EUR/CHF Strategy

Here I would like to discuss a new strategy based on the fundamental situation in the EUR/CHF.
In fact three variations of the strategy have been prepared and released. One is freely available, the other two are only for looged in users in the site beathespread.com.

Actually the link is here. There is a group about expert advisors in Metatrader 4.

This is something very special as a strategy it is based on a fundamental situation on that pair. The fundamental situation is related with a statement of the Swiss National Bank that it will protect at all costs the level 1.20.
As a result a particular market states develops on that par. In that way a strategy was developed to extract pips from that market. Well I feel sorry we are late on since the expert was working at least for 10 days. And we do not expect that kind of strategies to work for long.

Fundamental calendar with Volatility Graph

I just added an addon to the site it is the news release information and Volatility graph of expected volatility.
This tool comes from Delta Stock and I thing this is the best free news calendar I have ever seen. The frist thing I really like is that you put your time zone. You never guess what is your relative time to the news release time. You can choose your language too.


The second thing I really like is the volatility graph in pips, how much exactly the news have historically moved the markets. And this is a very important information. And it plots the volatility not only to one pair you can choose the pair or the relevant index.

The other very good fundamental calendar is the Forex Factory fundamental calendar I really like it too. In Forex Factory fundamental calendar you can see another important information is how much the expectation diverged from the reality.

How to install a fundamental Forex calendar in Blogspot?

In fact you can add this calendar to your blog too it is just a matter to copy paste a piece of code. You can take the tool from here:

Then you can use the code. In blogger it is very easy.

1. Log in in your account.

2. Go to go to the design.

3. After add a new gadget,  you should use the gadget HTML/JavaScript gadget. I prefer to put the calendar as a gadget at the end of the template. Because only there I have enough place for it.

4. Copy the code from the Delta Stock web site to the HTML/JavaScript gadget.

And you are done. You have a fundamental calendar in your own site. Yes there is a little banner included but this is the price to pay ;).

Intuition and trading Forex and other speculative markets

Do you use properly your intuition in your trading? If you are successful the odds are that this is not up to your intuition.

This pictures is from the excellent book of Daryl Guppy trend trading. The picture may look somewhat complicated at the beginning. But can be easily understood. The are two things knowledge (x) and ability (y). You may expect somewhat a linear progression between knowledge and ability. The more you learn the better you will be. This progression is indicated by the line from the zero point to the right. Actually things do not happen like that .Of course at the beginning there is somewhat a linear progression from ground zero to reasonable skill and reasonable knowledge. There is a plateau of skills despite the progression of  knowledge. The more interesting is the more you learn as a chartist and technical analyst your ability to trade successfully is going lower. Guppy explains that by learning more and more patterns you will not succeed. He proposes to use a systematic method. He argues that the most successful traders are those that use a simple method that happen to be successful. The idea is that in actual trading should be executed using simple approaches (simple is a relative term, by simple I would understand systems that use a limited amount of inputs and transform them in outputs that is the trading decision (the mechanism of transformation is irrelevant to the simplicity e.g. a neural network using a limited amount of inputs can be considered a simple approach despite its mathematical complexity)).

However this chart can be analysed differently using our knowledge from the RV experiments.

Under the remote viewing approach you are all submerged in a constant flow of information they call that the matrix. The intuition may be called the ability to extract information bit by bit. The problem is that the analytical mind is trying constantly to fit this information into categories and bring sense to it. And most of the time this results in rubbish.

The paradox is the more you are knowledgeable in technical analyse the less you are able to use naturally your intuition. Yes that is a paradox because people believe that by learning more they would be more and more successful in the speculative markets. In fact this is not a thing about learning at all. You can't reasonably learn to predict chaotic time series, and get better and better. That is why I am ready to laugh when I listen somebody to announce, you need to learn to trade the markets. 

Well of course there are things to be learned and the most important is the money management. On the other hand the thing that you can't learn much does not mean that you do not have to work, because it is a really hard work designing and testing trading strategies. But people who think that be reading by heart the Encyclopedia of the Chart patterns that will make them masters are going in the wrong direction. Or others who think that they will observe a particular market and time frame for 300 hours and after that they will start doing magic are wrong too.

So if there is a paradox can something be done? The answer is yes it is possible they call it Associative Remote Viewing (ARV). This is a protocol specially designed to court-circuit the analytical overly in order to predict an apparently random event. However we mean the future, and as the future is probabilistic you have a probability not a certainty, and probabilities for the future are not necessarily the product of ARV. That leads to my conclusion that specific designed protocols of ARV can be a valuable tool but cannot be used as a sole trading tool. 

This is true for intelligence purpouses as Ed Dames say, yes Remote viewing gives results but you need at least other two intelligence sources in order to take action. As analogy for the markets that would be the same.

London Trader Blog

London trader blog is a new project and has a group in the trader's social network beathespread,  dedicated to beat the spread in Forex and Commodities trading.

This is a blog dedicated to the current market analysis. It agregates information from many different sources.

I wish to ask london and londotrader good luck in this project and it is definitely in my watch list.

BPNN Predictor plus

There is a library with mods for the BPNN Predictor Plus.The library allow to use different inputs for the neural net.

beathespread.com

The BPNN Predictor uses for training algorithm the

Improved Resilient back-Propagation Plus (iRProp+).

The method is described on this address:
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.17.1332

The idea is to use as inputs different averaging algorithms. One of the mods includes as inputs the Singular Spectrum Analysis. In fact I use two types the normal one and the end - pointed version. 

You can choose from many different averaging algorithms.

List of MAs:

MA_Method= 0: SMA - Simple Moving Average
MA_Method= 1: EMA - Exponential Moving Average
MA_Method= 2: Wilder - Wilder Exponential Moving Average
MA_Method= 3: LWMA - Linear Weighted Moving Average 
MA_Method= 4: SineWMA - Sine Weighted Moving Average
MA_Method= 5: TriMA - Triangular Moving Average
MA_Method= 6: LSMA - Least Square Moving Average (or EPMA, Linear Regression Line)
MA_Method= 7: SMMA - Smoothed Moving Average
MA_Method= 8: HMA - Hull Moving Average by Alan Hull
MA_Method= 9: ZeroLagEMA - Zero-Lag Exponential Moving Average
MA_Method=10: DEMA - Double Exponential Moving Average by Patrick Mulloy
MA_Method=11: T3 - T3 by T.Tillson
MA_Method=12: ITrend - Instantaneous Trendline by J.Ehlers
MA_Method=13: Median - Moving Median
MA_Method=14: GeoMean - Geometric Mean
MA_Method=15: REMA - Regularized EMA by Chris Satchwell
MA_Method=16: ILRS - Integral of Linear Regression Slope 
MA_Method=17: IE/2 - Combination of LSMA and ILRS 
MA_Method=18: TriMAgen - Triangular Moving Average generalized by J.Ehlers
MA_Method=19: VWMA - Volume Weighted Moving Average 
MA_Method=20: JSmooth - Smoothing by Mark Jurik

Anyway you may see that the predictions varies a lot and it changes from time. There is nothing you can do about that. In fact the Forex time series have a lot of local optima and the neural net may constantly bounce from local optimum solution to another. 

Elliott Wave software the contrarian way

There are some news posts about Elliott wave application in the machine learning software.

This approach is completely different from the common Elliott wave applications. The common Elliott wave software and applications are trying to put the market action in a set of predetermined rigid rules. This is quite the opposite we are using manual Elliott Wave count or even we do not need to count the waves.

What we need to do is to identify segments. And in those segments we are going to use a predictive software.
Unfortunately this is not a grail because many things are not in the price, e.g. accumulation of open orders.

http://beathespread.com/discussion/view/229

BPNN Predictor with JJMA smoothing

Hi today I uplodaded some new BPNN Neural net mods in the the trader's social network site beathespread.com

The innovation is to use the JJMA smoothing in order to smooth the time series before we apply the neural net.
The second new thing is to make a hybrid neural net cycle indicator. This is achieved when I combined the the cycle analysis with JJMA jurik smoothing and neural net prediction.

Elliotware: How it works?

This is how Elliotware works:

1. I identify an Elliot Wave structure. This is MANUAL we do not use software. And this is the fundamental difference between this approach and the other approaches. They try to use a machine to force an Elliott Wave analysis.

2. I set the training range to the Elliot wave structure.

3. I apply my machine learning algorithm:  And I have a prediction.

Beat the Odds in Forex Trading: How to Identify and Profit from High Percentage Market Patterns

I really appreciate this book, that is why I decided to write a review in my blog.  This is a book from the so called russian school of technical analysis.  No you cannot find this term, I call this like that.
The first question that comes to my mind is:

Is it just another book of technical analisis?

-This is a book about Forex

This is something very important. In fact the forex market is different from the stocks and the commodities. There are some specifics. It is 24 h market. And I think that all the stuff written about the stock market does not apply authomatically in the Forex market.

There are some volatility patterns that are typical about the Forex markets and those matters are not adressed in the technical analysis books written about the stock market. For example the increase of volatility in the beginning of the European and London cession are typical for the Forex market. If you read a book about the stock market and you are not awared about that you would learn this market knowledge on the hard way.

It is very important to know that there are not many good technical books written specifically about Forex.

-The patterns are explained in a very interesting way

This is something very important. The author brings his own experience about the pattern trading. This is very valuable and he shares his proprietary way of managing pattern trading.

This is the most important thing in the book. The author prepares different strategies based on specific patterns. In those strategies he prepares a Trading plan. Every technical analyse sheet is linked with a concrete trading plan.

The bad thing if I compare it with a traditionnal book abouk patterns The Encyclopedia of Chart Patterns by Thomas N. Bulkowski there is not any evaluation of the success for every different strategy.
In fact I cannot vblame the author because everything is very dynamic in the market however, the author does not offer a methodology for backtesting of every single strategy on the current market conditions.

-There is a big public thread based on the information from the book Beat the Odds in Forex Trading

That is an important question because we are submerged by information about technical analysis. Everybody knows: Head and Shoulders, Triangles, Pennants etc.

One of the most important things is that his author I. R. Toshchakov also known as igrok has a thread in the forex factory forum. There are discussed a lot of things about his book. And this is very important because I think that the public discussions are part of the value of the book.

You can find the thread on this link: Igrok Method. Q's & A's. Comments, thoughts and ideas
http://www.forexfactory.com/showthread.php?t=21887

Today this thread has 468 pages and is very popular and it is very active.


Some ideas
I really like the intellectual approach of the author of the book Beat the Odds in Forex Trading: How to Identify and Profit from High Percentage Market Patterns.

It is very important to back test every strategy on the current hystory. Do not trade blindly. Do not take anything for granted. Test everything.

It is a good idea to use this book together with artificial technical analys patterns software.
The pattern recognition software is a good choise. Here you have a statistical evaluation of every pattern. That is a very good complement.

http://www.ibfx.com/Tools/PRS

Read the book and do not hesitate to join the technical analysis communities.
As far as I know the autor has a private community.However I do not know him personnaly so I cannot give any credentials

http://www.igrokforex.com/index.php?page=chif

The ordres at 1.37 have been ativated

Here I add the picture to show how this level has been activated.