I’m wondering where I can find hard data on the actual probabilities behind trading strategies. I see a ton of qualitative judgment calls (good, bad, super, etc) and very little in the way of numbers.
For example - Bollinger bands. How often do they successfully describe trends? 50%, 60%, 40%? Does the accuracy change dependent on other factors? (That’s a rhetorical question - I’m looking for a central resource that covers this, not a direct answer.)
I want to find objective analyses of technical indicators, and I don’t want subjective assessments. Does anyone know where I can find the hard numbers?
Wikipedia covers a lot, and has good references, but isn’t directed at Forex traders.
What I’m seeing and starting to believe is that a majority of market behavior looks like a random walk. Without Fundamental knowledge of some sort - whether implicitly encoded in the strategy or explicitly using real analysis - a strategy is naive to the drivers of the market.
An implicit strategy would incorporate an assumption about the market - a Fundamental judgment call embedded in a technical indicator. Something like “in the morning in the US, markets are likely to be perky, therefore I can capitalize on trends of type X.” Moving averages and crossovers of particular scopes could be used to signal such implicit assumptions.
I’ve noticed that market activity holds certain patterns year to year - each month, season, holiday, major sporting event, and other significant annual human event has an impact on markets. This leads me to conclude that there is profit to be made in knowledge about these changes. Any event that significantly impacts human events will significantly impact currency trading in discrete ways - it will change volatility or relative value.
Human life ultimately drives currency exchange. Knowledge about perception of value, real value, and behavioral patterns are the only rational way to gauge market trends. However - technical analysis can incorporate that knowledge implicitly.
I’m beginning to think that I’ll need to become something of a historian and psychologist in order to understand how the markets work. At any rate - does anyone know where I can find quantitative, objective analyses on Forex trading strategies, or is this pretty much what every trader has to learn for themselves?