Most of the indicators currently used by traders in the Forex market were created for another market - the stock market and for another time when there were sufficiently monotonous trends and quotes were not as volatile as they are now when there are no trends (as stable trends of unidirectional price movement). Moreover, the random noise of the foreign exchange market is now so great that (due to the summation of many random walks) they can even give rise to illusions of trends that will be determined by classical indicators that then give false signals. For more details on the occurrence of such false signals, see the author's study: " True and illusory currency market trends ." Therefore, almost the entire existing arsenal of indicators is not very suitable for trading on the Forex market and does not reflect key aspects of the state of this market. For a technical assessment of the state of the Forex market and its instruments, it is necessary, first of all, a statistical analysis of the history of their quotes suitable for such non-stationary processes, which would make it possible to identify important trading patterns that are latent for standard (supplied with the MT4 trading platform) indicators.
The author in this blog presents effective market research indicators, indicators for optimal filtering of market noise and statistical indicators, as well as algorithms for their work and principles of their use in profitable trading.
Indicator types represented:
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Market research indicators.
These indicators reveal the microstructure of the price change process and establish the true statistical characteristics of its regular and random components, which, in fact, made it possible to develop effective algorithms for filtering market noise. These indicators are:
- Casual Channel indicator
- Alligator Analysis (FREE),
- Channel Builder (FREE).
- Probabilities distribution of price (PDP),
- Probability distribution PRO,
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Indicators with optimal filtering of market noise.
The author has developed the number of new algorithms F ({Pi}) for recognizing and filtering random noise of market quotes and based on these algorithms he wrote indicators that, after optimizing them for the corresponding market, they allow you to enter it (the market) most profitably and close it in time open positions. Both the delay time T ({Pi}) of the filters constructed on their basis and the reliability R ({Pi}) of the signal generated by them depend on the parameters {Pi} of these algorithms. Both of these (T and R) factors influence the average profit B(T{Pi}, R ({Pi}))= B ({Pi}), which, therefore, depends on the {Pi} parameters. Therefore, based on the history of quotes of currency pairs, filter parameters {Pi0} are calculated that maximize the average statistical profit max (B) = B ({Pi0}), which is the essence of the optimal filtering of market noise.
Indicators with optimal filtration are:
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Statistical indicators.
These indicators are macroeconomic indicators and serve to determine the global trend. Readings of classic statistical indicators can be found in the economic calendar. The author has developed the following unique statistical indicators:
1. StochasticExtrapolator
Significant remark.
It is proposed that it is on the basis of fundamental analysis and statistical indicators that the direction of opening a position should be determined, and indicators with optimal filtering are used to determine entry and exit points, as well as to establish stop-losses, which, together with money management, is, apparently, the only possible strategy really profitable stock exchange game.
The presented indicators have four price categories:
1. FREE - products (any of the categories described below) that are temporarily free, but will eventually become paid.
2. BASIS - paid products that demonstrate only an algorithm with no additional information processing functions.
3. PRO – indicators supplemented:
1) all kinds of alerts about the signals they give;
2) statistical subroutines for calculating optimal stop loss and take profit;
3) money management functions, in which the lot is calculated based on the accepted level of risk of losses, the available deposit and the optimal level of stop loss.
4. ELITE - products that contain unique (not present anywhere else) ultra-profitable algorithms.
