a trading strategy based on Elliott Wave Theory - page 143
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This is only one possible algorithm for constructing a zigzag. I used a completely different one.
However, you are right about one thing: the zigzag is just an indicator. It is not suitable for estimation of the current situation, and moreover it is not suitable for forecasting, it only shows something post factum. But it was enough to give me one of possible explanations of Elliott's 5-wave trend structure. This is not a theory, but only, I emphasize, one of the possible explanations. And the question is not whether I am right or wrong, but how "quantitative" and how much of a "theory" is EWT.
I have to assume you are referring to some book (or books?). It would be good to point out which one, as I don't know which book I'm referring to.
Let me ask you a question, dear Yurixx.
Did you just write your own ZigZag indicator, because the standard
didn't suit you and everyone understood about the Wave Theory?
And how long did it take you to understand everything regarding
Elliott Theory, of which you are not a fan?
Let me point out that Wave Theory is not as primitive as you think.
And that its not just about recognizing the 3rd or 5th wave...
I agree with Gorillych "es maybe you read wrong books,
a couple of silly articles on Elliott Waves from Internet will not give you anything good,
will only confuse you...
I wish you good luck.
Sincerely,
Alexey.
Could you explain how the sentence from my post on the previous page
could have turned into what you "quoted":
Unfortunately, the rest of your statements are on the same level of impartiality.
But that's the minutiae. But on the subject (by the way, the one you opened) you never said anything.
Too bad, I was hoping to hear something interesting and substantiated.
PS I'll let you in on a secret. I haven't read anything at all on EWT, neither books nor articles.
solandr 27.08.06 21:05
Decided to present the results of playing manually with the above system in the above post.
The figure above shows the balance of the demo for a period of 1 year. The testing of the above convergent gradient system was done manually during the last month. The lower chart shows a more detailed picture. The game was played with a fixed lot 0.5 on 11 currency pairs, whose spread does not exceed 6 pips. Currency pairs with larger spreads were not considered. During testing, the entry methodology was slightly changed. The AMPLITUDE_STAT_LEVELS indicator was introduced, which is also presented in this branch.
The use of the AutoGrag software package http://www.autograf.dp.ua/ has been of great benefit to me, thank you very much for that!
To make it really comfortable I had to detach all MessageBoxes, turn off the sound and remove coloring of "round levels". After some polishing, AutoGraf has become very convenient and time-saving especially when working with multiple currency pairs.
Within a month I managed to double the training account which has lost a lot of weight during the year of searching and testing various methods ;o). Total profit made during the last month using this technique is 1291 pips. Average profit per 1 trade is 15 pips.
Switched to using this technique on real account. For now on last few days of playing real account there is profit around 10%. Let's start playing further.
The following Forex market model was born.
There are 2 types of capital in the Forex market. The first one is fundamental, the second one is speculative.
Fundamental capital is understood as capital which participates in commodity-money relations in economy.
The definition of speculative is clear from the name.
What it looks like on the charts. The movements of the fundamental capital can be seen on the large timeframe charts from D1 and above. Those price movements that are noticeable to the eye on the timeframes below D1 are speculative capital movements.
The correlation between the fundamental and speculative capital. According to my estimations the speculative capital in Forex market does not exceed 3-5% of the total mass of money. The change of EURUSD from 0.83 (October, 2000) to 1.36 (December, 2004), for example, was caused by fundamental changes in the monetary policy of states. The change of EURUSD from 1.25 (18.07.2006) to 1.29 (04.08.2006) is a speculative game, which hardly has any real fundamental basis.
The news that is commonly called "fundamental news" is just a speculative price driver in this model, but not at all what analysts and traders consider it to be (so, depending on how the news and the price move coincide or not, phrases like "the market has already taken that news (before it happens!!!)" may appear.!!)", or "the market has not reacted to the news, maybe it will react to it tomorrow"). This position stems from the fixed and limited nature of speculative capital itself. In other words, a limited (finite) number of players (speculators) can supply a finite (finite) amount of speculative capital at a finite time, or rather in a finite period of time. The speculative capital itself is limited. What happens is its flow from one pockets of speculators to another. Even if successful traders withdraw it for their own purposes, with the same regularity new people (money) appear, who want to participate in the Forex game. As a rule it turns out that newcomers pay for the success of experienced traders from their own pockets.
On the basis of all this we can make the following assumptions. Since the amount of speculative capital is limited, during the game it can "run out" of those who have already made bets. Presumably, the maximum deviations of the price from its average (fundamental) position determine the moments when all speculative capital is invested in the direction that prevailed before and the moment of withdrawal of capital of the winning traders arrives. Another part of traders see these extreme deviations as convenient for contrarian trading. This is the way it is repeated all the time. The movement of speculative capital around a fundamental movement caused by foreign economic relations between countries.
For practical use in practice, accordingly, you just need to learn to identify these very moments where speculative capital "ends". The proposed above "methodology of convergent gradients", to be more precise, determination of regression channels for which the sum of gradients equals zero, in general, attempts to solve the problem. Each of gradients built for a history channel can formally be considered as a volume of speculative capital invested for example in the current day. Then due to finiteness of speculative capital the volumes of currency sales should equal the volumes of currency purchases. Therefore we find such regression channels that satisfy the finiteness of speculative capital. In principle this model follows from the central theorem used in this thread by Vladislav.
Realizing that we can be mistaken in defining the regression channels themselves, we do not look for one but for several channels, e.g. 2 that differ from each other for some period of time. Increasing the number of channels, we can formally improve the accuracy of determining the reversal levels. From my experience, I can say that I usually use parabolic regression - price gets to extreme positions rather precisely. Linear regression is used mainly to detect possible stop level.
Also in this model only the fundamental movement of the currency is called a trend! For speculative capital there is only a "deviation from the fundamental trend". That means this model does not imply a special search for a trend of the speculative capital. The speculative capital simply makes a corrective movement in the direction of the fundamental trend from the reversal areas where it "ends". Therefore, the essence of the strategy is very simple. You need to enter the market in the reversal areas and exit the market at your own discretion when there is profit. Presumably the best time to do this is when price is on the opposite side of the yellow line in the indicator AMPLITUDE_STAT_LEVELS, that is, when the probability of movement against the open position begins to increase. There is no point in waiting for the price to reach the extreme opposite side of the "end" of speculative capital. Price does not always follow a straight line but can often move back to the area where the position was opened.
Mda........ my dear friend, I don't even have anything to say... :-)
I think you've made it yourself.
Regards,
Alexey.
Is that all you have to say in defence of Elliott ?
Alex, that is a very weak answer. Haven't you realised by now that I'm not affected by your attacks ? :-)
Maybe that's why you're afraid of having a constructive conversation, because you're still belligerent?
Because the one who attacks is ALWAYS afraid of being attacked. Right! Because if one dares to criticize Elliott.
If they dare to criticize Elliott, they might also criticize (or God forbid, laugh at) my immortal
ideas ! I will not stand for that !
That's right. If you want to keep your ideas (views, opinions, predilections, etc.) intact,
unchallenged, it's best not to show them to anyone, ever. And you'll live with them for the rest of your
until your old age. The goal is not to get to the truth, but to get to you,
my dear one, that you don't get hurt.
And for some reason I thought you had something to say... :(
Well, good luck if you can.
Mda........ my dear friend, I don't even have anything to say... :-)
I think you've made your point yourself.
Regards,
Alexey.
Alex, I haven't read it either. I have tried many times, but I have always been disgusted by the weak validity and the drawn-out nature of it.
I gave up somewhere in the middle...
I'd be happy if you'd voice a few key points that make you think EWT is worthy of consideration.
Please don't send me to the "right books" or tell me that "there's a lot there" and "can't be told in a nutshell".
If you can articulate the key points, it means you have a coherent theory, not a fanatical mess in your head.
Once you have a register of these points, you can discuss them individually. And that would be interesting.
I'd be happy if you could voice a few key points that allow you to consider EWT worthy of consideration.
Please don't send me to the "right books" or tell me that "there is a lot there" and "it's impossible to tell in two words".
If you can articulate the key points, it means you have a coherent theory, not a fanatical mess in your head.
Once you have a register of these points, you can discuss them individually. And that would be interesting.
You're right, I can't say it in a nutshell.
Well, if it helps me in any way, I will try, without going into details
, to explain the essence of the Wave Theory.
A small digression. Do not forget that Eliot was only at the origins of
his theory, so he described his theory in general terms.
Elliot had many followers, but not all authors are so talented and brilliant,
that's why not all literature on the subject contains useful information.
Hence the many dissatisfied, I see you're not happy with what you've read before either.
You don't like cats? You just don't know how to cook them! (just kidding)
Maybe you're actually reading the wrong books.
Fortunately, not all authors are so mediocre! Some followers in the field have gone
very far in their research (yet to spend 10 years of their lives studying Wave Theory),
and have refined it considerably.
But the basis of the Elliott Waves is still represented by "good" figures consisting of "fives" and "threes".
From these figures the "favorite" Elliott Waves are formed.
Everybody calls these figures differently, some people call them patterns, some people call them parabolas, some people call them fractals,
, etc. But it is not so important, though what do patterns have to do with it? I still do not understand.
I have only encountered this word in Victor Kandyba's book "Three Hundred Techniques of Deep Hypnosis"
and in the literature on psychiatric medicine. I do not know in what context this
term can be applied to Elliott Waves? Oh, well, good riddance to it.
Let's continue, let's not get distracted...
Figures are divided into 2 categories - Impulsive and Corrective.
Impulsive, in its turn, are divided into Trend and Terminal.
The Corrective ones are subdivided into Zigzags, Flat and Triangles, which are themselves subdivided into classes:
Flat, in turn divided into
- Failed b-wave
- Failed c-wave
- Ordinary Flat
- Double Failed
- Extended
- Irregular
- Irregular Failed
- Movable Corrective;
Triangles are divided into
Limiting Tricks, those in turn are divided into
- Horizontal
- Irregular
- Movable
and Non-Limiting Tricks.
There are Complex shapes like
Double or Triple Zigzags,
Double or Triple combinations starting with Zigzags,
Double and Triple Flat or
Double and Triple combinations starting with Flat.
Each figure is described with its own channel boundaries in which it should develop.
The chart moves in the channel, pushing off from opposite channel boundaries, until it ends and the next chart, of higher order, begins to form
.
This is why you're watching on your chart as one channel on a small timeframe replaces the other,
higher-order. The process of formation of these figures to infinity
(see the principle of the "golden spiral", my earlier post with pictures).
These figures are standard and have the same geometrical shape, i.e. the figure on the minute
chart doesn't differ from the figures on the hourly or daily chart.
The only thing is that they have different Order, in other words, different scale.
Bigger Order figures are made up of the same Smaller Order figures.
What does that have to do with fractals? You ask.
For example, if you look on a fern leaf you see that it consists of small branches,
and each such branch is a miniature copy of big fern, in other words
contains information about all fern in whole (Remember Mandelbrot? Properties of fractals - SOMETHING).
Do you catch the analogy?
Apart from a detailed description of each figure, i.e. where and when it may occur, Wave Theory has
many additional Rules, including the rule of recognizing Corrections and Impulses using channels,
the Similarity and Balance Rule, the Alternation Rule, etc., etc.
I said earlier that I won't go into details...
Sorry, got carried away.
Naturally the question arises, but how do you define pivot points?
Elliott Wave Theory details the Outer and Inner Ratios
Fibonacci, i.e. reversal points in waves fall on Fibonacci levels.
It is not difficult to check even if you are not at all familiar with Elliott figures.
For example, take any chart, select any timeframe, set up Japanese candlesticks,
and try to "stupidly" stretch the Fibonacci grid from min wave to max or vice versa.
See where reversals of this or that wave occur.
I hope I have satisfied your curiosity at least a little
For more detailed information, refer to the relevant literature.
Respectfully,
Alexey.
As I thought, you failed to articulate the key points of EWT, you copied a lot and eventually advised me to read the right books.
I'll try to do that myself.
So, what's in EWT:
1) The basis of everything, the fact that regardless of the timeframe and instrument, the price on the chart moves in waves.
2) There is a classification of wave configurations (figures, channels).
3) There are rules (an algorithm) to account for waves.
4) There is a set of rules to predict the price movement, based on the current configuration of waves.
5) There are additional tools that allow specifying and classifying the probable borders of a price movement (all of the Fibonacci's).
My opinion:
The main purpose of using any theory in the market is to make a profit. I think that in EWT only the attempt to formalize a visual analysis of the current state of a chart is worthy of attention. But the effectiveness of the proposed rules and additional tools for prediction, is not statistically proven, and cannot be proven in essence. That is, it is a fairy tale, beautifully described in books. Examples are all drawn to the theory and often contradictory, if you look at the development in dynamics and not after everything has already happened.
In view of the above, please Alex, give me an example of something from EWT that allows you to predict with > 50% probability and that something has happened at least 30 times :)
Why?
You have been explained, do you need to prove it? Why? Thirty times?
Unless you check something yourself and believe something, there is no point in proving it to you!
All that I have written can be found and verified by yourself, but you have to work, take so much time... and look for it first...
Everyone forgets that Elliott made his discovery (great or mediocre) on a millimeter with a logarithmic ruler in his hands...