A System that can't Lose

[walt123]

This topic started in another thread, but got a little convoluted.
We’re on the right track now, and I think this method/approach may
be of interest to others.

So, you want a winning system that has the potential to be profitable
forever? Try the following:

First, let’s apply common sense.

If a million people are looking at the same market aspects you are, what
are the odds of any of those aspects providing you with substantial
profit? The best you can hope for is some small profit for a little while.

Books and systems out there can offer general education, and some basic
ideas on where to start, but if any of the aspects of such showed strong
profit, do you think their creators would have disseminated that information
for any amount of money?

Bearing this in mind, we can see that aspects of the market that are
unknown or known by few, have much more potential for profit.

But how to go about it…

First, you will need a minimum of general knowledge.

1. Elliot Wave theory
2. Candlestick theory
3. Mathematical logics

With the Elliot, don’t concern yourself with the overall pattern. Study the
Characteristics(how they act) and logic of the waves (swings) themselves.

With candles, familiarize yourself with the basic patterns, and study the
logic behind those patterns.

With mathematics, there are market logics such as indicators and other
mathematical interpretations of the market, and then there are logics
outside the realm of markets but still applicable. Chaos theory and
Probability Theory are a few examples. Familiarize yourself with the math behind each logic, but focus mainly on the logic the math is supposed to represent.

Now that we have our minimum general knowledge, let’s turn to the "base"
of the market: the AB pattern.

The AB pattern is simply an upswing followed by a downswing, or a
downswing followed by an upswing.

Consider the aspects of each bar in the swings:

1. Position in swing
2. Relationships of High and Low (individually and in groups)
3. Relationships of Open and Close (individually and in groups)
4. Relationships of bar range (individually and in groups)

Next, consider the relationships of the swings:

1. Size of swing
2. Average number of bars in swing

When studying this, try to work out the logic behind what you are seeing.

Now that you’ve done this, it’s time to consider the logics.

The trick is to think about the logics you have accumulated, and how they
go together. Play with it. Move the logics around. Compare and contrast
them. Add them and subtract them. Find new ways to put them together.

Your time will be well spent. If you can isolate just one pattern, you
will do very well.

As an example, the price pattern I use began with the logic behind Chaos
theory. From that single logic, I extrapolated a single market aspect that
proved to have a powerfull confluence with other market aspects.

In closing, I assert that, based on reason common sense and personal
experience, the patterns you find with this method will yield results far
superior to any known approaches. Further, these patterns should
continue to yield profit for many years. I have used 1 or 2 patterns for
over a decade.

The logics of the market and math are diverse and many. So, Let’s talk
about logics traders use. Give the specs of your logic and it’s uses…etc.

[mich]

This topic started in another thread, but got a little convoluted.
We’re on the right track now, and I think this method/approach may
be of interest to others.

So, you want a winning system that has the potential to be profitable
forever? Try the following:

First, let’s apply common sense.

If a million people are looking at the same market aspects you are, what
are the odds of any of those aspects providing you with substantial
profit? The best you can hope for is some small profit for a little while.

Books and systems out there can offer general education, and some basic
ideas on where to start, but if any of the aspects of such showed strong
profit, do you think their creators would have disseminated that information
for any amount of money?

Bearing this in mind, we can see that aspects of the market that are
unknown or known by few, have much more potential for profit.

But how to go about it…

First, you will need a minimum of general knowledge.

1. Elliot Wave theory
2. Candlestick theory
3. Mathematical logics

With the Elliot, don’t concern yourself with the overall pattern. Study the
Characteristics(how they act) and logic of the waves (swings) themselves.

With candles, familiarize yourself with the basic patterns, and study the
logic behind those patterns.

With mathematics, there are market logics such as indicators and other
mathematical interpretations of the market, and then there are logics
outside the realm of markets but still applicable. Chaos theory and
Probability Theory are a few examples. Familiarize yourself with the math behind each logic, but focus mainly on the logic the math is supposed to represent.

Now that we have our minimum general knowledge, let’s turn to the "base"
of the market: the AB pattern.

The AB pattern is simply an upswing followed by a downswing, or a
downswing followed by an upswing.

Consider the aspects of each bar in the swings:

1. Position in swing
2. Relationships of High and Low (individually and in groups)
3. Relationships of Open and Close (individually and in groups)
4. Relationships of bar range (individually and in groups)

Next, consider the relationships of the swings:

1. Size of swing
2. Average number of bars in swing

When studying this, try to work out the logic behind what you are seeing.

Now that you’ve done this, it’s time to consider the logics.

The trick is to think about the logics you have accumulated, and how they
go together. Play with it. Move the logics around. Compare and contrast
them. Add them and subtract them. Find new ways to put them together.

Your time will be well spent. If you can isolate just one pattern, you
will do very well.

As an example, the price pattern I use began with the logic behind Chaos
theory. From that single logic, I extrapolated a single market aspect that
proved to have a powerfull confluence with other market aspects.

In closing, I assert that, based on reason common sense and personal
experience, the patterns you find with this method will yield results far
superior to any known approaches. Further, these patterns should
continue to yield profit for many years. I have used 1 or 2 patterns for
over a decade.

The logics of the market and math are diverse and many. So, Let’s talk
about logics traders use. Give the specs of your logic and it’s uses…etc.

Hi Walt,

Interesting concepts correlating EW, candles and Maths. Could you briefly elaborate how do you correlate price pattern to chaos theory. I guess you are talking about timeframes of a day or more.

Additionally, can you give an example of application of your method to an instrument such GBP/USD. I have just completed my assesment of EW to GBP/USD. You can find the thread on “Elliot Wave …” in newbie section.

Cheers,

Mich

[fsprea]

Hi friends,
that’s just to subscribe here. No time, right now, unfortunately but I am very interested. (I’m coming from the previous thread).

Mich, nice thread yours too, although I must say that, for the few that I know, your EW count (the last one) for today looks a bit strange to me.

The two rules of classical EW that in my view are violated are

1. W3 must be the most extended. In your chart W1 seems longer in time & price
2. W4 can never overlap W1, that is grossly violated in your pattern.

But maybe this is just my ignorance, and anyway it is only marginally on topic here.

Looking forward.

Fabio

[Sweet_Pip]

I’ve been using fib patterns…butterflies & gartleys mostly. The base pattern of them is the AB=CD which I gather is an element of the Elliott wave theory? Are you saying I should focus more on the symmetry of price & time of their swings and not so much on what fib levels they measure to? Then once I have “my” pattern, then figure out what the best probability it projects for a risk/reward target using parts of this & that that I have learned thus far?

I’m thinking that perhaps when it comes to common sense for many newbies, telling them to use it kinda leaves them hanging out to dry because it’s common for us to not have a sense of the market quite yet…lol. That’s why we’re here…to get some. So if this is more of an exercise in getting there, I hope you plan to spell it out a little more at a level the majority of your audience is at.

[rhodytrader]

It is corect money management that decides whether you will be a winner or loser - not your trading system!!

I cannot agree with this tymen. It takes a good system, good money management, and good psychology (to execute both the other two) to be a winner. No one element can make you a winner, but the lack of any of the three will make you a losing trader.

[trav72]

@tymen1

And then Walt123 mentions the use of Astrology!!
Well that just wrecked any hope of even getting credibility with me!! :eek:

there is more than one view. The much respected Dr.S.Sivaraman has a lively daily blog over on fxstreet discussing live market analysis which is based on his respected alogrithm - which has astro-pyhsics as an element of it…If you branch out you will find more than one view! It is all about listening and learning and not thinking you know it all and seen it all before.

Who is Dr.S.Sivaraman?

Dr.S.Sivaraman was born in 1952 and got his Ph.D in applied statistics in 1979. He served as professor for 28 years under University of Madras, Chennai, India. During 23 yrs of his post doctoral work he developed a statistical algorithm to predict the world markets direction, trend,trend reversal,time and levels using astro-physical parameters ('X- Factor ') influencing human decision making and herd mentality which are the main governing forces of the markets world over.

He has several analytical and financials articles to his credit. He is providing the Forex market forecast through Accurate Currency Markets Forecasting and Managed Account Services to various subscribed financial institutions, banks,and traders of different parts of the world. He also provides online Professional trading training to members -how to read the intentions of the operators and effective trading strategies to earn from any market condition at ease.

He has contributed user friendly features like trailing stop,trailing hedging order etc.in actforex trading platform developed for online trading to all investor at for his exclusive multiple managed accounts facilities. He also efficiently manages trading accounts for wealth management companies and high net worth clients. His forecast is being published in fxstreet since 2001.He also gave several Q&A sessions for fxstreet.com audience

[Sweet_Pip]

@trav72

there is more than one view. The much respected Dr.S.Sivaraman has a lively daily blog over on fxstreet discussing live market analysis which is based on his respected alogrithm - which has astro-pyhsics as an element of it…If you branch out you will find more than one view! It is all about listening and learning and not thinking you know it all and seen it all before.

Who is Dr.S.Sivaraman?

Dr.S.Sivaraman was born in 1952 and got his Ph.D in applied statistics in 1979. He served as professor for 28 years under University of Madras, Chennai, India. During 23 yrs of his post doctoral work he developed a statistical algorithm to predict the world markets direction, trend,trend reversal,time and levels using astro-physical parameters ('X- Factor ') influencing human decision making and herd mentality which are the main governing forces of the markets world over.

He has several analytical and financials articles to his credit. He is providing the Forex market forecast through Accurate Currency Markets Forecasting and Managed Account Services to various subscribed financial institutions, banks,and traders of different parts of the world. He also provides online Professional trading training to members -how to read the intentions of the operators and effective trading strategies to earn from any market condition at ease.

He has contributed user friendly features like trailing stop,trailing hedging order etc.in actforex trading platform developed for online trading to all investor at for his exclusive multiple managed accounts facilities. He also efficiently manages trading accounts for wealth management companies and high net worth clients. His forecast is being published in fxstreet since 2001.He also gave several Q&A sessions for fxstreet.com audience

Even more known is W.D. Gann. (June, 1878 – 14 June, 1955) Gann market forecasting methods are based on geometry, astrology, and ancient mathematics. Many charting programs & systems today come with and are based on many aspects of his methods and indicators.

Seems to me that it has it’s place whether some like it or not and there is nothing with less credibility than those who can’t respect that!

[wrtm_19]

This topic started in another thread, but got a little convoluted.
We’re on the right track now, and I think this method/approach may
be of interest to others.

Hi, I’m interested in what you have to show/teach/share.

Gartleys and butterflies are my base for trading so I guess somehow this relates with what you do (at some point of course)

Could you post a chart explaining a trade so we can get a better idea of your method?

Regards

[soul786]

I’d be interested in reading more of these methods and ideologies and how they correlate to trading. It’s a bit out there but that’s what makes it more interested. Any direction or recommended reading you guy’s would suggest?

I assume a simple google search would work but at the same time I prefer valued sources Preferably even in book form.

[fsprea]

Hallo people,
now that the “preliminary discussion” has already taken place,
as a contribution to a possibly common work for refining our analytical skills, as suggested by Walt, I propose to look at a chart together (finally).
As for my first post (or the last in the other cramped thread, I don’t remember) I find perhaps even more valid than a “packaged” system Walt’s indications, because he’s not trying to sell us a system, but indicating how to acquire a method (although just with general suggestions: but everybody has the right to chose how much, what and how to disclose…).

So: to get hands dirty, I propose here an EURUSD D1 chart with a very preliminary count of swings and price levels. I will start on my own to make some counts and calculations, but today I’m around (for my ‘damn’ job) the whole day (and night). So I want to let me surpise also by your contribution and critique. If I come to something, I promise I’ll let you all know.

Bye

Fabio

(P.S.: this chart comes from FXDD, which is GMT+2, so maybe you can find some differences, being this the forex cash, with your broker-data. I hope that patterns can be robust enough to be recognizable even with these fx problems!)

[Sweet_Pip]

@fsprea

Hallo people,
now that the “preliminary discussion” has already taken place,
as a contribution to a possibly common work for refining our analytical skills, as suggested by Walt, I propose to look at a chart together (finally).
As for my first post (or the last in the other cramped thread, I don’t remember) I find perhaps even more valid than a “packaged” system Walt’s indications, because he’s not trying to sell us a system, but indicating how to acquire a method (although just with general suggestions: but everybody has the right to chose how much, what and how to disclose…).

So: to get hands dirty, I propose here an EURUSD D1 chart with a very preliminary count of swings and price levels. I will start on my own to make some counts and calculations, but today I’m around (for my ‘damn’ job) the whole day (and night). So I want to let me surpise also by your contribution and critique. If I come to something, I promise I’ll let you all know.

Bye

Fabio

(P.S.: this chart comes from FXDD, which is GMT+2, so maybe you can find some differences, being this the forex cash, with your broker-data. I hope that patterns can be robust enough to be recognizable even with these fx problems!)

Hey Fabio…thanks for setting up a possible example. Hopefully Walt will come back and let us know if this is on track with what he’s started.

So according to the guidelines, it looks like waves 1-4 could be considered confirmed and we’re in the 5th wave, and the up trend should be in it’s final stages with limited upside potential.

Now if price retraces back down past wave 4, we are then anticipating a down ABC correction pattern. And the range of that rally is expected to be a rally greater in time and price than either wave 2 or 4 of the prior uptrend.

I’ve got a stoch indicator indicating overbought conditions and starting to head down too…so that seems to be in sync with the start of the corrective A down swing/wave/leg…whatever you want to call it :D.

This is as far along I am in the book…lol…so being that it’s on the daily chart, I should have a few days to get a little further along should that actually start developing.

[mich]

@Sweet_Pip

Hey Fabio…thanks for setting up a possible example. Hopefully Walt will come back and let us know if this is on track with what he’s started.

So according to the guidelines, it looks like waves 1-4 could be considered confirmed and we’re in the 5th wave, and the up trend should be in it’s final stages with limited upside potential.

Now if price retraces back down past wave 4, we are then anticipating a down ABC correction pattern. And the range of that rally is expected to be a rally greater in time and price than either wave 2 or 4 of the prior uptrend.

I’ve got a stoch indicator indicating overbought conditions and starting to head down too…so that seems to be in sync with the start of the corrective A down swing/wave/leg…whatever you want to call it :D.

This is as far along I am in the book…lol…so being that it’s on the daily chart, I should have a few days to get a little further along should that actually start developing.

Hi,

This is indeed a good example. The EW 1-5 seem to be qualified although I am vague about these swings at the moment.

I have drawn the ichmoku diagram plus RSI as well (please see the attached PDF file). I guess 1.4993 or 1.4970 (as the trinangle on Chikou Span depicts on price itself) is pretty much the end of Wave 5 and beginning of Corrective Wave A. I guess we will be looking at 1.4797 (38.2%), 1.4736 (50%) and 1.4675 (61.8%) Fib levels. According to wikipedia on EW “…some technical indicators that accompany wave A include increased volume, rising implied volatility…)”. If indeed that is the case then the thickness of Ichi cloud projected 26 days forward shows the depth of volatility. Note the depth of volatility is projected to be higher than Waves 1-5. Are these swings implied volatilities?

Appreciate all feedbacks.

Cheers

EURUSD_daily_20091021.pdf (56.8 KB)

[Sweet_Pip]

Hi,

This is indeed a good example. The EW 1-5 seem to be qualified although I am vague about these swings at the moment.

I have drawn the ichmoku diagram plus RSI as well (please see the attached PDF file). I guess 1.4993 or 1.4970 (as the trinangle on Chikou Span depicts on price itself) is pretty much the end of Wave 5 and beginning of Corrective Wave A. I guess we will be looking at 1.4797 (38.2%), 1.4736 (50%) and 1.4675 (61.8%) Fib levels. According to wikipedia on EW “…some technical indicators that accompany wave A include increased volume, rising implied volatility…)”. If indeed that is the case then the thickness of Ichi cloud projected 26 days forward shows the depth of volatility. Note the depth of volatility is projected to be higher than Waves 1-5. Are these swings implied volatilities?

Appreciate all feedbacks.

Cheers

Hi Mich,

Looks like it’s just you and me now.

I have no idea if these swings are implied volatilities…lol. In case you missed it, there are a few of us…well there was :rolleyes:…reading a book titled “High Probability Trading Strategies” by Robert Miner.

He is using the logic of elliott waves for “practical pattern recognition for trends and corrections”, but does not get into the e-wave complexities. If you want to, no problem, but just so you know, that would be why you won’t get much of an indepth discussion with me about that aspect, at this point anyways.

The only guidelines for the swings as he (Miner) sees it, is this:

1. Wave-2 cannot trade beyond the beginning of Wave-1.
2. Wave-3 cannot be the shortest in price of waves 1, 3, and 5.
3. Wave-4 cannot make a daily close into the closing range of Wave-1.

We all should know that not every trend will be 5 waves, or every correction will be 3. However, many are.

If you’d like to continue this thread with me, please do. There’s a lot more yet to cover before pulling all the parts together into a complete system.

[TalonD]

sweetpip, I will get into that book this weekend. still skeptical of Ewaves but willing to give it a look.

[mich]

Hi Mich,

Looks like it’s just you and me now.

I have no idea if these swings are implied volatilities…lol. In case you missed it, there are a few of us…well there was :rolleyes:…reading a book titled “High Probability Trading Strategies” by Robert Miner.

He is using the logic of elliott waves for “practical pattern recognition for trends and corrections”, but does not get into the e-wave complexities. If you want to, no problem, but just so you know, that would be why you won’t get much of an indepth discussion with me about that aspect, at this point anyways.

The only guidelines for the swings as he (Miner) sees it, is this:

1. Wave-2 cannot trade beyond the beginning of Wave-1.
2. Wave-3 cannot be the shortest in price of waves 1, 3, and 5.
3. Wave-4 cannot make a daily close into the closing range of Wave-1.

We all should know that not every trend will be 5 waves, or every correction will be 3. However, many are.

If you’d like to continue this thread with me, please do. There’s a lot more yet to cover before pulling all the parts together into a complete system.

Hi Sweet Pip,

I ordered that book yesterday so it should be with me soonish.

I am sure Fabio who seems to have a good knowledge base will join us together with the thread owner and others who make constructive contribution to this thread.

Like you I would like to know if the end of wave 5 on EUR/USD is confirmed. That may not be the case today. However, given the depth of volatility shown by Ichimoku cloud I would say it is nearly there.

We should also remember that this is a daily chart. Indeed as the text book goes Wave 3 supposed to be the longest wave, although Wave 5 could be as well. We should establish this pretty shortly

Cheers,

Mich

[Sweet_Pip]

On one hand even Babypips has worded the top of this forum as such…

[B]Free Forex Trading Systems[/B] [B]Got the “Holy Grail” system? Want to share it for free and become everyone’s hero? This is the place to do it.[/B]

In that case…every friggin thread here is a Holy Grail cause that’s Babypips said goes here…even without without said title of the likes of this thread. :eek:…so are they being irresponsible and misleading newbies that that’s what they can expect? At least they have a sense of humor about it. Some of you guys really need to take a chill pill

So moving on, I wanted to make note that there are 4 parts that make up this trading strategy. They are:

1. Multi-timeframe momentum - understanding your oscillator indicators
2. Pattern recogonition for trends & corrections
3. Fibonacci
4. Cycles.

Once [B]each[/B] of those 4 parts are understood really well, then they are pulled together into a trading plan - entries, position size, exits and trade managment - If you only focus on one part, it will not be complete and inconsistent results will follow.

It’s not just about elliott waves, but just about everyone agrees that price moves in waves and these waves form patterns. If you put several overlapping ABC swings together, you can get corrective patterns like wedges, triangles, flags & pennants. Many of these patterns create highs & lows that you can run a trendline along, or a channel. This strategy only uses some of the elliott wave guidelines to help define when these wave patterns may be setting up for a highly probable trade.

Over the next days or so, mostly I’ll just be looking at real time charts looking for and labelling some of these trend & corrective waves. I have a feeling that with much practice, it becomes second nature…something that traders with many years of practice have come to know…that common sense or instinct/gut feeling part…lol. Apparently Miner claims he can look at a chart and within 3 minutes be able to detect where in the market a trend or correction is.

[soul786]

Over the next days or so, mostly I’ll just be looking at real time charts looking for and labelling some of these trend & corrective waves. I have a feeling that with much practice, it becomes second nature…something that traders with many years of practice have come to know…that common sense or instinct/gut feeling part…lol. Apparently Miner claims he can look at a chart and within 3 minutes be able to detect where in the market a trend or correction is.

If you get the chance, it’d be wonderful if you could post some screenies of your progress in identifying some of the aformentioned. I’d love to follow along and join in on the learning.

[Sweet_Pip]

If you get the chance, it’d be wonderful if you could post some screenies of your progress in identifying some of the aformentioned. I’d love to follow along and join in on the learning.

I wanted to tonight but I had a entrepreneur of the year award ceremony to go to…free food and booze!..lol. Now it’s basically bedtime so will try tomorrow.

[MattW2009]

Even Holy Grails lose sometimes

[dpaterso]

Hello,

I have to admit (that after reading this thread again TODAY) that maybe the thread starter DID INDEED get a bit of a ‘bum rap’ as it were (no offense is meant Tymen as I’m sure you will know coming from me). I myself though apologise for my earlier post. I mean (and as John says): this stuff sure is not for ME but that doesn’t mean that it has no merit for other traders i.e. Elliot Waves (to use but one example) no doubt have their place (if you can SEE and UNDERSTAND the darn things anyway).

One thing that has been mentioned by a few here though is money management (although I must say that I cannot make the link between the thread starters post and money management but anyway): it may be of interest to some to note that there have been various experts in the field that have demonstrated that with correct money management a person could actually make an overall profit simply by taking random entries in random markets. This stuff is pretty well documented. Don’t get me wrong though: it’s not something I’d advocate but it does at least prove the point that money management is ALL IMPORTANT.

Regards,

Dale.