s), but only after considering the slopes of all related measures to ensure structure supports the decision being made.
And finally, take profit when price reaches the far side of the price wave that initiated the above transaction.
This is a relatively simple, yet extremely effective approach to day trading. As of today, when applying the system, I am using as key measures the 70-minute simple moving average envelope at 0.30%, 0.43%, 0.63% and 1.00% deviation; the 10-minute price range envelope at 0.14% deviation, the dynamic seven-minute price range envelope at 0.08% deviation; the two-minute price range envelope at 0.03% deviation; the two-minute baseline; and the six-minute baseline.
I will just briefly mention that one of the key "signs" I'm seeking when scalping is for the six-minute baseline to maintain a parallel course with the upper (blue) or lower (red) band of the dynamic seven-minute price range envelope when the band is sloping up or down (NOT when it is level/horizontal, obviously) and for the candlesticks to maintain their position above or below the (green) 2-minute baselines, as appropriate.
And if the candles are painting to the outside of the envelope, so much the better. In fact, if the candlesticks are not yet forming on the outside of the seven-minute price range envelope, I probably shouldn't be in the trade.
HOW DO YOU KNOW WHEN THE INTRADAY PRICE FLOW IS REVERSING DIRECTION?
- First of all, the two-minute baselines will switch from ebbing and flowing primarily on one side of the Price Projection Sidekick (i.e., the six-minute baseline) to the other.
- Similarly, the Price Projection Sidekick will cross over from one side of the Price Projection Indicator (i.e. the 12-minute baseline) to the other.
- And candlesticks will also begin painting on the opposite side of the Price Projection Indicator (the 12-minute baseline).
- Moreover, the upper and lower band(s) of the dynamic seven-minute price range envelope will begin curving in the other direction.
- And finally, the floor and ceiling of the Donchian Channel will begin stair stepping AND making steady progress in the NEW direction.
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So, having begun formal operations with my partner in India (on a trial basis) I am finding that, though he suggested he spends almost as much time trading as I do, in actuality, he spends almost no time trading (on his own) at all. Consequently, I doubt we will continue to collaborate after this week. But, for the time being at least, most of my thoughts are being shared via a private platform between the two of us. Nonetheless, there ARE a couple of things I want to note where I am more likely to run across them again, hence the following entry...
Having begun official operations as a practitioner of Numerical Price Projection (NPP), here is what (I think) are my ultimate views:
I used to debate whether the 20-, 30- or 40-minute baseline should be the primary arbiter of my decisions at the day trading level, but in fact, it is none of those. Rather, it is the 13-minute baseline.
The other three measures mentioned above ARE important however, but as PRICE RANGE ENVELOPES and NOT as baselines. Together, they convey the gist of where price is headed at the intraday level, or the directional tendency of price action, if you will.
Moreover, these channels, at the proper deviation levels, constitute the levels at which the "immediate" trend will, more often than not, elect to reverse direction. By immediate trend I am referring to the five-minute to 15-minute flow of price.
These reversals are best conveyed on a five-minute chart using the six-minute baseline and the ten-minute dynamic price range envelope, with the first indicator "riding" the upper band of the second when the immediate trend is bullish, or riding the lower band when the immediate trend is bearish.
(When the trend is neutral, the six-minute baseline will embark on a more-or-less sideways, or horizontal course between the two bands.)
Even so, one should probably be looking to enter short positions ONLY when when the 13-minute baseline is sloping downward, long positions ONLY when the 13-minute baseline is sloping upwards, and to remain on the sidelines when the 13-minute baseline is neutral. Also, the best time to enter positions is when the slope of the 13-minute baseline matches the slope of the three consensus price range envelopes mentioned above.
In preparation for entering Traders Union contests (though they are certainly taking their sweet time in verifying my account) I opened a new demo account with which to practice. The three trades I've made so far today are, on average, more profitable than those I made on the 21st.
Consequently, I wanted to record to what I believe I can attribute this learning curve.
The difference between the trading I did last Friday and the trading I've done today is that I transposed the projected maximum daily candlestick length from my daily charts (as illustrated below) onto my one-hour charts...
...and then used these measures as guideposts when entering positions based on reversals in the six-hour baseline(s).
Consequently, I wanted to record to what I believe I can attribute this learning curve.
The difference between the trading I did last Friday and the trading I've done today is that I transposed the projected maximum daily candlestick length from my daily charts (as illustrated below) onto my one-hour charts...
...and then used these measures as guideposts when entering positions based on reversals in the six-hour baseline(s).
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At this point, my primary interest MIGHT be shifting away from guarantying that I make a profit every single day to being able to put on a trade and WALK AWAY, confident in the "fact" that it's ultimately going to make me money EVEN IF it spends the first few hours turning AGAINST me, and therefore providing it with plenty of "wiggle room" for such maneuvers.
The next (or next few) post(s) will constitute my initial foray into this new territory in terms a personal style of trading.
AUDJPY has been coming down since September of 2022, but after establishing a four-day bearish leg, the rate finds itself in the bottom half of the three- to five-day price ranges with at least one of the instantaneous moving averages hooking upward, supporting the donning of a long position.
Entering the position now will tell if it would have been better to wait for a consensus among ALL the "no-lag" measures... so time will tell.
EURJPY has spent about 16 days sayin': "I'm VERY bullish, and I ain't finished YET!" I therefore plan on entering a long position following the next pullback, assuming one is forthcoming.
Conversely, USDCAD is acting like it has finished climbing for the time being.
UPDATE: Shift of primary interest or not, my past experience counsels me to pocket my profits from AUDJPY here, and evaluate when to re-enter a long position...
...so then, at this juncture, circumstances would have me believe that entering a long position based on the suggestion of just ONE instantaneous moving average was justification enough to do so after all.
Entering the position now will tell if it would have been better to wait for a consensus among ALL the "no-lag" measures... so time will tell.
EURJPY has spent about 16 days sayin': "I'm VERY bullish, and I ain't finished YET!" I therefore plan on entering a long position following the next pullback, assuming one is forthcoming.
Conversely, USDCAD is acting like it has finished climbing for the time being.
UPDATE: Shift of primary interest or not, my past experience counsels me to pocket my profits from AUDJPY here, and evaluate when to re-enter a long position...
...so then, at this juncture, circumstances would have me believe that entering a long position based on the suggestion of just ONE instantaneous moving average was justification enough to do so after all.
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Though my initial steps suggest this approach might indeed work overall (with the moves of AUDJPY and EURJPY outweighing those of USDCAD) the behavior of the U.S. dollar-Canadian loonie nonetheless points to how much of a superior strategy it would be if I COULD enter, monitor and manage positions IN LIGHT OF forecasts as to the ultimate direction of rates, rather than simply putting on trades and walking away.