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why those ma's did you read the tunnel post why not fib ma's 12,62,144,169??
The reason I'm seeking economists, math guys, and more theoretical types is this. I believe we are going to succeed in sorting out what we know from what we don't know--at least to a highly practical extent.
If I'm right, that changes everything. The consequences will be astounding, incalculable. I want to dialog with some really smart people about this. I hope they show up. Right now, I'm sure it would be just to humor me because few are going to believe I can do it.
Well, I've already done it. Just need to finish it once and for all, and we're going to right here on this little unknown corner of the net.
Ted
I agree with Diane Garnick to this extent. Most TA does *not* work. That's why I started this board--to sort it out. My aim is to set a standard so clear and obvious that we will not ever see this kind of quote again. Instead, we will say, "Remember when we used to think this model or that model worked, but now we know." "Remember when we spent 60 hours a week slogging through piles of iffy data, adding this if to another if and another if, to arrive at the shakiest estimate of probabilities? And then we would put our money on it. Holy cow, what were we thinking?"
Ted
“Technical analysis on its own as a discipline does not work,” said Diane Garnick, the New York-based investment strategist at Invesco Ltd., which oversees $348 billion. Using it in isolation is “the fastest way to lose money,” she said.
Land! Perfect. Thanks. Check out this quote:
“Technical analysis on its own as a discipline does not work,” said Diane Garnick, the New York-based investment strategist at Invesco Ltd., which oversees $348 billion. Using it in isolation is “the fastest way to lose money,” she said.
More nonsense published about the market. I'll prove it in a few sentences and trading rules:
1. Pick a moving average that fits with your personality and trading/investing horizon--10, 20, 50, 200-day ma.
2. Buy when price climbs above that ma and the ma is flat and likely to turn up or is already pointing up.
3. Sell if price falls below that ma by [> 2 percent] and especially if the ma is flattening and likely to head down. Note: quick, small breaks of the ma when the ma is pointing steeply up are likely headfakes or overshoots. Also the numbers in brackets are variable and an area for continuous improvement. So try 1 percent to 5 percent and see what works best.
With the above information, it is extremely difficult to lose large percentages. For a long-term investor, these simple rules would have captured the profits last summer simply by watching price relative to the 200-day ma.
Strip everything else away--everything else you know. All other indicators. The beautiful arcing dome of the 200-day was the only prophet required in that instance.
Ted
PS
I was 100 percent cash and will start building short positions piece by piece. Not looking to make a killing here. So if I only get to 25 percent of what I would like before the market rolls, I'll be happy. I'm taking positions counter to the trend--with many good reasons--but I still want to be careful. The move this morning was explosive.
PSS
On the other hand I agree with Diane Garnick. Most TA does *not* work. That's why I started this board--to sort it out.
Rain, this may look like a snowstorm of theory around here, but I assure you the aim is the most practical application of knowledge.
The market is pure information--so it's a bit airy by nature. As a result more nonsense has been published about the market than anything else in existence.
We--all of us trading the market--have had to slog through mountains of useless and semi-useless information to get to this point. The purpose of this board is to finish the job once and for all. We want to arrive at a small pile of data, facts, and observations we can rely, and we will call that pile Knowledge. With that pile, we hope to change TA, trading, and investing forever.
I'm intrigued by your background in automated processes. I may draw on that experience at some point.
Help keep us focused on what is practical and real.
Ted
The Big Bear Tease has been the game for weeks now, and it continues. Friday the market appeared to roll and once again the market pops. Until I see clear evidence to the contrary, I'll look for this pattern to continue into June.
Why? Too many want to short the market. Last week, CNBC was practically advertising a top.
So while I anticipate a 10-week low before May 13, right now I expect a low that is one level higher and one day sooner than most would want. Then another attempt to reach the 200-day ma on $SPX. The 50-day ma should contain the retreat, and price may or may not touch it this time.
Good luck and
smart trading!
Ted
Stock Charts Fail Forecast Test in Complete S&P Miss
http://www.bloomberg.com/apps/news?pid=20601057&sid=alwgQy9.K4LI&refer=futures
My work experience is primarily with industrial control systems for refrigerated warehouses and other automated processes. I like hands-on technical applications - I'm not too much of a "theory guy".
What does it mean to think like a champion? Profound question! I'm sure that volumes could be filled on that subject. In a nutshell, though, it seems that it has to begin with a burning desire to excel at something you are passionate about. Once that foundation has been established it must be followed by focused, unrelenting effort to achieve the desired level of performance. Long-term focused effort - never satisfied with the degree of accomplishment - always striving to refine and improve performance in order to reach a higher level.
How does one acquire that mindset? I think there has to be an innate driving force. A person may not realize that they have it in them until something triggers it. It could be exposure to something new that really excites them, or it could be that they decide that mediocrity is just not acceptable anymore. Suddenly they become driven by that internal desire to have or achieve something. It becomes their passion - their core desire. From that point they acquire the mindset of a champion.
I did not create this system just passing it on
THE TUNNEL METHOD
First, you need a charting service. Since most all electronic trading platforms have charts with technical indicators, this shouldn't be a problem.
Barcharts or candlesticks really make no difference. Overlay on this 3 things: 1) a 169 period [1 hour] ema [exponential moving average], 2) a 144 period [1 hour] ema, and finally 3) a 12 period [1hour] ema.
The 144 and 169 ema's create what I call the "tunnel". The 12 ema is an extremely valuable filter that you will want to have there all the time. I will talk more about this in the filter section.
THEORETICALS OR EVERYTHING HAS A REASON
PART 1. THE TUNNEL
Why 1 hour charts?
Smaller charting periods lead to more false positives, which translates into more losses. By the time you get to the five minute chart, the bank has you on a string and your account is going to go to them. Longer term charts, like daily and weekly produce to much slippage in market price for the final portions of the position.
2 hour and 4 hour charts are roughly analogous, but I prefer the 1 hour chart for its simplicity, and sometimes it's tough to see how a market trades in a 4 hour period.
Why 144 and 169 1 hour ema's?
It's all about momentum over the short to medium term. Lower ema's produce momentum signals that give trading signals that are to short-term to trade profitably. In other words, the dreaded whip-saw. It may go in your direction for 3 minutes and 6 pips, then it rolls over and crushes you. Higher ema's produce momentum signals that are to long-term and as a result you get 2 trading signals every 3 years. This isn't very good either because while you are waiting, the market is going handles in a direction without your participation.
There is another reason. W. D. Gann
Gann was big on squares, square roots and the inter-relationship between price and time. I am not a Gann disciple, but you can't just dismiss his work as junk. Afterall, the guy made $50 million between 1910 - 1950. He deserves respect, even if you disagree with his methods.
So, 144 is the only fib number that has a whole number square root [12]. The closet fib number to this square root is 13. The square of 13 is 169. The tunnel is now created.
But, the proof is in the pudding. In a trending currency market [which is what it does most of the time over the long run], retracements are where you can re-establish profitable positions. Go back and look on the 1 hourly charts and see where the retracements stop, and you will need to know nothing more about Gann or numerology, astrology, or anything else. They stop very close, if not exactly on the 144 and 169 1 hour ema; the tunnel.
THE FIB NUMBERS
Everyone should know that all moving averages are lagging indicators. It makes no difference the type, they all lag. Only after the fact can they tell you the market has turned. Even though that is valuable information and is acted upon by taking a position, it isn't going to help you much in getting the best profit potential out of your trade. If you use them exclusively to then get out, you will discover 2 things: 1) you get chopped when you had a profitable trade at one point, and/or 2) they took you out on a retracement and now you don't know what to do.
I can sum up everything you need to know about fib numbers and the corresponding fib ratio of 1.618. Nature and the physical universe loves them. They are everywhere from the pyramids, to mountain ranges, seashells, forests, etc. So why not markets?
Fib numbers are real-time. This is not a lagging indicator here. When a market hits a fib number from the current ema's, it is telling you that here is a natural stopping point, please take some profits off the table. When a market goes through a fib number, like a hot knife through butter, it is giving you further information about momentum in the move.
The higher fib numbers really are giving you that important equation: price = information. They are screaming exhaustion.
THE FILTERS
Filters are used to increase overall profitability and/or reduce overall losses. If a filter does not do one of these two things, then I do not use it. What good is a filter if it raises your profitability by 10% but only gets you into 1/3 as many trades? What good is a filter if it reduces losses by 10% - 20% , but also reduces profitability on every trade by half? I think you get the point.
Put the 12 ema [1 hour] on your screen with the rest of your indicators. When everything is at the same price [tunnel, current market price, 12 ema] sit up and take notice. When the market breaks away from the tunnel, there is a very high probability of a strong market move coming. I don't need Gann, because this gives me time, the square of time, and price all in equilibrium. When it breaks, it goes.
This filter is so profitable, we increase the size of our trading position when we see it develop and then happen.
When you go back and check it out, you will notice many times how it just misses a move by a few hours. It is an extremely profitable filter.
Here's a rough draft of what's coming, posted on another board last week. Very rough. Will clarify, simplify, and elaborate with charts soon. I'm needing a break. Keep saying that. ;)
================================================
I use the 10, 20, 50, 75, 100, 150, and 200-day sma's with a focus on the first 3 and the last, the 200. Any variations--doesn't matter much to me. I can use any and see essentially the same thing. Just want MA's roughly equivalent to those specified above.
The price relative to these lines is super-important. Above the line--price likely to trend higher. Below the line--price likely to trend lower. This gives us our trading/investing timeframe. For example, a long-term investor can focus on the 50-day and 200-day ma's and be quite happy.
The larger the number, the more significant the information concerning the longer-term health of the market. A price above 50-day is a healthy price. Below 50, unhealthy, likely to decline. Ditto the 200-day.
The 20-day is the jugular vein of the market. This is where the life force of the market shows up. This is where the 5-week cycle happens. Every larger cycle consists of an endless string of 5-week cycles. So if all you did is look for every 5-week cycle and every double of the 5-week cycle (the 10-week), you will do great.
The significant information around the 20-day ma? The price above the line--healthy, likely to trend up. Price below the line, weakening, likely to decline. Also the angle of the line is SUPER-important. If the line has been descending, a flattening line and turning up is healthy, likely to trend higher. A line pointing up is healthy. A line that has been trending up and is now flattening? It's weakening, may trend down. If the line is pointing strongly up and price drops below the line a bit--high probability of a headfake or overshoot--likely to trend higher unless the 20-day flattens and threatens to roll.
The rolling process of the 20-day ma (before a price reverses and heads down) when the line has been steeply up usually takes 5 to 10 trading days including the back-test. The back-test is where the market becomes a shorting market--if the backtest fails that is. Common trader error is to short a market where price is trending above the 20-day ma and the 20-ma is pointing up. It is possible to short a situation like this but you're going against the flow of the market--so you better be clear about what you're doing. More money is lost this way than any other--fighting the market flow.
Regarding the 10-day ma: Ditto all the above except that the 10-day is an early warning system.
Trading secret: No price can trend higher unless it is above the 10-day ma and stays there. It can of course dip below and then weave back up, but unless it stays above the line, the price will not trend higher. Ditto the 20-day ma. Price must be above for price to trend higher. Price must be below the 20-day to trend lower. So to have a shorting market you want to see the 20-day ma rolling over and preparing to head down with price below the 20-day ma.
When price is above both the 10-day and the 20-day, it is a higher-probability trade. When price is above the 10-day, 20-day, and 50-day, it's an even higher probability trade. Buy as close to the cross above these lines as possible for the highest probabilities. Also, you want to see all these lines turning up or pointing up. Lately in the S&P, the 50-day has been flat. Now it's turning up. Both are a sign of a healthy price. Doesn't mean price can't descend to backtest that line.
Much of this is purely conventional TA. Purely. Conventional. But for some reason, very, very few are hitting 70+ percent stats. So before you come making fun of this very conventional stuff, bring your stats and show us how you achieve an accuracy rate above 70 percent.
=======================================
What makes my method unconventional is the way I bring every *detail* into an integrated whole. NOTHING is overlooked. EVERYTHING is included except my bias and my mind's wish to believe a crash is around the next corner--unless I see it in the configuration. I focus on the particular configuration of the lines, the angle of the lines, and the relation of price to the lines.
I especially look at the lines with NO PRICE or perhaps with just a dot. I want to see the FLOW of the ma's without the daily noise of price. I want to see the daily candlesticks too-but only after I've grasped the market dynamics through an ma analysis. Where is the price flowing now? It may change in the next 5 minutes. Where is it now? Trade the high-probability NOWs. Not the MAYBEs. "Maybe we crash. Maybe this is the top." Forget about it. What is happening now and where is the price going with the highest probability based on FLOW? Being able to see where the price is going to be is essential to skillful trading. It's about finding the high-probability trade.
Have you noticed the market is an ever-changing kaleidoscope where every time you learn something, it doesn't seem to work in the next phase of the market? The answer really does lie in what I'm expressing here. It is the ever-changing, UNIQUE combination of moving averages that reveal the nature of the current market and what it's likely to do next. I won't say this is easy to learn. It will take a year or two of practice so you have confidence with it, but it works and it works well. Learn to see, taste, feel the unique combination of the ma's and what they are telling us about RIGHT NOW. Sometimes the market is flat and tangled and sometimes it's trending steeply down and sometimes it's putting in an up-trending whipsawing top like now.
This last paragraph is HUGE and worthy of a separate course. It's my secret. If you start seeing what I'm seeing, your accuracy rate will go way up. You will have far more fun. I'm sure someone else knows exactly what I'm saying. I'm sharing because this is how I learn, and I want to see the ridiculous trades stop. They cause me pain. Don't know why but I hurt when I see crazy trades.
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About knowing and not-knowing
------------------------------
I have a built-in NOT-KNOWING METER scaled 0 to 100. If it's at 50 or higher regarding any particular trade, I don't trade. There is absolutely nothing wrong with not knowing. I love not knowing. It's keeps my money safe. I keep not knowing until a chart gets a certain glow around it. All the lines start to look healthy. The configuration becomes structured and likely to trend higher. NOT THAT IT WILL DEFINITELY TREND HIGHER. My Not-Knowing meter might be reading 30 or even 40. So I still don't know. But the chart looks healthy and strong and ready to rock. I buy the structure and hold the structure. If the price falls below the 10 ma, it's a warning and a cross below the 20 is probably a violation. So I want to protect my entry position as if it were a queen or king in a chess game.
Basic stuff. Not wanting to offend anyone who is more advanced than I am. But I'm starting with the foundations. Getting us on the same page.
To anyone looking Sunday evening. Time off required. ;)
Trust the process. It will all come out soon enough.
Here comes Monday! Good luck trading this week.
Ted
PS to anyone interested. SmilingHiker posted this over on AJTJ99's Market Pulse board:
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at www.Twitter.com master traders such as ... to name a few -
Fari Hamzei of Hamzei Analytics and
Brian Shannon of alphatrends.com
Jason G. of sentimenttrader.com
are actively posting their trade entries/exits and related charts
many TA-based traders are now learning that Twitter is an efficient way to identify and follow quality posters/traders with complete control of who is followed for your own benefit
I suggest the efficiency and time-saving aspects of following only those traders we each choose to follow ... without the clutter of other posters whose content does not help us ...this technology has advantages over old-format "trader rooms"
Glen's CCI system is interesting, sometimes predictive. Now testing it in an informal way. Just throwing it out there. Not advocating it.
http://fib_1618.websitetoolbox.com/post?id=3245042
So far, the method sometimes seems helpful when deciding to BUY, HOLD, or SELL.
Ted
It would appear to some we are starting at the very beginning--almost pretending TA doesn't exist, that significant work hasn't already been done by great minds.
Yeah, that's what we are doing. It doesn't mean we as a collective group aren't highly experienced and knowledgeable. We know a ton.
I'm purposely starting slow, stripping things down, challenging what we do know--so we can build a better method.
I have seen too many flaws in all the most popular methods. Statistically most do not hold up. I'm convinced that Hurst was on to something important--that he found reliable tides in the market. As far as I know, however, he did not understand the causes of cycles. This in my view leads to a significant weakness in the method--especially if you try to apply it too dogmatically. I believe I know the causes of the cycles and hinted at in the post concerning price behavior relative to the 20-day and 50-day ma's. Someday I will lay out a thorough discussion of the specific causes of cycles. When you know the causes, you are in a much better position to apply the knowledge effectively.
Within a week to 10 days, everything we're doing is going to come together, and the outline of a new TA will emerge.
Then we will see unlimited continuous improvement because we will have a working model. From there, we will see an explosion of creativity because real money will be made, and individuals will start seeing potentials beyond what we can currently imagine.
This is an open-source project, built in the same spirit as the UNIX software language. One of their motto's was, Do it once, do it right, forever. I will aim for that when I start integrating the insights, observations, and knowable tools and descriptors.
I well know the tendency to keep trading information secret. I decided to go public when I realized we have entered a new era. Everything practical and real about price is already known or will soon be known as minds all over the planet pursue the prize running automated systems.
I then realized I am stronger as a member of a team than operating alone in the laboratory of price. I encourage you to join the effort openly and with your best intelligence. You absolutely can't lose. Soon we will attract some great minds who will be able to tell us a little about the consequences of this new era in finance and trading.
Right now, I need you on this team. Thanks for being here.
Ted
So both the Knowlege pile and the Iffy Clues pile can be divided into two categories:
1) Descriptors (e.g., price above or below the 20-day ma)
and
2) Predictive Indicators (e.g., price crossing offset midpoint average to give a cycle high projection).
We're not absolutely sure yet the latter even exists--as Knowledge. ;) It might but it will be tough to prove because sometimes things appear predictive but are not. There is a logical fallacy that describes this problem (Post Hoc Ergo Propter Hoc, after this therefore because of this). We want to make sure we are identifying something that is truly causal or descriptive or predictive--not just an accident that happens occasionally--as in half the time.
Anyway, I want to make a real search for predictive indicators because if they're practical, we want them in our Knowledge toolbox. If they don't work reliably, then we want to put them in our Iffy pile.
Great question.
Won't have time to answer your specific question now. Gotta vacuum the house! ;)
This gets into the area of projections at which the Hurst analysts specialize. I've got some pretty good clues to work with around moving averages.
Here's a single example: If price is trending strongly above both the 20-day and 50-day ma's, and 43 days have passed since the last touch-back to the 50-day ma, the probabilities that price will cut below the 20-day and at least touch near the 50-day climb significantly higher with each passing day up to day 55. By day 55, 99 percent of all prices under all conditions will have touched back. This is just one tiny piece of data we can know about price behavior. And since price behavior is holographic, you can extend this bit of reasoning to several different ma's. So price tends to touch back to the 20-day about every 20 days on average (with many variations so each situation must be studied carefully.) Will get into this subject in detail. Right now, we are standing on the edge of the ocean and just making a few observations, kinda like ancient man pondering the tides.
About ma's, I've had several people inquire whether I use sma's or ema's. From here on out, let's make it a standard rule: If someone says "ma" they mean sma; otherwise, specify ema.
Correct me if I'm wrong, the ema uses a formula that causes the leading edge to turn faster than an sma. I have not found a significant practical advantage of the ema. If I want a faster signal, then I will simply drop to a lower sma, so the 8 turns faster than a 10-day ma, for example.
Ted
PS
Have tons more to say about ma's. My entire method depends on the close observation of ma's--every tiny detail--and especially the unique interaction of the ma's as time passes.
I'm convinced the ma's in combination yield many of the market's most important secrets--including how and why methods that appear to work in one phase cease to work in another!
However, let me quickly add this: I have found many if not most moving-average crosses to be unreliable! Learned this lesson in 2001, I think. A writer named Mailman--great trader--said, "Hey whenever the 13-day crosses below the 50-day go short. It's working like magic." So I dutifully studied the phenomenon, and sure enough, it worked like a steering wheel on a car. So I watched and waited and then saw a stock and the 13-day crossed below the 50, and I bought put options (expiration close by). The next market cycle launched upward, and I got creamed. It was about this time, I discovered Hurst and Airedale.
Can anyone suggest an indicator that indicates before a price move? Kinda like a "wizard who will serve."
Specific Questions for Discussion:
If you know just one piece of information in response to the following questions, please throw it out there. My job will be to organize and codify the flow of information.
1. What are some things we can know with high probability about price behavior that tells us whether to BUY, SELL, or HOLD? Are there iffy indicators that when combined would rise to the level of a necessary and/or sufficient condition to give a consistent, clear BUY, SELL, and HOLD signals?
2. What are some commonly used indicators that are too iffy to give us clear BUY, SELL, or HOLD signals? How would you rank the indicator on a scale of 1 to 10? (1 = Trash It, and 10 = Strong Clue.)
3. Is the Renko chart just another rear-view mirror method, or does it offer a clear advantage over viewing the standard price charts using 10, 20, 50, and 200-day sma's?
4. What does it mean to be a champion and how do we acquire the mindset?
5. Will trading probabilities fall into the range of 50/50 (+/- 10) no matter what we do? Or is it possible we sometimes know with 90 certainty (and we are right) and then other times we simply do not know, trade anyway, and then lower our stats to make it look like the odds are 50/50? If the latter is true, how can we raise our stats?
This is the board I found that video http://investorshub.advfn.com/boards/board.aspx?board_id=14840
the MOD is Ichimoku
Rain, a couple questions:
What's your work background or specialities?
Here's a question that I see is essential to trading success:
=============================
What does it mean to think like a champion?
=============================
Now what does this have to do with TA? More than we realize. Trading decisions happen within the cradle of consciousness. If that consciousness is distorted by fear or greed or biases or misperceptions, poor trading decisions will follow.
The *perfect* method in a weak consciousness will lead to loss of time and opportunity at the least--and loss of capital at the worst.
Also we need to think like champions to discern the best methods in the first place.
So a *poor* method held in a strong consciousness will lead to loss too! I've seen some of the best traders go down in flames by not seeing the Achilles heel in their method. The method works great in bull phases and then fails bigtime. The market has an ingenious ability to keep turning, turning, turning to uncover the weak point. The chain always breaks at the weakest link whether it's the individual making a poor decision or the method suddenly revealing a weak point.
Anyway, if anyone wants to jump in on this question: What does it mean to think like a champion and how do we acquire that mindset?
Ted
Land, do you mind if I list this as a project above with your name as Lead? If you prefer, I'll simply list it as a project and anyone can contribute as inspiration strikes. The benefit of someone taking the lead is it will more likely lead to a useful report coming back.
I'm excited by the idea of this being a working group--an ongoing business meeting, a 24/7 brainstorm.
By listing it as a project, we keep the thread from getting lost.
Ted
Land, I've examined Renko. In my cursory studies, I've found it gives me 20/20 vision in the rear-view mirror by the smallest, most frustrating moments of time. This is true of many indicators if not most.
Now, don't listen to me too closely concerning Renko. I've only skimmed it, tested it briefly. So if you wouldn't mind, watch it closely going into the 10-week low and report to the team on these questions:
=====================
How meaningful was the signal coming off the top and how clear was the signal on the next launch out of the 10-week low? How did you read the signal? At what point do you sell longs? At what point do you buy shorts? At what point do you re-buy longs, assuming you are a short-term trader? Final question, how would a longer-term investor handle this chart--hold or sell? If sell at what point? If re-buy, at what point? Tough questions, of course, so anything you contribute will be appreciated.
=====================
I have a few concerns about the chart. For example, you may be thinking it's giving a go-short signal but in a strongly trending market, it would get overridden. I have a high degree of confidence we will get some pullback here soon, and so the chart doesn't help me know this right now. But let's say the chart looked just like this but the cycle pattern was different. The market might ride right on up, and how would you know whether to hold long or go short?
Ted
Welcome Rain Rider! Like your name. What I'm looking for are penetrating questions more than anything. The truth is I'm exhausted by the board launch--an outpouring of creativity. It's going to take me a little bit to recover and start putting out what I hope will be TA-changing concepts.
Ted
PT have you gotten a chance to look at post #45 on the Renko system just curious what you think
http://breakpointtrades.com/CamtasiaFiles/Renkosystem/Renkosystem.html
Thanks
Very interesting group, Ted! Your goals are quite lofty - and stimulating! I don't have any brilliant thoughts to contribute at the moment, but I'll see what develops.
Thanks, landm19, it's been less than 48 hours. ;) It will take a little while--but not long. My purpose is to create a TA method simpler than ever, more reliable than anything I've seen.
As you may guess from the tone of the board, my interests range far wider than simply teaching people how to trade. Certainly that, but I sense something far greater as a vision. To accomplish that vision--a new economic vitality--I need some of the best and brightest to show up and make a contribution from time to time. When I say best and brightest, this may be some unknown person from Georgia and another from Oregon. I'm not looking for status but good people with better than average common sense--status and degrees or not.
The more people ask specific questions, the more I will focus. What I'm setting out to present here is knowledge as opposed to mere guesses, maybes, and more market opinions.
I'm sitting here chuckling a bit, because I know some of my readers are getting frustrated. Ted, would you just lay it out already. Look, I'm tired, and doing this is how I relax. ;) I've given you my word, I'll lay it out--with a few charts too. Let a guy enjoy his Saturday night.
Thanks again for being here.
Ted
PS
My sister lives in Sorrento. Spent many a day in Mt. Dora.
Nice board marked looking forward to see the conclusions
Have you seen this system using Renko charts
http://breakpointtrades.com/CamtasiaFiles/Renkosystem/Renkosystem.html
Only occasionally do I look at Renko charts, but this one may
be of some interest...though it is a long term chart, the
shift in trend it portends should be worth watching and noting
even for short term traders.
http://stockcharts.com/h-sc/ui?s=$SPX&p=M&yr=10&mn=0&dy=0&id=p01240194136&a=152510272&listNum=4
Question to the Traders:
What percentage returns have you seen among traders year in and year out consistently?
This is an important fact to ascertain, and I haven't gotten it yet. I get a lot of big fish tales, hems and haws, and maybes.
One old-timer said that if a guy really focused, he would probably hit in the 60 to 80 percent range. But, this guy didn't focus, and he really didn't know anyone who did, although he was sure there were some.
I have an important reason for asking but first let's get some numbers out there. I've seen outliers hitting 1000 percent in good years, but then they disappear and I hear no more. My method right now is on track to hit 300 percent per year, but it remains to be seen whether these numbers will be sustained.
Wanting a broader range of actual numbers--not projected numbers--over a period of years (that's what really counts).
Thanks!
Ted
PS
You can see why I need lots of writers. I have lots of questions, and I'm hoping to find specialists to provide solid information in the various areas. I will be integrating this information in a meaningful and practical way. Stay tuned. It's going to take a month or so to catch up with myself and attract all the right people.
A Few Instructions for Applying Posts 32 and 34:
Ask questions if you're not getting it. The logic is wound up a bit tight. ;) The idea is this:
1. Know thyself. What kind of trader investor are you? Do you want to trade soon and often, or do you want to be a little more casual? If you trade the 10-day ma, the action is a little faster. If you trade the 20-day, the action is a little slower. If you want slower still, use the 50-day or the 200-day.
2. Choose your preferred moving average--and stick with major stocks and indices that reflect the power and breadth of an entire civilization.
3. Test and refine your strategies for entries and exits. There is unlimited room for continuous improvement in this area and how you manage and protect capital. Also need enhancement concerning how to recognize the best opportunities. The moving average structures (and particular combinations) make a huge difference. Fundamentals (and cultural mood) can make a big difference when talking about individual companies.
4. Don't spend much time guessing what the market may do next. Think like a computer and just follow the simple rules. Then you can take a tiny percentage of your engineered wealth and play penny stocks for the excitement if that's what you're looking for.
5. Have fun, make money.
Ted
PS
The 20-day, 50-day, and 200-day ma's are pretty much the stripped down data you need to perform consistently accurate market calls and forecasts. Will get into the details later. An essential rule: if the market is above the 20-day ma, don't guess, wish or hope for anything other than more upward movement. There are a few more rules like this, but it's absolutely simple. No fog. No ego. No nonsense or hours and hours of study to reach the conclusion the market may go up and may go down. You buy and hold the structure until the structure gives a clear signal something new is happening. This is just a preview. Much more to come--with charts.
Wanted: Traders to Perform Automated Back-Testing of Trading Systems
If you have the means, the interest, and the time, I have endless ideas to test and report on. You will be compensated by the knowledge gained.
Write to let me know you're available.
Thanks!
Ted
OK, I know we are going to bog down here a bit because I've given you a lot to think about--especially posts 32 and 34. It's going to take time to grasp the significance. Feel free to ask any questions silly or otherwise. I will clarify everything expressed so far. Charts will be coming. Also numbers to show significance of what has been published already.
In the meantime, I hope you assist me in spreading the word. What you've see here in the last 30 hours is just a drop of what is about to happen.
You will soon see not just an explosion of information and posts but leaps forward. Leaps and then more leaps. The meme is out, and this is a powerful one.
The meme is this:
1. Price stripped to only what is knowable.
2. Everything else placed in the pile of Iffy Clues.
3. Iffy Clues tested, ranked (discarded when necessary)--and the fewest, clearest number will be systematically applied in a weighted, integrated, holistic way. Every nonessential clue will be stripped away.
Ted
http://en.wikipedia.org/wiki/Meme
A meme (pronounced /meam - rhyming with "scream"), a postulated unit or element of cultural ideas, symbols or practices, gets transmitted from one mind to another through speech, gestures, rituals, or other imitable phenomena. (The etymology of the term relates to the Greek word mimema for "something imitated".
[1]) Supporters of the concept of memes believe that they act as cultural analogues to genes, in that they self-replicate and respond to selective pressures....
...Meme-theorists contend that memes evolve by natural selection (in a manner similar to that of biological evolution) through the processes of variation, mutation, competition, and inheritance influencing an individual entity's reproductive success. Memes spread through the behaviors that they generate in their hosts. Memes that propagate less prolifically may become extinct, while others may survive, spread, and (for better or for worse) mutate. Theorists point out that memes which replicate the most effectively spread best....
Automated test 1 through 6? Just the beginning. Unlimited potential beyond this. U N L I M I T E D. My head is exploding with KNOWLEDGE as opposed to the FOG OF INFINITE CLUES which leaves most traders CLUELESS. Which is why I sounded pompous or offensive or something to the Short-Term TA folks. You see, I really cared about these guys, and I saw things, and I wanted to bop them on the head. I had too much to say and didn't know how to say it!
Yes, I am Sir Isaac Newton. No, I'm not! I'm just a guy having fun exploring the world of price. Yes, I have a few things to contribute.
The financial industry has been waterboarded for the last century by a dominant power structure/thought pattern and fear--the fear of loss, the fear of tricksters (of which there have been too many). There dominant pattern at the institutions does not allow for this kind of explosive creativity. The financial schools kill off creative brain cells in their product--Certified Financial Advisers. There are important reasons which I support--so don't misunderstand my tone! You can't have crazy people running around making huge mistakes or losing retirements with wild creativity. The irony of course is that they do it anyway--huge mistakes, I mean. ;)
But here we can test and we can prove.
I'm just explaining why this kind of information has been squashed. And then you saw what happened on the Short-Term TA Trading board. Enthusiasm is killed. Then no one dares say anything new. It's OK. It's easy to see that we simply could NOT have had this kind of explosion on the Short-Term board. Just a little too intense for what they do. Perfectly fine!
One more point: You can spend a life-time studying, improving, and testing the wrong system or methods that don't work. Do as you like, but aren't we doing this to make money? Again, this is another reason why we haven't seen a knowledge explosion or a revolution in this business. It takes years to test and see what is true and what is not true. We are now at a new tipping point--the tipping point of a KNOWLEDGE explosion in the financial industry. Thanks for participating in the adventure.
We are on the cutting edge. We are where Apple was in the late 1970s being birthed in a garage.
Welcome to PriceTeam!
Ted
PMiles and MetalFill, I hope you stop by and grace us with your presence. Both of you could contribute so much to what's happening here.
Peter, a long time ago, I remember your saying you did not want to be a robo-trader. Well, does this sound like robo-trading or what? What I suggest to anyone is this: If you're interested in engineering wealth, you really do want to be a robo-trader. It is the only path to reliability. Everything else leads to loss of money, time, or at the very least opportunity.
To put it another way, if you *know* something, it can and will be codified and automated. It's just the way the future is, and the future is now. Catch on or go the way of dinosaurs.
If it can't be automated, you really don't know what you're doing. You're guessing, messing around, taking potshots, gambling. Nothing wrong with gambling. No judgment. This board is about engineering wealth.
Ted
Automated Back-Tests 5 and 6:
[NOTE to Programmer: Take code from tests 2 and 4 and rewrite using the 50-day ma for Test 5 and then the 200-day ma for Test 6].
===========================================
ROOM FOR CONTINUOUS IMPROVEMENT IN THE FOLLOWING AREA ON TESTS 5 AND 6:
[NOTE to programmer: the following bit of code would be inserted when you're holding position because price is above the 50-day ma in Test 5 and above the 200-day in Test 6.]
IF 50-day ma is angled upward 20+ degrees
AND
IF price breaks below 50-day ma by < 2%
HOLD
OR
IF price breaks below 50-day ma by > 2%
SELL.
[NOTE to programmer: the above fragment can be written and tested on Test 6 but changing all numbers to reflect the 2000-day ma.]
[NOTE to programmer: Because this is a suggested fragment as an area for continuous improvement, the angle of the line (+20 degrees) and the percentage break of the line (< 2 percent) are variable and should be tested with a variety of numbers and combinations to discover the ideal angles and percentage breaks to maximize gains and minimize losses.]
Automated Backtest #'s 1, 2, 3, and 4
NOTE TO TEAM: Tests 2 and 4 would be an example of Investing Knowledge--as opposed to the Iffy pile of data. The key is to buy as close as possible to a cross above the 10-day and/or the 20-day as possible. Another thing, human beings will have a slight advantage in being able to anticipate a cross for early entry. The computer will have an advantage because it has no fear or tentativeness about it.
============================================
TEST 1: Trading rules:
Price above 10-day ma, BUY.
Price below 10-day ma, SELL.
TEST 2: Rules:
IF angle of 10-day ma flat or turning up (or will turn up if price climbs above the 10-day)
OR
IF 10-day is pointing up
AND
Price above 10-day ma, BUY.
IF price below 10-day ma, SELL.
[NOTE to programmer. Significant technical challenges programming the 10-day ma code. Can you accomplish this easily? If not, can you perform a kludge? ]
TEST 3:
Price above 20-day ma, BUY.
Price below 20-day ma, SELL.
TEST 4:
IF angle of 20-day ma flat or turning up (or will turn up if price climbs above the 20-day)
OR
IF 20-day is pointing up
AND
Price above 20-day ma, BUY.
IF price below 20-day ma, SELL.
[NOTE to programmer. Significant technical challenges programming the 20-day ma code. Can you accomplish this easily? If not, can you perform a kludge?]
===========================================
ROOM FOR CONTINUOUS IMPROVEMENT IN THE FOLLOWING AREA ON TESTS 2 AND 4:
[NOTE to programmer: the following bit of code would be inserted when you're holding position because price is above the 20-day ma.]
IF 20-day ma is angled upward 20+ degrees
AND
IF price breaks below 20-day ma by < 2%
HOLD
OR
IF price breaks below 20-day ma by > 2%
SELL.
[NOTE to programmer: the above fragment can be written and tested on Test 2 above but changing all numbers to reflect the 10-day ma.]
[NOTE to programmer: Because this is a suggested fragment as an area for continuous improvement, the angle of the line (+20 degrees) and the percentage break of the line (< 2 percent) are variable and should be tested with a variety of numbers and combinations to discover the ideal angles and percentage breaks to maximize gains and minimize losses.]
Redundancy is fine in my opinion. I'm looking for team members tolerant of a high information flow--to a practical degree.
Thanks for posting and keep it up!
Ted
MrNat: 18 weeks roughly corresponds with the Hurst 20-week cycle--the cycles often come in a bit short of the ideal. Hadn't studied your chart carefully before. However, in my opinion, the Hurst cycles were quite distorted during 2006 to March 2009. What we're seeing since March 10 has been amazingly regular, so will be watching that going forward.
Ted
CPC chart, using the aroon osc. to generate signals.
I know some of you have seen this before, and I apologize for being redundant.
open link then click chart to expand.
http://stockcharts.com/c-sc/sc?s=$CPCE&p=D&yr=1&mn=0&dy=0&i=p44037532917&a=115818118&r=5420
RCKS, correct, the (TYP) noted on the chart = typical
Just hit on better names for our two piles: 1) Knowledge and 2) Clues. Not sure this is perfect but it might make for easy reference. So Knowledge is what we absolutely know about price and Clues includes the iffy information that may signal this or that but may not.
Will noodle this a bit. Does anyone have a better idea?
Ted
Here's an example of a High-Probability, Necessary or Sufficient Descriptor/Signal:
This is one of the laws of price that I promised.
Price must be above the 10-day ma to trend higher and price must be below the 10-day ma to trend lower.
Always true in bull markets and bear markets--no matter where the 20-day or 50-day ma is pointing and whether the overall trend is up or down. This is an absolute descriptor of price behavior. It is not a cause. But it is a necessary condition! Extremely important.
So we want to accumulate all market data similar to this to put in our first pile--our most important and precious pile of knowledge. This is knowledge--not guessing.
If you say, "Yeah but Ted, this information won't change my trading life forever," my reply is this: First we have to know what is always true about price--everything that is true about price always--and when we put it all together, then we will have a knowledge-base a champion can depend on.
One of the major trading issues is TOO MUCH INFORMATION and especially too much IFFY information. So we want to strip price naked down to only that information which absolutely makes a difference, and then we will put everything else in the IFFY pile. Once we have the IFFY pile, we will then categorize and rate that data. But just the first pile alone will change your trading and investing experience completely, forever.
Ted
PS
A huge side benefit of the first pile is you won't have to think so hard. If you set aside everything that's iffy, it's so much easier to see where the great trades are!
You are my advisers. If you have suggestions, speak up privately or otherwise. I won't always listen but I often do when you least expect it.
Greg and others suggested I do this board. I finally relented yesterday morning and look at what's happened in 24 hours. ;)
I've had many requests to use fewer words and more charts. Charts will be coming soon. At the same time, we are likely to see an explosion of words. I'll do my best to be concise.
It's pretty obvious a fire hose of information is trying get from the inside out. It will all come out soon enough.
Stay tuned, thanks for your support and contributions, enjoy the game. You have no idea whether this is for real or not, whether it will lead to anything. That's ok, at least this board is interesting!
If all we find out is that we don't know anything about price, what a discovery! That's important information. Then we can just rely on mysticalball.com for our answers. Much easier.
I'm a relentless truth digger and if you dig truth too, you are so welcome here. We need fine minds that can weigh the evidence--not endlessly but practically. This is an engineering board. We think but then we apply. If we prove the probabilities really are only 50/50, an engineer can work with that. In the latter case, everything would then be reduced to mere cash management. I'm pretty sure we can do better than 50/50 though.
Let's play Who Wants to Be a Millionaire!
Ted
Note to the team: Will I ever get around to just dishing out my formula. Yeah, yeah, yeah. Relax. We've got time. ;)
As you can tell from the new look of the PriceTeam Board, this has become a Team project--not a Ted project. Please actively recruit the people you like and admire--that you think would enjoy reading our stuff and perhaps contributing. I expect an active audience of at least 500 and perhaps 50 contributing writers with as many as 100 messages a day. Out of this hotbed, we are going to change the face of trading and investing forever. Either we will discover what we are setting out to do is impossible (important thing to know) or it's possible. If it's impossible, we simply continue trading with really good cash management skills. If it's possible, you are beginning the adventure of a lifetime. It just doesn't get any better than this.
I was meditating on how to get my formula across last night, and I was struck by two things: 1) The scale and difficulty of what I'm trying to communicate; and 2) the first and most part of my formula is developing the heart and mind of a champion. The latter is absolutely required. I can give you the perfect formula, but if you're not thinking on top of your game and if you do not unfold a wealth consciousness, you will not get far. Know thyself is the first rule. Will have much more to say about this, but I just wanted you to be prepared.
Every piece of my formula is required. I will *exclude* anything not essential. So if I include something, I mean it. I say this because there may be a tendency to brush aside certain aspects of what I say, "Oh yeah, I know that. Common knowledge, of course." If I include something in the formula, there is something there that is *not* common knowledge even if it appears to be. I'm requesting you stay with me until you see what is not common in the idea--or more important, until you own the idea.
Finally, to make the formula work, we must integrate each aspect of the formula. Holistic reasoning is required. For example, you can build a radio but if one internal wire is loose, it won't work. The radio must be completely integrated to function. The same goes for what I will be laying out.
So the first part of the formula is you must have the heart and mind of a champion to achieve long-term, consistent success. Are you there? How would you go about getting there?
One purpose of this board is to build a team with an effective knowledge-base and a winning spirit, a focused, kind, caring, mentally tough attitude of Olympic champions.
Ted
RCKS, concerning cycles highs, I do look for them. My best signal in the current situation will be a decisive cut below the 20-day ma and a reversal of the $NYMO. Right now, I'm wondering whether the $NYMO can deliver a blowoff breakout like we saw going into the New Year.
Not looking for any big decline here going into the 10-week low--just a quick back test and then back to the same routine, teasing and frustrating the bears. We'll have to see how the market handles the overhead from here.
Ted
Welcome to the Price Research and Trading Team
We are dedicated to pooling our best intelligence and understanding of price dynamics to achieve a 70+ percent accuracy rate both in trading and market calls.
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While all trading models and methods are welcome, the focus is on the science of price behavior and trading. Be prepared to answer this question repeatedly: Does your TA method produce reliable market calls and trades with an accuracy rate exceeding 70 percent? If it doesn't, the method is probably not a meaningful description of price behavior--or you're not applying what you know with enough consistency to call it a business--a huge issue which will be addressed thoroughly here.
The purpose of PriceTeam is two-fold: 1) To attract individuals and businesses interested in improving trading and investing results. 2) To lay out an understanding of price
that consistently produces market calls and trades with an accuracy rate exceeding 70 percent. Our focus is applied knowledge, knowledge that can be used to engineer wealth without luck or accident. We will capitalize on luck every time it comes along, but the best way to prepare for luck is to *know* what you're doing. ;)
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