ProfLogic's Method
- Thread starter El Guapo
- Start date
- Status
Large arrows are user (me) placed to show trade placement areas. Not specific bar entry but simply the fine tuned area where the trade was executed.
The small arrows are computer generated and show the specific bar where the Trading Oscillation label first appeared. The Trading Oscillation label come from the next fastest (larger) fractal chart. The Trading Oscillation is where the decision making process begins to set in motion the execution process. Everything I do is objective base and a step-by-step process; if this, then this.
The Histogram Oscillation (denoted by a color change) is simply another step in the process of executing a trade. The histogram oscillating at a Prime level simple shows that price is oscillating at a high level of strength. Any other oscillation shows price creating a top or bottom that isn't as strong. Histogram is generated from next fastest (larger) fractal chart ERG oscillations.
Each step separately means little but each step in sequence is critical.
I'm right here and the ERG settings have already been posted.
http://trader.online.pl/MSZ/e-w-Ergodic_Indicator.html
The Intraday Trade Rules!
Perfect Trade â Summary (Intraday Trade)
(In Trading Decision Chart)
1. Prime Trading PPF trade through to Prime Trading Breach.
2. Verify Histogram is in Prime but not yet oscillating.
(In Strength Chart)
3. Confirm Histogram is in Same Direction on Strength Chart, next slowest chart. (This is for see the overall strength)
(In Entry Chart)
4. ERG Oscillation in Prime.
5. Look for PF Bar or Bars
6. Look for Confirmed Price Failure Bar.
7. Enter at the open of the Execution Bar (this is the bar immediately following the Confirmation Bar).
(Exit Position)
8. Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
Detail
(In Trading Decision Chart)
(1) Prime Trading PPF trade through to Prime Trading Breach.
- In Trading Decision chart when PPF label shows then confirm previous label is Breach label.
(2) Verify Histogram is in Prime.
- For Long Position histogram must equal or below -10 (When PF confirms, histogram can swing back above -10).
- For Short Position histogram must equal or above +10 (When PF confirms, histogram can swing back below +10).
(In Strength Chart)
(3) Confirm Histogram is in Same Direction on Strength Chart.
- For Long Position Histogram in Strength Chart has to be in up direction
- For Short Position Histogram in Strength Chart has to be in down direction
(In Entry Chart)
(4) ERG Oscillation in Prime.
- For Long Position ERG is changing from Red color to Blue color and value must equal or below -10.
- For Short Position ERG is changing from Blue color to Red color and value must equal or above +10.
(5) Look for PF Bar or Bars
- PF Bar definition in Book
(6) Look for Confirmed Price Failure Bar.
- For Long Position look for Swing Bar Low that is Higher then Previous Swing Bar Low.
- For Short Position look for Swing Bar High that is Lower then Previous Swing Bar High.
(7) Enter at Open of Execution Bar.
- Enter position on open of bar immediately following the Confirmation Bar.
(Exit Position)
(8) Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
- For Short Position exit immediately upon confirmation of Oscillation. (Oscillation must be 2 complete bars).
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation.
- For Short Position exit immediately upon confirmation of Oscillation.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
Near Perfect Trade â Summary (Intraday Trade)
(In Trading Decision Chart)
1. Prime Trading PPF trade through to Prime Trading Breach.
2. Verify Histogram has creating an Oscillation (> 0) greater than the zero line but not yet in Prime.
(In Strength Chart)
3. Confirm Histogram is in Same Direction on Strength Chart, next slowest chart. (This is for seeing the overall strength)
(In Entry Chart)
4. ERG Oscillation in Prime.
5. Look for PF Bar or Bars
6. Look for Confirmed Price Failure Bar.
7. Enter at the open of the Execution Bar (this is the bar immediately following the Confirmation Bar).
(Exit Position)
8. Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
Detail
(In Trading Decision Chart)
(1) Prime Trading PPF trade through to Prime Trading Breach.
- In Trading Decision chart when PPF label show then confirm previous label is Breach label.
(2) Verify Histogram has creating an Oscillation (>) greater than the zero line but not yet in Prime.
- For Long Position histogram must have oscillated and must be (> 0) but less than -10 (When PF confirm histogram can swing back above -10).
- For Short Position histogram must have oscillated and must be (> 0) but less than +10 (When PF confirm histogram can swing back below +10).
(3) Confirm Histogram is in Same Direction on Strength Chart.
- For Long Position Histogram in Strength Chart has to be in up direction
- For Short Position Histogram in Strength Chart has to be in down direction
(In Entry Chart)
(4) ERG Oscillation in Prime.
- For Long Position ERG is changing from Red color to Blue color and value must equal or above -10.
- For Short Position ERG is changing from Blue color to Red color and value must equal or below +10.
(5) Look for PF Bar or Bars
- Look for PF Bar definition in book.
(6) Look for Confirmed Price Failure Bar.
- For Long Position look for Swing Bar Low that is Higher then Previous Swing Bar Low.
- For Short Position look for Swing Bar High that is Lower then Previous Swing Bar High.
(7) Enter at Open of Execution Bar.
- Enter position on open of bar immediately following the Confirmation Bar.
(Exit Position)
(8) Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
- For Short Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation.
- For Short Position exit immediately upon confirmation of Oscillation.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
Perfect Trade â Summary (Intraday Trade)
(In Trading Decision Chart)
1. Prime Trading PPF trade through to Prime Trading Breach.
2. Verify Histogram is in Prime but not yet oscillating.
(In Strength Chart)
3. Confirm Histogram is in Same Direction on Strength Chart, next slowest chart. (This is for see the overall strength)
(In Entry Chart)
4. ERG Oscillation in Prime.
5. Look for PF Bar or Bars
6. Look for Confirmed Price Failure Bar.
7. Enter at the open of the Execution Bar (this is the bar immediately following the Confirmation Bar).
(Exit Position)
8. Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
Detail
(In Trading Decision Chart)
(1) Prime Trading PPF trade through to Prime Trading Breach.
- In Trading Decision chart when PPF label shows then confirm previous label is Breach label.
(2) Verify Histogram is in Prime.
- For Long Position histogram must equal or below -10 (When PF confirms, histogram can swing back above -10).
- For Short Position histogram must equal or above +10 (When PF confirms, histogram can swing back below +10).
(In Strength Chart)
(3) Confirm Histogram is in Same Direction on Strength Chart.
- For Long Position Histogram in Strength Chart has to be in up direction
- For Short Position Histogram in Strength Chart has to be in down direction
(In Entry Chart)
(4) ERG Oscillation in Prime.
- For Long Position ERG is changing from Red color to Blue color and value must equal or below -10.
- For Short Position ERG is changing from Blue color to Red color and value must equal or above +10.
(5) Look for PF Bar or Bars
- PF Bar definition in Book
(6) Look for Confirmed Price Failure Bar.
- For Long Position look for Swing Bar Low that is Higher then Previous Swing Bar Low.
- For Short Position look for Swing Bar High that is Lower then Previous Swing Bar High.
(7) Enter at Open of Execution Bar.
- Enter position on open of bar immediately following the Confirmation Bar.
(Exit Position)
(8) Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
- For Short Position exit immediately upon confirmation of Oscillation. (Oscillation must be 2 complete bars).
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation.
- For Short Position exit immediately upon confirmation of Oscillation.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
Near Perfect Trade â Summary (Intraday Trade)
(In Trading Decision Chart)
1. Prime Trading PPF trade through to Prime Trading Breach.
2. Verify Histogram has creating an Oscillation (> 0) greater than the zero line but not yet in Prime.
(In Strength Chart)
3. Confirm Histogram is in Same Direction on Strength Chart, next slowest chart. (This is for seeing the overall strength)
(In Entry Chart)
4. ERG Oscillation in Prime.
5. Look for PF Bar or Bars
6. Look for Confirmed Price Failure Bar.
7. Enter at the open of the Execution Bar (this is the bar immediately following the Confirmation Bar).
(Exit Position)
8. Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
Detail
(In Trading Decision Chart)
(1) Prime Trading PPF trade through to Prime Trading Breach.
- In Trading Decision chart when PPF label show then confirm previous label is Breach label.
(2) Verify Histogram has creating an Oscillation (>) greater than the zero line but not yet in Prime.
- For Long Position histogram must have oscillated and must be (> 0) but less than -10 (When PF confirm histogram can swing back above -10).
- For Short Position histogram must have oscillated and must be (> 0) but less than +10 (When PF confirm histogram can swing back below +10).
(3) Confirm Histogram is in Same Direction on Strength Chart.
- For Long Position Histogram in Strength Chart has to be in up direction
- For Short Position Histogram in Strength Chart has to be in down direction
(In Entry Chart)
(4) ERG Oscillation in Prime.
- For Long Position ERG is changing from Red color to Blue color and value must equal or above -10.
- For Short Position ERG is changing from Blue color to Red color and value must equal or below +10.
(5) Look for PF Bar or Bars
- Look for PF Bar definition in book.
(6) Look for Confirmed Price Failure Bar.
- For Long Position look for Swing Bar Low that is Higher then Previous Swing Bar Low.
- For Short Position look for Swing Bar High that is Lower then Previous Swing Bar High.
(7) Enter at Open of Execution Bar.
- Enter position on open of bar immediately following the Confirmation Bar.
(Exit Position)
(8) Exit Position Condition.
a. Any ERG or Histogram Oscillation in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
- For Short Position exit immediately upon confirmation of Oscillation (Oscillation must be 2 complete bars).
b. Any ERG or Histogram Oscillation not in Prime, and PPF exit immediately.
- For Long Position exit immediately upon confirmation of Oscillation.
- For Short Position exit immediately upon confirmation of Oscillation.
c. Any ERG or Histogram Oscillation in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
d. Any ERG or Histogram Oscillation not in Prime, and a Breach, Breach or Match PPF, you may exit on PF Bar sequence or Adjust Stop to Previous like Oscillation until Stopped Out, a Divergent/Convergent oscillation is created or a failed oscillation is created.
- For Long Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) Low and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
- For Short Position, Move the Stop Loss Point to Previous Swing (ERG Histogram Oscillation) High and repeat until Stopped Out or a Divergent/Convergent oscillation is created.
It seems that a lot of people are trying to get the indicator, but there is little discussion as to what it actually is, or why it provides useful information.
I see a two things in ProfLogic's method that I definitely agree with.
1) Removing time and using constant volume bars. Price moves relative to information -- and an excellent proxy for information diffusion is volume. His values seem rather arbitrary -- but if they work, they work!
At this point, I would ask why the values are not self adjusting to volatility -- but I suppose that really only matters at a more macro level, or over a longer time period. For example, values that might have been 'slow' in 1995 might be 'fast' now, due to an increase in total volume.
2) "Fractal" space. By looking at the slower fractal above, you can get a good idea as to direction (and perhaps strength?) of the primary trend. Since your trade should be contained within your fractal (for example, a trade taken on the basis of 5 minute bars should not last months), the only primary trend you have to be aware of is that in the fractal above. I like this a lot.
The rest gets a bit washy for me ... but only because I don't think I understand it. Evaluating Ergodic, it seems to be a derivative of TSI, which looks to be, at first glance, a momentum indicator.
This would indicate to me that ProfLogic's Ergodic is basically a trend/momentum system? By using constant volume bars, we only take into account 'significant' price movements, reducing noise. We then look at two trends, our current fractal and the slower fractal, waiting for a confluence. Then, we use the confirmation of momentum to ensure that our trade is going in the right direction. At the wane of momentum, we begin looking for our exit.
Is that correct? Did I mess something up? It seems like a logical system to me: reduce noise and wait for a confluence of signals that identify a profitable opportunity.
I see a two things in ProfLogic's method that I definitely agree with.
1) Removing time and using constant volume bars. Price moves relative to information -- and an excellent proxy for information diffusion is volume. His values seem rather arbitrary -- but if they work, they work!
At this point, I would ask why the values are not self adjusting to volatility -- but I suppose that really only matters at a more macro level, or over a longer time period. For example, values that might have been 'slow' in 1995 might be 'fast' now, due to an increase in total volume.
2) "Fractal" space. By looking at the slower fractal above, you can get a good idea as to direction (and perhaps strength?) of the primary trend. Since your trade should be contained within your fractal (for example, a trade taken on the basis of 5 minute bars should not last months), the only primary trend you have to be aware of is that in the fractal above. I like this a lot.
The rest gets a bit washy for me ... but only because I don't think I understand it. Evaluating Ergodic, it seems to be a derivative of TSI, which looks to be, at first glance, a momentum indicator.
This would indicate to me that ProfLogic's Ergodic is basically a trend/momentum system? By using constant volume bars, we only take into account 'significant' price movements, reducing noise. We then look at two trends, our current fractal and the slower fractal, waiting for a confluence. Then, we use the confirmation of momentum to ensure that our trade is going in the right direction. At the wane of momentum, we begin looking for our exit.
Is that correct? Did I mess something up? It seems like a logical system to me: reduce noise and wait for a confluence of signals that identify a profitable opportunity.
1. The values are based on Prime Numbers. One is obviously unuseable, 3 offers too many chart choices, 5 ends up being too noisy being that each increment is divisible by 5, 7 was perfect for number of choices and finally 11 was to large so I went back to 7.
2. Exactly correct!! Every trade is taken inside your defined Trend so you always know where your price direction and strength lies.
The ERG is a momentum indicator simply mirrored to price movement. Other than that you nailed it. Logic works in the correct environment.
Well done.
- Status