What strategy actually works? - page 14
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Exactly.
Somewhat late in my trading career, I actually find myself wanting to abandon the entire trending versus ranging distinction. I'm slowly coming to the realization that in the oldest instruments, all price action patterns have already occurred in the past to an 80% to 97% certainty. In this way, both trend and range are irrelevant. It's only the pattern projection, and the length of the "future run" therein, that matters at any given time.
(Chaos theorists will obviously despise this post so, by all means, let the diverse views fly).all price action patterns have already occurred in the past to an 80% to 97% certainty.
Ryan, that's an intriguing point. It makes me curious: what kind of patterns are we talking about? Are these classic price action setups (like triangles or flags), or are you looking at something more mathematical, like specific volatility clusters or cycles?
It resonates with the idea that price action rarely invents anything truly new. While candlestick patterns might appear chaotic on the surface, the underlying mechanics of the movement remain remarkably consistent.
Take AUDNZD, for example:
If a market lives in a state of heavy mean reversion, it retains that return-to-average DNA even within a year-long trend. Market memory exists, the challenge is simply extracting it from the noise.
I'm currently finalizing an article on this subject, where I'll be sharing my indicator and the statistical findings behind it.
[W]hat kind of patterns are we talking about? Are these classic price action setups (like triangles or flags), or are you looking at something more mathematical, like specific volatility clusters or cycles?
Code Base
Price prediction by Nearest Neighbor found by a weighted correlation coefficient
Vladimir, 2010.07.12 11:50
This indicator finds the nearest neighbor by using a weighted correlation coefficient, in which more recent prices have larger weights. The weight decays linearly from newer to older prices within a price pattern.