a trading strategy based on Elliott Wave Theory - page 148
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Thanks for the profit factor. :)
I didn't actually assert anything. Though, it seems to me, by the end of Friday the pound was already outside the parabolic channel of Vladislav. And your long (probably short too) descending parabolic channel held. As you can see with parabolic channels it's hard to get unambiguous. Vladislav's channel is going upwards, while yours is going downwards.
But it is unclear why you are optimistic about the pound. I have not seen any hints on the rebuild upwards on your charts. And the considerations you cited are firstly qualitative and secondly subjective. The market has had a couple of great
I'm referring to the record TB deficit and the drop in retail sales. If the market had been ready, the pound would have already rushed up 200 pips. However... it just pretended.
That's why they are trumpeting it, that the mood for a reversal is brewing, and therefore all the conditions for a false start are in place. And after all the impatient ones enter the position, the pound will go for their stops. And the reversal up will happen imperceptibly and only after all the amateurs like me have given up their opinion that it's time to go up.
IMHO it may very well happen that the market (euro and pound) will slowly slide up for the rest of the year, periodically bouncing up and then falling lower and lower after that. However - I'm an amateur.
You are of course right in principle, but apart from logic, there is also the following technical picture.
On Friday, the pound did everything, I think, that it did. It went from the green levels of the indicator AMPLITUDE_STAT_LEVELS, where the pound had been few days ago (October 10), and from the lower green line of the short parabolic channel, where it should have opened a position, which I did (see pictures above), to the yellow line (arithmetic mean of the red and green indicator lines), and also went to the upper green line of the short parabolic channel. After that, it bounced back down on the news. That is basically how the currency is behaving. That is what I am trying to trade on.
On Monday, this short parabolic channel will be recalculated in the direction of the upper limit of the channel, and the pound will have new horizons, which it might want to test. In other words, the forecast for the currency cannot be straightforward - the forecast can be given only within the technical picture, and only in terms of estimating the possible rational levels for entering the position. For its exit, I do not have any clear recommendations. So far, it is at my discretion. But I think that good levels to enter the position are already a lot. As for when and where the rate will go, I think this task has no solution. For me personally I have stopped at the identification of rational entry points into the position without considering the direction of the currency.
Thanks for trying to show a picture. Unfortunately, I see only a square that tells me that there is a picture in this place. I can't see the picture itself. :-( Maybe it's only me who can't see it ?
I do not pretend to be true, nor have the right to correct you. :-)
I am simply participating in the discussion with the hope of broadening my limited understanding.
There is one subtlety here. In that post I wrote
In fact, the energy of the system does not necessarily need to be identified with the price at all (although it may be). It is simply the most elementary option. As you quite rightly pointed out at the time "the price field is potentially". Translated into Russian, this means that any scalar price function has the potentiality property. So there is a great choice. But you have limited it (for simplicity) by a quadratic form. A great solution in its clarity and validity, of which I am a supporter to this day.
It is clear that the dynamic minimum of potential, i.e. the bottom of "gorge" of potential energy surface, which defines the trajectory, can be obtained for the usual parabola, and for the cubic one, etc. It is not clear only why you write that the decoherence of the quadratic regression "practically exactly repeats the minimum of potential energy". I think it means that you have not changed the form of the potential energy function compared to the one you used for linear regression. Although it begs to do the same for the potential energy (i.e. increase the order of its expansion), since you use terms of order 2 in the Taylor series expansion of the trajectory.
And in general (as I have already understood :), your approach allows us to use different ways of approximating trajectory and potential energy independently of each other. And in this sense parabolic regression is not worse than linear one. But I didn't actually argue to the contrary. What I asserted are just qualitative "physical" considerations for the choice of approximation methods. But as far as I understand you don't object to them.
Yes, we will be watching. However, from the TA point of view, your parabolic channel gives the pound very limited scope to move up and almost unlimited scope to move down.
Completely agree with you. It seems to me to be the only sensible position to trade in.
PS Thanks for the picture Vladislav. I see it now. :)
A lot has been said here on the forum about channel construction. One way or another, but everyone (in my opinion) started from the idea of building channels backwards. And the number of bars was determined by the convergence criterion. I have an opposite viewpoint: LR should be built forward. If an appearance of a new bar can cause the channel to change completely, how can we trust such channels? And an attempt to have enough bars in the calculation can lead to the fact that LR will gradually change its parameters and, thus, the moment of channel rebuilding will either be missed or not discovered in time.
Inspired to some extent by your ideas, I tried to implement this algorithm of building LR forwards during the last 4 months. And I've largely succeeded. I hope to do some research now - channel lifetime, width, dependence of these values on each other and on other variables. Agree, when there is an unambiguous construction procedure, you can calculate statistics.
Yuriy, could you share your ideas, of course on conceptual level (if you see fit, of course) about methodology of building such channels. I also performed analogous research and got the following result: such a channel can be built with some stability, but only using EWT (at least I did, since I did not find other criteria), "guessing/calculating" (whatever is convenient) a folding pattern with limitation of series length. I.e. further movements (even taking into account stretching, absorption of waves, etc.) will be inside such a channel.
My methodology is not yet fully formed and ready for publication (research is still in full swing after the break). The approach is based on the basic ideas of DSP. All known patterns, presented in the form of signals (they can be quite simply presented in analytical form) and investigated their properties. Then there are the DSP techniques.
PS: The link may be useful for your research:
http://forex.kbpauk.ru/showflat.php?Cat=0&Board=trading&Number=81508&Searchpage=2&Main=81451&Words=%EF%F0%EE%E4%EE%EB%E6%E8%F2%E5%EB%FC%ED%EE%F1%F2%FC&topic=&Search=true#Post81508
Vladislav started a tradition of sharing ideas in this thread. Solandr and others have repeatedly supported it. And I am in the same place.
However, although the algorithm has been implemented, there are still some details that need to be improved. In practice, of course, I haven't had time to try it out yet, and I have even examined it rather superficially. Regardless of its uniqueness, it is the product of a certain approach and cannot be considered the only correct algorithm of channel construction. The resulting channels have a rather wide spectrum in length and width, which is quite understandable, since trend sections occupy only a part of the price trajectory. But, as a result, a considerable part of channels has a length, which cannot provide reliability of parameters of these channels under any circumstances. If all this doesn't scare you, get this: :-))
When we build channels after the fact, we can always identify the reference points from which they begin. The most obvious and probably correct way is to build channels from points of extrema. Even supporters of EWT will not argue with that :-). The easiest way to get these points is to use a zigzag indicator. Since there is no generally accepted algorithm for it, the field of action is wide. You can take the standard zigzag, or you can not be lazy and write your own one.
As you know, the zigzag tail wags, and it makes it absolutely useless for trading. But it does not matter for our purposes.
Suppose we already have a regression line for some section of the price. A slope is determined for it and we can use it to build a channel of some width. I use the deviation from the LR of 2*sko for plotting. When a channel is out of the channel by a certain value, it is considered to be broken and a new channel should be built. A new reference point should be set. I take the opposite vertex of the zigzag as a new reference point. That is, if the upper rail of the channel is broken, the next channel will obviously be formed upwards, and you can take the minimum of the zigzag as its beginning. Not necessarily the last one. I prefer to choose the minimum out of some set of the last ones.
To make the mobility of the zigzag tail not play a role, you should choose the vertex from which the channel is starting to be built among already definitively fixed vertices. There is usually no problem with that. Before the price breaks through the upper rail, it has to go the distance from the lower rail. It is almost always enough for the bottom top to be completely fixed. Another good thing about the zigzag is that by changing its parameters we can get a different scale. As a result, we obtain what Vladislav suggested when he was talking about several channels. This was implemented manually as channels in different timeframes: M30, H1, H4 and D1. Now we can build it automatically on one TF.
That's all. I hope no one will be disappointed with the simplicity of this approach - it is quite obvious. The problems start when we want to squeeze the market into our simple schemes. For me these problems were related to the implementation of the algorithm in those parts of the market where uncertainty reigns and the market moves from side to side. As you can understand, neither a trend, nor Elliott Waves (:-)) are out of the question during such periods. And the algorithm must be resistant to any market behavior, and it must handle all situations clearly and rationally. In general, there are still many interesting details, which will be useful to anyone who wants to understand something new about the market, to try his or her forces in this, quite solvable, case.
The approach is certainly interesting. I would like some further details and pictures about this way of building LR channels.
Something similar but based on extrema (without using LR) has been tried to implement in the Shi Channel indicator
http://fxovereasy.50webs.com/Indicators.html
"MQL4: SHI_Channel_true".
Perhaps the indicator code will help you to write your own indicator following the principles outlined above.
I think it is rather risky to use the postulate "if the channel is broken through upwards > the price will go upwards and vice versa". After reading such an approach in "Technical Analysis" by Schwager, although for stock markets, I was inspired to use it for forex as well. My observations have shown that it works very badly.
Here is an example of channels built at different time interval values.
As you can see, it is very similar to intersection of channels of different urgency shown in due time by Vladislav and later implemented by many participants of this branch. I have done it my own way too, but in my own way. I went this way because I have some considerations for its further use.
There really is no such postulate. "the channel is broken upwards" is a fact, "the price IS going upwards" is also a fact for the moment, but what happens next is not stated. The parameters of a new channel change as it develops, the direction may change and then a new channel may start. However, the picture will explain it to you.