South Winds, Red Skies & Clouds in the West

[expiated]

In the spirit of "testing everything and holding fast to that which is good," I'm starting this online journal to assess my proficiency at reading the "signs of the times" to see that which lies beyond the Forex market horizon.

I do some, but not a whole lot of going back to check the exact indicators (and parameters) I was using in the past, so I’m not quite sure of everything I was using before, but as of this morning (late last night) how I should interpret price (exchange rate) movement has become really, really clear to me. Consequently, this journal is now pretty much purposeless.

For maybe three-and-a-half years I’ve been coming close to doing what I started doing just hours ago—but not exactly.

Though my daily success rate is back up to 90%, my average loss is still greater than my average gain many times—but not all the time, like it used to be. Moreover, there is a really great chance this will end completely once I am trading my system full-time, where I will be exiting positions as soon as the readings from my forecast model indicate it is time to do so, as opposed to getting kicked out via stop losses, which result in bigger losses.

Also, I will remain in trades until my trend lines tell me that any corresponding runs are over as opposed to exiting trades when a predetermined take-profit target is hit, which will frequently lead to much bigger gains per trade. I have returned to seeking 5 to 10 pips of profit at a time due to the nature of price action in the Forex market (this makes much more sense than shooting for 20 to 30 pips at a time). But once I am collecting gains based purely on price action rather than predetermined targets (i.e., trading full-time) returns of 30 to 100 pips will not be unheard of.

Not to mention that when I am trading Lot sizes of 1.00 instead of 0.02, even the kinds of trades I was executing today will be worth $50 to $100 each as opposed to $1 or $2, which will be much more money than I will ever need to live on, given my frugal life style.

That said, I feel like entries to the treads I’ve started on this forum are winding down, except for the ones in the spiritual section and the one on synthesizing Tharp and Elder. So I’m not anticipating having much more to add to this particular thread after today, if anything at all.

 

[expiated]

As of this morning (late last night) how I should interpret price (exchange rate) movement has become really, really clear to me. Consequently, this journal is now pretty much purposeless.

Rather than use this journal to assess my proficiency at forecasting what lies ahead in the Forex market, a task I feel I have essentially completed, I am as of today using it to update my observations in a convenient location where I know where to find them...

Thursday, August 22, 2019 / 2:00 p.m. PST

EURGBP is currently very bearish, so sell the pair if it pulls back up to the gravity line.
Consider selling EURUSD if and when it makes contact with the northern river bank.
Sell NZDUSD if the rate climbs back up to the gravity line.

GBPJPY remains bullish, so consider buying the pair if the rate crawls back down to the gravity line.
Buy USDCHF is the rate falls back down to the gravity line.

 

[expiated]

Friday, September 06, 2019

I felt pretty confident in March of this year that I had arrived at the final configuration of the chart setups I would be using to trade foreign currency pairs online from that point going forward. So of course, I was probably even more certain that this was the case in June. Hence, there was no way I thought I would be making additional modifications in September, but that is indeed what I have done.

The difference now however is that rather than making changes to accommodate new ideas, all of the adjustments I have made since June have been to simply enhance or better serve the system as is. As before, I cannot imagine how any additional alterations might be possible—but time will tell.

At any rate, my approach to the Forex market is now fully developed, to the point that I have returned to this thread after two weeks to describe it, rather than to continue the kind of entries I was making before...

So, it seems that what I will be calling my system in its final form is The Dynamic Price Range Forex Trading Strategy, which is an offshoot of The Numerical Price Prediction System. As of this week, its methodology has become so refined that I plan to use only one specific setup for entering positions!

Instead of viewing exchange rates as more-or-less tracking one or more moving averages, the system conceptualizes price action as being swept along in a tsunami (a tunnel or wave) of a given width (amplitude) except that the tsunami evidences river-like characteristics in the form of opposite banks between which debris (candlesticks) is tossed to and fro.

At the heart of the system is what I call a gravitational trend line, which defines the "orbit" of a given asset’s rotation (otherwise known as bias or sentiment) as evidenced by its slope.

Positions should only be entered in the direction of the orbit. Trades are executed when debris reaches the bank of the river that is opposite the direction of the orbit, but is then rejected and subsequently sent on a trajectory aligned with market bias, crossing a "trigger line" in the process (i.e., a more conventional moving average that tracks price cycles as the corresponding "low-level" waves form peaks and troughs).

This system is best implemented using five-minute charts in that it constitutes a style I call "pseudo-swing trading."

One-minute charts are inappropriate in that one of the goals of this approach is to ignore less significant price movements (what might be of interest if scalping) in order to realize 10- to 30-pips worth of profit per trade, as opposed to 10 or less.

Fifteen-minute charts and above are also inappropriate in that the approach relies on an extremely high level of precision and accuracy for success, which is simply not available using higher time frames.

The need for precision is also why virtually all measurements are taken using proprietary indicators. However, these indicators eat up a lot of memory, so standard approximations have also been calculated and used to construct “lite” versions of the chart setups for rudimentary monitoring of the market.

Some might say this all constitutes "curve fitting," and if true—so be it—for it would simply mean that curve fitting is from where my system gets it strength and power. I don’t necessarily see this as a bad thing. In fact, I totally reject strategies that recommend using the same moving averages (for example, the 20- and 50-period simple moving averages) irrespective of the time frame one is observing. I’m not saying there is anything wrong with this, just as I would not claim there is anything wrong with Brussels sprouts. But this does not change the fact that its taste is simply not to my liking.

A second reason for rejecting the use of higher-time-frame charts is that, like the numerical weather prediction forecast models that inspired this system, it suffers from the intrinsic predictability limitation of error growth with time.

 

[expiated]

The need for precision is also why virtually all measurements are taken using proprietary indicators. However, these indicators eat up a lot of memory, so standard approximations have also been calculated and used to construct “lite” versions of the chart setups for rudimentary monitoring of the market.

Saturday, September 7, 2019

Scalping the Dynamic Price Range Trading System...

Since I created a lite version of the five-minute setup, I figured it would be easy enough to create a one-minute lite version as well by simply multiplying all the parameters by five, which I did, even though I wrote yesterday that it would be inappropriate to use one-minute charts to trade this strategy.

In trying to figure out how I could use the resulting configuration, it became clear that though trading it in the same manner as five-minute charts would be rather unworkable, using it to carry out a clearly defined scalping strategy would not, and if fact, might prove quite profitable.

 

[expiated]

Saturday, November 16, 2019

Friday's price action tricked me into abandoning winning positions and eat a couple of losses only to have to reenter the same positions later on. This was based on 60- and 5-minute charts, so perhaps four-hour charts, on which the following forecasts were based, will help me avoid such "head fakes" in the future.

As I glance above at what I was doing on September 7th, I'm thinking I might try adapting that particular configuration to my new four-hour charts (which were translated from my current one-hour charts) and do the same thing now to avoid being stopped out prematurely.

The following is for my own use and is neither offered nor intended as trading advice for anyone else...

AUDJPY
The weekly trend is very bearish, so the instantaneous moving average is headed in the “wrong” direction. Consequently, you should look to short the pair as soon as you get confirmation that the instantaneous moving average has turned south.

AUDUSD
The weekly trend is very bearish, so the instantaneous moving average is headed in the “wrong” direction. Consequently, you should look to short the pair as soon as you get confirmation that the instantaneous moving average has turned south.

CADJPY
The weekly trend is unquestionably bearish, so the instantaneous moving average is headed in the “wrong” direction. Consequently, you should look to short the pair as soon as you get confirmation that the instantaneous moving average has turned south.

EURAUD
The weekly trend is decidedly bullish, but given that the instantaneous moving average has been headed south for the last 24 hours, look to short the pair if and when price climbs above a still down-sloping instantaneous trend line.

EURGBP
Bearish weekly trend, but haphazard day-to-day price action. The pair is more-or-less remaining within the four-hour price range so look for an opportunity to short it, at least for the short term, should it visit the 0.8577 neighborhood.

EURJPY

The weekly trend is decidedly bearish, so the instantaneous moving average is headed in the “wrong” direction. Consequently, you should look to short the pair as soon as you get confirmation that the instantaneous moving average has turned south.

EURUSD
The weekly trend looks like it might be initiating a reversal north.

GBPJPY
Range bound for four weeks now.

GBPUSD
Same as GBPJPY.

NZDJPY
Same as the Cable/Sterling pairs.

NZDUSD
Range bound for four weeks and zigzagging all over the place.

USDCAD
Zigzagging all over the place. The bullish trend of the last two weeks might (or might not) be initiating a reversal southward.

USDCHF
Zigzagging all over the place. Has essentially gone nowhere over the last eleven weeks.

USDJPY
Has essentially gone nowhere over the last five weeks.

(I just added one of my smoother [proprietary] moving averages to the four-hour setup to help clarify what is going on with the zigzagging charts a bit faster and more consistently than the weekly trend lines can do. I think this might be a big help.)

I just added two longer term moving averages as well, and based on this modified configuaration, I'm now viewing USDCAD as still longer-term bullish and will therefore be waiting for the pair's instantaneous moving average to turn north once again, at which point, I might consider entering a long position.

USDJPY looks to still be ever so gradually heading north, so I might enter long positions following significant pullbacks.

As I glance above at what I was doing on September 7th, I'm thinking I might try adapting that particular configuration to my new four-hour charts (which were translated from my current one-hour charts) and do the same thing now to avoid being stopped out prematurely.

I will be using the three proprietary moving averages I just added, and not the protocol from September, to avoid being stopped out prematurely.

 

[expiated]

Wednesday / December 25, 2019 / 10:00 p.m. PST

Daily Trend is bullish:
AUDJPY
AUDUSD
EURGBP (but looks to be losing momentum)
NZDJPY
NZDUSD

Daily Trend is bearish:
EURUAD
EURJPY (but looks to be losing momentum)
EURUSD (but looks to be losing momentum)
GBPJPY (at 142.26, this pair is nicely structured for a short position if it plans to continue heading south)
GBDUSD


Daily Trend is neutral:
CADJPY
USDJPY

(The New Zealand pairs were nicely structured for long positions when Binary dot com shut down the other day. Had I been "on my toes" and waiting for the platform to reopen at 2:00 p.m. PST today, I could have earned an easy profit, but my focus was on holiday activities instead.)

 

[expiated]

Saturday / December 28, 2019 / 10:30 p.m. PST

Daily Trend is bullish:
AUDJPY
AUDUSD
CADJPY
EURJPY (turned bullish on Friday)
EURUSD (turned bullish on Friday)
GBPJPY (turned bullish on Friday)
GBPUSD (turned bullish on Friday)
NZDJPY
NZDUSD
USDJPY (turned bullish on Thursday but is still day-to-day range bound nine days running)

Daily Trend is bearish:
EURUAD (Friday's candlestick is the "wrong" color)
USDCHF
USDCAD

Daily Trend is neutral:
EURGBP (went neutral on Friday)

 

[expiated]

Monday / December 30, 2019 / 5:30 p.m. PST

Daily Trend is bullish:
AUDJPY
AUDUSD
CADJPY
EURAUD (turned slightly bullish today)
EURJPY
EURUSD
GBPJPY
GBPUSD
NZDJPY
NZDUSD

Daily Trend is bearish:
EURAUD (Friday's candlestick is the "wrong" color)
EURGBP (slightly bearish, slowing momentum, rising close and open two days in a row)
USDCHF
USDCAD
USDJPY (turned bearish yesterday)

Daily Trend is neutral:
CADJPY (went neutral today)

 

[expiated]

Wednesday / January 1, 2020 / 6:30 a.m. PST (New Year's Day)

Daily Trend is bullish:
AUDJPY
AUDUSD
CADJPY
EURJPY
EURUSD
GBPJPY
GBPUSD (at the top of its typical day range)
NZDJPY ("wrong colored candlestick)
NZDUSD

Daily Trend is bearish:
EURAUD (went from slightly bullish two days ago to slightly bearish the last day of trading and seems unable to make up its mind)
EURGBP
USDCHF
USDCAD
USDJPY

 

[expiated]

Thursday / January 2, 2020 / 4:00 p.m. PST

AUDJPY
AUDUSD
CADJPY
EURAUD
EURGBP
EURJPY
EURUSD
GBPJPY
GBPUSD
NZDJPY
NZDUSD
USDCHF
USDCAD
USDJPY