I’m an intraday forex scalper. My background is statistics and computing and have worked in a mixture of IB and HFT firms. I scalp using PA, pivots and EMAs. There seems to be some good people on here and I have been looking for a decent community of people to discuss and share ideas with.
Nice to meet you.I also use mathematical analysis on the market, in fact thats the only thing that i use in some degree.I hope you will find here what you wish, and maybe we could also work together since we are working similarly.
Good luck!
Nice to meet you,welcome to Babypips!I’m looking forward to exchange knowledge with you.
Thank you for the welcome note. The funny thing is that I would not say I use mathematical analysis that much. I met a professional poker player a while back and he said an interesting thing to me. He said If you are playing with people who know what they are doing then they mostly likely know the odds of winning a certain hand. The trick beyond that is how to get the most amount of money in the pot so when you do win you are winning more than what you should have won given the cards you have. I think its more about psychology and making sure you get enough money for the trades you take.
Oh, but the difference between poker and the market is that in poker you play vs people, so its subjective you can use poker face, and other indimidation methods.In trading you play vs an object, the markets so it’s no longer subjective, its objective, so if it’s objective you can use math tools to figure out your chances 
And so far for me it works, and for many other people it did who got very rich.I dont think the guys at Goldman will trade based on intuition, they have mathematicians there to figure out the probabilities.
I`m curious though what you refer by “statistics” in your first post, but you disregard maths? The two is the same thing
Are you saying that we’re not playing against people in the markets? Who do you think creates the market you’re trading and taking on the other side of your trades?
I use quantitative analysis and modelling for my trading as well, but I’d be blind to ignore market psychology and behavioral finance.
By stats I mean understanding things like sample error in estimating your probability of winning or understanding the power vs. the size of statistical tests. I tend to shy away from complex mathematical techniques such as kalman filters, fractal analysis, MESA signals and the like.
I think stats is important as I have seen a lot of people get burned from not understanding the complexities of statistics in back testing. I just like to keep strategies as simple as I can to improve their robustness.
So what is the rough them of the strategies you run?
Ah a quant, nice to meet you.Well i dont think quant analysis is relevant in forex.I think it only works in stock, futures and other stuff, but since forex is a 2 way market.It is the cross of 2 currencies, i dont see where the speculators come it.
Not to mention if only 15% of the speculators are trading forex the rest is big bank transfers, economy,corporations etc.
And according to some theories, in which i believe in, speculators merely toss the money around, but have absolutely no implication and impact on the exchange rates.
You just buy EUR and pass your USD for it, but dont change really much, or not at all, the rates.So my view of the markets is and always will be objective.
Not to mention why 60% of the chart patterns (which work on stock markets because of market psychology) dont work on forex.Simply because the psychology is irrelevant in this market, forex is very much different than other markets.
Im sorry but i ignore completely sentiment analysis and market psychology and even fundamental analysis in certain, but not all cases,during my analysis and im fine without it
If you think it works well good for you, but me viewing with an objective eye, i believe differently.
Well i search for chart patterns mostly , and since my research is not complete yet i cannot say exact things.But in my view, i view the market with an objective perspective, so its only a line moving up and down towards right, so my bigger plan is to approximate the moving of the market, but not with a math function (to completely predict the market which is impossible), but rather with a probability wave.
I built a very sophisticated software in which i load data and it works as an AI, it learns chart patterns which have enough occurences, but instead to predict the probability of the pattern i try to estimate the probability of the price’s movement.And if the probabilities are good to my risk management i take the trade.So in simple terms, the program learns chart patterns and their probabilities and tries to predict the price movement between 2 chart patterns with a probability curve, and when the curve reaches a reasonable probability then it should predict the movement there very accurately (~75%).It’s very experimental yet, but i could have a nice future, maybe i will open a thread about this here on BP in the future.
Here are my results so far (it’s an EA i made based on the early versions of this software)
http://forums.babypips.com/expert-advisors-automated-trading/58361-exodia-ea-developer-diary.html
Hey, I was wondering something about backtesting in meta trader EAs. How do they factor in spreads and commissions to the backtests? Have you had a change to run in live yet?
I would be interested to knowing how you take psyhcology into account. I would see behavioural finance being something like taking advantage of bulls over-reaching in a bear market. Or watching a stop run about to happen and expecting the ensuing carnage to give you a 1:3 RR. I know this is sharing prop ideas so if you are not ok with that then i understand. If youre interesting in chatting PM me or just post it here.
They dont simulate comissions and taxes, and thats also irrelevant in my point because it is subtracted from the profit, so you can calculate that later.
However i simulates spread, but my backtest was done in very low spread condition, so it might show different results in high spread conditions, so i must work on it more because in the current form it is not yet profitable in the long term.
I would not count on psychology much in forex since it is a 2 way market.It may work in stocks and other stuff but i dont think it works in forex.Since i tested 70 different chart patterns which were god-like in stocks but achieved very very poor results in forex.The patterns all were psychology based reversals, with fear of losing capital, and it might work very well in stocks, but in forex it doesnt, so thats +1 sign that psychology is not very strong in forex.
How would you explain things like the market going a pip beyond the end of a bar and then reversing?
Bad luck 
It happens, depends of the frequency, if it’s very often, then it may be something there, maybe a pattern worth studying, if its not often, then whatever, the market has some random elements in it, so you have to consider every possibility.
Its easy to prove why the market is objective and not subjective.And that is the line chart.Just study it, its only a damn line which moves up and down, it’s like a wave, with amplitude and frequency:
-if the amplitude is big and the frequency is big then it has many spikes (probably low volume)
-if the amplitude is big and the frequency is small then the market is ranging
-if the amplitude is small and the frequency is small then is consolidating
-if the amplitude is small and the frequency is big then it’s trending
Thats it, its objective, and the shadows are only the same wave-like movements in lower timeframes ,so its also fractalized.The market is a fractalized wave :), and it is totally objective,with nothing subjective in it 
I agree with the waves and fractal part the thing is, do you care why you get waves on multiple time frames or is this not of interest to you?
Because of the structure of the market.It is emerging from the low TF to the high TF.It’s only a sequence of prices which is plotted in a chart.A candlestick is only a segment of time of the full sequence of prices.
For this you must understand what moves the market, and the main thing is the basic interest rate differences and the LIBOR or other interbank rates.
Which is calculated based on the supply and demand of the resective currencies.But only 15% or less of these are made of speculators, the 85% is made of commercial trades,interbank bank lending, goverment spendings and other commercial factors.So the speculators don’t really move the markets, and since the commercial transactions are inevitable, it smoothens it’s subjectiveness and it becomes mostly objective
For example if Toyota wants to export some cars to the US it must exchange it’s yen into dollars regardless of the current exchange rates, they won’t wait until the rates will become good enough if they want to export they will, at any given exchange rate,and to compensate the losses they will increase the price of the car so that the buyer will pay the transaction costs. So that makes that transaction objective.
The other thing what they can do is to make a forward or futures contract but that again because of it’s uncertainty will be objective at it’s expiration.
This guy is hilarious. I think you fail to understand the root of your objective analysis. What causes these edges that you hold significant? I’m pretty sure it’s not some deity that says every “x” intervals I will put in “Edge #y”.
There’s a difference between knowing how to use an indicator and knowing what the indicator is actually calculating.
I would agree thats a lot of the macro reasons as to why the market makes significant moves. There is a good book I read recently about this called trading in 3 dimensions that goes in to this in detail. My opinion to why the waves happen is that everyone has limited inventory. The market can only, sell or buy for so long before it needs to take profit. So the patterns on different time frames are just the different types of players with different accounts getting maxed out. This is the same for algos or people.
Laugh as much as you want we shall see who will laugh at the end.I think you don’t understand my point.You emphasize so much the subjective nature of the market that you fail to see the bigger picture.I think you fail to understand the root of objective analysis, since you didn’t pointed out a single argument why the market is objective.
An edge happens if you find a good trade setup in the market.The entire market has a total probability of 100%, that means that it always carries with itself a pattern which has 100% chance of happening every time, you and i dont know which one it is, but i think it exists.If we’d know that pattern we’d already be billionaire.
There are different approaches to find that pattern, or setup or strategy if you will, but i bet that 99% of those listed here on BP forum hardly even breach the 50% chance bound.If you already have a strategy that has a 51% winrate you can consider yourself a good trader among the top 5% (and of course if your RR is also reasonable).
For example the head & shoulders is said to have around 60% win rate, ok that’s good, then why dont you trade only that?
Why you mix it with patterns which have under 50% win rate ? I never understand why some guys do such moronic things?
(i`m not talking about you ,just in general)
If you want to be a succesful trader you have to be selective, you throw away the junk and keep only the good ones.The holy grail is in the market,no doubt, the thing that you didnt found it it’s your problem.The market will not care