How many people here use price action instead of indicators in their EAs? - page 3
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Is that such a bad thing? The market changes everyday, one of the articles I read made me think about who is actually trading the markets. Lets take a big bank with a manager called Harry who is bullish on EURUSD and tells his traders to be on the look out for bullish trades, Harry gets sick and is replaced by Jack who think that the market is due for a reversal and so tells the trader to start reducing positions. The market will look different because Harry isn't putting his views across while Jack is. That's all a market is, the price of peoples views, so the patterns are bound to change over time.
I hate to say but you are undeniably spot-on - I have to admit that's how roughly it works out there -- LMAO --- you got Harry and you got Jack eying on Harry from far, plus you got a load of monkey-see-monkey-do traders who nobody care, except their hanging around as long as one of them still hadn't got rolled out.
So, you can see appreciate what guys like MetaQuotes are doing (and up against...;-|). The irony is working as a trader, you may get paid tons until something happens yet you dont have a clue what really you're good at - while if you're on your own, you tend to know whether is or was trading really the cup of tea or it was just another job.
Maybe I'm missing a point here: What exactly is a "Market Change"? Is this a transition from an uptrend to a downtrend or a channel to a downtrend or an uptrend to a channel? Is that what "Market Change" means?
Also - can someone explain the term "draw down" to me? I am guessing that means the maximum cumulative capital loss during an EA's active period. Please correct me if I'm wrong.
Anyways, the strategy I've been yammering about for the past couple of days finds exactly what I think "Market Change" means. It finds the changes a little late but still early enough to be beneficial, and it's purely mathematical. Aesthetics are for museums and art galleries. You go there after you make your money...
All I do is look at hourly price movement against a set of bollinger bands based on the daily price movement (24 hour-bars) and a simple moving average based on the weekly price movement (144 hour-bars).
I figure, the biggest players are banks and other financial firms who use currency futures to hedge their deposits. That means the the biggest players are likely looking at daily and possibly weekly charts. So when a guy watching the weekly prices sees something interesting, he puts his weight on it. And then the daily guy might see the same thing and put MORE weight on it. The reverse can also happen and more often does. Then all the fools go "OOOH PRETTY!!!!!!!" and jump all the f*** over it. Sooner or later, the mania ends and smarter traders start cashing in. The daily price will usually feel it first although sometimes the Weekly price will... it's actually kind of weird like that. Regardless, if one of the weekly or daily price starts to move down, it's time to collect your money and watch the fools scramble until the market starts to make some sense again.
As such I extend the term "The Trend is your friend" to "Trends are your friends. When friends disagree, stay the crap out of it."
A weekly channel will usually indicate some upcoming wild daily swings that can be picked up easily enough by gauging overbought and oversold conditions with bollinger bands around the daily price average.
I really need to test this strategy with more data. Every attempt I've made to code this has failed somehow. I'm about ready to toss it on here to see if anyone would be willing to fix it :P
@trivates: What exactly is a "Market Change"? Is this a transition from an uptrend to a downtrend or a channel to a downtrend or an uptrend to a channel? Is that what "Market Change" means? Have a read here, very informative stuff. For a definition of Market Change, I'll go with BarrowBoy latest comments. "as macro-patterns change". So Yes all the stuff on your list and I would include stuff like changes in Volatility and Momentum to the list.
Also - can someone explain the term "draw down" to me? This is how I still look at it. Your definition is correct enough. There are 2 drawdown the tester reports. Maximum and Relative. Maximum is in $$$ Dollars. Relative is in % Percentage. Relative drawdown is usually viewed as more important. A system which loses $10,000 on a $100,000 account is not as bad as a system which loses $99 on a $100 account. The first one lost more money $10,000(10%) but the second lost more Percentage 99%($99).
Ps: I'll try your approach to defining a range or trend within my current project, if thats ok with you of course :)