Alternative and common approaches in the construction of TC

New comment
 

Common:

FI1 (financial instrument) is taken and patterns are sought in it. On the basis of these patterns TC1 is created.

Then FI2 is taken and exactly the same way TC2 is obtained.

As the result, in the best case we obtain the number of TC equal to the number of FI.

Alternative:

A TC is invented. It is investigated what properties an FI must have in order for the TC to work stably.

After the properties are determined, the possibilities to create a synthetic (artificial FI) from the set of FI available for trading are searched.

The TS trades a synthetic.

Example (on martin):

Common:

You analyse some specific financial instruments as a possible use of martin. You choose the best of them and run your martin.

Alternate:

First clearly define how the financial instrument must behave for a martin to work - 1.
Then figure out how to create a synthetic from the current financial instruments that meets the conditions (1).
When you figure it out, you start your martin on the synthetic.

Comparison:

In this example, it is obvious that the alternative will give a much better result - stability and profit.

 

what about the costs of creating a synthetic. There will always be more spread and requotes when creating a synthetic and the forecast result is no better.

It is not possible to create a pure synthetic out of constant fractions using currency pairs. All currency fractions fluctuate due to price changes. It only shows the deterioration of such a synthetic forecast.

Why use synthetics at all. There is a particular instrument that has the maximum probability of making a forecast and all costs (spread, costs of technical implementation of such a synthetic) are minimal on it.

One could refer to the diversification of risks of the strategy portfolio, but the practice shows that in reality diversification for forex does not work at all.

 
The topic has nothing to do with risk diversification by strategy portfolio.
 
hrenfx:

Common:

An FI1 (financial instrument) is taken and patterns are sought in it. On the basis of these patterns, TC1 is created.

Then FI2 is taken and TC2 is created the same way.
And the following iron logic: if it goes up, it will go further up and if it does not go down, it will go further down. :)
 
Andrei01:
How about this ironclad rule: if it goes up, it will keep going up, and if it doesn't go down, it will go down. :)

It's great! All that remains is to formalize "if it went up", "will go up and on", "didn't go" and "will go down" ;)
 
hrenfx:

At this example, it is obvious that the alternative will give a much better result - stability and profit.

No.

To do so, the process of creating synthetics would have to be simpler than the standard method. And this is not obvious, so keep developing the idea :) because it's interesting anyway.

 
TheXpert:

So go on with your thought :) because it is interesting in any case.


IMHO this is a dead end.

you can make sausage out of meat

you can't make a sausage into a cow.

you can take a cow, a pig, a chicken or a sheep and make up a new recipe for a tasty sausage.

you can buy a sausage and analyse what kind of meat it is made of.

the author suggests we buy chocolate, call it sausage and analyse what kind of meat it's made of.

 
it is as if the author is proposing a new sausage recipe, and picking a set of meat from "cow, pig, chicken, lamb"(it is known which animal meat is included). This is much easier than studying the properties of a set of meats in a ready-made sausage(you don't know which animals' meat is in it).
 
TheXpert:

To do this, the synthetic creation process has to be simpler than the standard method. And this is not obvious, so keep developing the idea :) because it is interesting anyway.

If we are talking about getting more stable and higher profits than the standard approach, what does the complexity of the alternative have to do with it?

Or do we reason like this: if it's complicated, we won't do it?

I do not advocate complex approaches, if someone has the impression. Non-standard does not mean complicated. You just need to get used to it.

Another example in favor of the alternative approach (creation of an optimal synthetic):

Let's take a TS on a breakdown. Obviously, it shows better results the more volatile is the FI. For example, GBPJPY is not a bad option (it's also popular) for such a TS.

Just imagine that GBPJPY was not quoted anywhere explicitly. What then? With the standard approach no one would have guessed to trade on synthetic GBPJPY.

But we are not going to develop our imagination, but consider the simple task of obtaining the most volatile synthetic from two FIs.

Without much thought, we can figure out that the most volatile synthetic from two FIs will be found if the two FIs have minimal linear relationships.

How you will calculate a pair of FI with minimum linear relationship is a matter of methodology. You can do it by correlation, or you can do it by other simple methods as well. The main thing is to find it.

So the synthetic of such pairs will be optimum for the TS on breakdown. If you start your TS on such synthetics, you will get much better results than on any of the existing pairs.

 

Yes! Technical indicators are now called synthetics)

Same ... just the side view.

 
The topic has nothing to do with technical indicators.
12345678...10
New comment