When I think about Elliott Wave I feel sentimental and nostalgic about my first book of technical analysis where the author was promissing 90 % chances of success. I did not get the 90 %, not even near. I had the impression that the trading is something you have to learn and you make it. If I was realizing how much effort I was going to put into this I think I would do something else. However it is my child's dream and so that is why I am here.
The traditonal approach of this author was that there is something...sure and this sure thing was E...W....ve. Then he gavve many examples how Prechter predicted the bull, market, the bear market etc. The predictions by Neely etc. Then I realized OK they do so and they find themself very often wrong. In the same time the ASCTrend and the Brain trend on daily graphics make a very, very good predictions about the big bear market and the bull market etc. The ASCtrend and the Digital Brain Trend predicted the crisis VERY accurately.
So what is the point of Elliot wave if a software makes a better prediction. I think that this analysis has something that a purely mechanical approach can miss. I mean what interests me most is the transition from one market state to another. And this knowledge can prove very usefull when trading a mechanical trading system.
Imagine you are working into a trend with clear impulses. Suddenly the market starts shifting its behaviour. What are we planning to do? To see how the profits vanish and accepting that the losses were initially calculated in the system or to stay away and to try to analyse the current market behaviour with Elliott wave principle.
The Elliott wave principle lacks badly for prediction of market direction. I can give countlees professional examples about counter trend market predicions based on Elliott Wave principle.
The mechanical trading systems are very bad at predicting the market conditions. In fact the true strenght of the Elliott wave principle is to predict the volatility and the the underlying market action. How much it is going to continue and when it would start to do something else.
For example somewhere in August on the EUR/USD the market became erratic. The ASCT Trend systems and its trend following families started to loose like crazy. I think that turned out a normal seasonal market feature. Under Elliott wave principle that could be analysed as a very, very complex XWZXZW ranging pattern. The antipersistence was so bad that every counting effort appeared to me pointless.
However we know that after that kind of market action a new storng impulse is on its way. Can you predict the direction the impusle is going to take? Me, No thanks. This is a job for fundamental traders not me.
The traditional Elliotis would try to predict the market direction based on counts. But those people do not realize that this lacks somewhat a practical sense in Forex. The future global predidctions based on counts are for stocks (I do not develop here why but the Elliot wave theory was based on a game theory approach).
Another thing. The actual drop in the Gold. Well we see that there is a drop. And the market behaviour shifts. The bear market has a different behaviout than the bull market. Is it going to be stupid to use a Neural Net trained partly on bear market and partly on bull market?
Is it possible to say for sure how much the market is going to fall? Where it is going to stop? I do not know.
I know I that the market characteristics has changed. So identify with Elliott waves principle where that happened exactly and start training the experts and the training models in general on the new market conditions.
Maybe I could be wrong but this is my hypothesis.
Няма коментари:
Публикуване на коментар