Forex Mythbusters

 

Hello,

I tought it would be fun to collect some fakts and myths.

I will edit the first post and build a index as long i can (After some time i cannot edit the post anymore)

Some basic rules:

Every indicator ! MUST ! be attached so that others can redo the calculations.

Explain your way of dooing the statistics.

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LECTION 1: Price falls qucker then price rises - EURUSD


*/


LECTION 1: Price falls quicker the price rises.

Part 1: EURUSD (Because i have good history files for that pair)

How do we analyze? We make a per Bar analysis and use the ZigZag indicator to analyse swings.

What results we get? The absolut number of up and down bars as well as the average movement and the average lenght, the average movement as well as the average movement/average lenght for swings.

Here are the results for EURUSD:

Period
#Bars UP
#Bars DOWN
Bars_AvgMovementUp
Bars_AvgMovementDown #Swings UP
#Swings DOWN
Swings_AvgMovementUp
Swings_AvgMovementDo
Swings_AvgLenghtUP
Swings_AVGLenghtDOWN
Swings_Movement/Lenght UP
Swings_Movement/Lenght DOWN
MN
146
125
275.7 pips
292.0 pips
7
8
3440.8 pips
3126.4 pips
20
13
172.0 / Bar
240.4 / Bar
W1
350
323
136.3 pips
138.7 pips
14
14
1840.4 pips
1660.7 pips
26
19
70.7 / Bar
87.4 / Bar
D1
1656
1591
60.0 pips
60.2 pips
87
86
662.2 pips
640.4 pips
19
17
34.8 /Bar
37.6 / Bar
H4
9472
9344
22.0 pips
21.8 pips
563
563
249.0 pips
246.0 pips
17
16
14.6 / Bar
15.3 / Bar


I have written here only the 4 highest timeframes because you can see clearly whats happening when going lower. The per Bar analysis does not give us any informations at all. (At best you can say that the market falls about 1% faster if you look only at those values.)

Lets watch at the swing analysis, for me the most interesting values are the Swing_Movement/Lenght values in relation to the average lenght. If you look at the red marked numbers above you can see that on timeframes higher than the daily there is a big difference between up and down swings. For this pair we can say that downswings usually take shorter time but are moving faster than upswings. However, due the very small dataset in those timeframes i assume the this might be not relevant in the long term.

As lower you go in the timeframes, as higher gets the sample data, as smaller gets the difference between up/down bars and up/down swings.

I personally would consider this myth as busted. (Still can be true for the weekly and the montly chart, but statistically busted on the lower timeframes)

 
Price does fall faster except in forex where you are trading a pair, one falling, one rising.
 
WHRoeder:
Price does fall faster except in forex where you are trading a pair, one falling, one rising.

Well, i cannot sign that since i do not trade stocks. However DAX, DOW and GOLD (which of course can also be considered as a pair) shows only very little differences on charts < D1. (A differenct of 2-5 pips/points per bar i would not consider as statistically relevant here.)

On the higher timeframes (weekly/montly) the myth seems to hold. (On average the DAX falls about 40points/week faster then it rises)

 
I never believed nor observed that prices falls faster than it rises on Forex time-frames which I'm used to seeing. Nice way of putting it to the test.
 

Hi zzuegg

thanx for your hard work, this is exactly what i really want :)

Zzuegg.....i hope you dont mind.......i will give you some idea to improve your indicator...

My idea is to add the parameter to your zigzag indicator, ex : ExtDepth, ExtDeviation, ExtBackStep...... so we can also calculate/capture the small swing in every pair...

in the end ....we can make precisely statistical report of swing range in every pair.....then we can trade to the best pair with larger swing range.

hopefully you can understand what i mean, sorry my english is not good enough :)

Happy Trading

Traderspirit