Proprietary Trading Firms - A Different Business Model

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The "Weekly Tracer" chart configuration (which defines the typical weekly price range) cannot be duplicated on lower time frame charts. Yet, anecdotal observations made with respect to this four-hour approximation suggests it might nonetheless be useful in timing entries and exits based on the more accurate but less detailed measures stemming from the higher-time-framed source material.

The "Four-hour Weekly Tracer" configuration just mentioned above appears to become even more useful if the six-day temporal support/resistance measure is added to the chart.

On a different note... The trade represented below illustrates how the projected daily price range (i.e., projected day range), 24-hour temporal support/resistance levels, eight-hour price range channel, 24-hour price range channel, and four-hour price range channel (except that I need to carry out an evaluation/analysis, because these last three measures might actually constitute the two-, six- and one-hour price range channels—and NOT the eight-, 24- and four-hour channels) can more-or-less concur or reach a consensus opinion on when the statistical odds that assuming a long or short position will have a positive outcome is much greater than average/normal, leading to a $28 return on a single Knock-out contract within a span of just about one hour...

It also illustrates the preferability of trading Knock-outs (where in this case, a potential -$25 risk was accompanied by a potential $75 reward) over Binary Options (where in this case, an in-the-money $20 reward would have been accompanied by a -$80 risk).

This weekend i will begin compiling all the notes from this thread into a single document which might serve as a manual for junior traders in the future, but will serve as a manual for MYSELF in the meantime, seeing as how I do NOT hold all these observations in my head, but probably NEED to.

 

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Moreover, if volatility/liquidity is high, watch for intraday breakouts on lower-time-frame charts, as conveyed by a refusal of the the faster moving averages to drop "behind" the "Battenberg" (or "mason wasp") moving average, poised above or below the "black cloud," formed by the 60-minute price range envelope at 0.10% deviation.(This is where you "let your profits run.")

About that "mason wasp" (or 20-minute) baseline, it too has its own breakout level, which is the associated price range envelope at 0.07% deviation. Try not to miss opportunities where candlesticks have breached BOTH these thresholds simultaneously, nor the pips that become available when exhaustion takes over and rates maneuver a reversal in the other direction.

 

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The "4-Hour TWO-WEEK TWO-DAY ENVELOPES" configuration is also very prescriptive.

Because GBPUSD is overall bearish and candlesticks were painting in the lower region of the two-day envelope, I was watching for an opportunity to buy the pair for a major gain from a swing trading perspective.

However, that opportunity never materialized. On the other hand, there were numerous opportunities to make less grandiose profitable trades based on "black and brown cloud breakouts" and exchange rate voyages from one "riverbank" or "shoreline" to the opposite side of the "river" or "ocean" based on the three levels of the 60-minute price range envelope(s).

According to Kathleen Brooks and Brian Dolan, the scalper is a trader who looks for short, minimally profitable opportunities in the market that can add up over time. Scalpers don't have the patience to hold a position for a lengthy period and grow bored easily when keeping trades active for too long. They're motivated by the excitement of seeing fast-moving markets, sometimes trading around major new events to realize the vast potential of a large move in a very short period of time. They aren't happy about placing a losing trade, but they're typically less impacted both financially and emotionally due to the small nature and frequency of trades that they place.

The swing trader is someone who typically enjoys staying in a trade for as little as a few hours to potentially days. Swing traders like the analysis aspect of trading—finding patterns that develop and exploiting them like a cunning strategist. Because they place fewer trades on a daily and weekly basis, losing trades could have more of an impact on their psyche, so keeping longer-term goals in mind and sticking to the plan are imperative.

The position trader has a much longer time frame in mind than most other traders. They could be in a trade for months or even years if their conviction is strong enough. Usually based on a fundamental perspective of political, sentimental, or supply/demand reasoning, they brush off the fear of short-term movements. They're much more tolerant of drawdowns and could take losses fr a very long time before finally admitting defeat.

 

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USDCHF is extremely bearish, pushing the limits of support in the form of the lower band on the 12-day price range envelope. Of course, this means the pair has plenty of room to climb, but as long as the two- and five-day price range envelopes are sloping downward, the pair must remain an overall sell. Accordingly, with candlesticks presently painting in the middle of the two-day channel, I will be watching for the signal to sell as pressure on the pair to turn south again builds between 0.9340 up to 0.9448.

 

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And finally, generally speaking, you will want to look for opportunities to enter positions as rates come out of pullbacks (conveyed by the faster moving averages) during those periods or intervals where the slope of the "black cloud" and the slope of the "Battenberg" or "mason wasp" moving averages are headed in the same direction.

Along these same lines, consider as a possible trigger-signal those instances where the slope of the "black cloud," as represented by the lower-panel histogram, is above 0.035 or below -0.035. (Exit the corresponding positions when the histogram begins losing ground.) More significant examples of such events are highlighted in the image that follows...

 

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This happened at 7:00 PM PST Monday night, December 19, 2022...

 

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KEY INFORMATION:

I wrote in my book that...

Numerical Price Prediction (NPP) conceptualizes price action as a spectrum of values forming cyclical waves of given amplitude that cut swaths of area bounded by (dynamic adaptive) price range channels observed to have directional tendency. These measures inform a decision-making process based entirely on mathematical odds and statistical probability, resulting in an uncanny power to unveil key levels where major market participants reverse direction to enter or come out of positions with liquidity.

For this reason, I feel my ideas are akin to those of JM Hurst, who according to Brian J. Milliard, claimed that: (1) some 23% of price motion is based on cyclic movements in nature; (2) these cycles are additive; (3) the cycles can be seen clearly if envelopes are constructed around the price movement; and (4) the ideal buying [or selling] point is when several such cyclic components are reaching their low [or high] points.

At this time, NPP forecast models, which base most measures on time rather than on "periods," lists the following three measures as paramount for the purpose of: (A) defining the envelopes (swaths of area constituting price range channels) used to see cycles at the intraday level, and (B) identifying ideal day trading buying and selling points—where the upper or lower bands of multiple price range envelopes come into alignment with one another...

They are:

• 60-minute price range envelope at 0.10% deviation
• 2-hour price range envelope at 0.25% deviation
• 4-hour price range envelope at 0.45% deviation

 

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CRITICAL INFORMATION:

Additional Key Measures:

• As long as candlesticks are painting outside the 60-minute price range envelope at 0.10% deviation, you will want to stick with the trade in that this essentially means the asset is on a run.
• The same applies to the 20-minute price range envelope at 0.07% deviation.
• The proprietary 60-minute adaptive price range channel at 0.20% deviation conveys the "gist" of intraday price flow.
• Based on all observations to date, candlesticks will NOT violate the outer band(s) of the proprietary ten-minute adaptive price range envelope (at least not for more than five minutes max).

 

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At this time, NPP forecast models, which base most measures on time rather than on "periods," lists the following three measures as paramount for the purpose of: (A) defining the envelopes (swaths of area constituting price range channels) used to see cycles at the intraday level, and (B) identifying ideal day trading buying and selling points—where the upper or lower bands of multiple price range envelopes come into alignment with one another.

Graphical Depiction of Both the Correlations AND Cross Currents within the Price Flow Fractals of the Intraday Trend:

 

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NOTE TO SELF: Traders can purchase a maximum of 100 currency knock-out contracts per transaction...