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Harmonic Currency Pair Cross Index

  #9 (permalink)

Edmonton, Canada
 
 
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

Sorry for the lateness. I've been spending a lot of time lately working with ProTrader and their technical support/development team, to work out some issues that were already known, as well as some that I found in the platform during my own evaluation. Basically, while I do like the direction that ProTrader attempts to move into, the platform is simply too unstable for my taste.

I ran some Arbitrage trades using the platform and they worked exceeding well, so I was happy about that - especially after bringing a couple bugs in the Arbitrager to their attention and having them fix them within two weeks time. I like Arbitraging and I especially like the way their Source to Destination motif is set-up within the Arbitrager. But, overall, the platform is simply too unstable for me personally at this time. They are working on a new stand-alone version of ProTrader which should be lighter and better optimized, but that is a new project and so the platform won't be available anytime soon.

So, I won't be able to easily do these Harmonic Currency Pair Cross Index trades, or show them inside this thread. Of course, I have seen pics of an MT4 indicator that produces such charts, but I've never been able to get that indicator working properly on my box. The ease with which you were able to create such charts in ProTrader was unmatched.

However, we can still talk about some of the concepts to some extent, anyway.


Fat Tails View Post
I think that the book by Robert C. Miner "High Probability Trading Strategies" is the best on the subject. Larry Pesavento's book is an easy read with a few well-known patterns, Carolyn Boroden's book is similar to the first but less clear. Constance Brown's book on "Fibonacci Analysis" uses an entire different approach, which is not easy to follow.

Also could you elaborate more on what is a "Harmonic Trajectory"?

I have not picked-up the Robert C. Miner book yet, but I might as well do so. You are right about Constance Brown's book. One of the ideas that I developed for myself, came from Constance Brown's book. It is the notion of synergy among ratios in dissimilar time-frames. She does not directly deal with this relative to traditional Harmonic Patterns in her book, but the idea came to me after I read her book and then later began studying the Gartley extensions.

I can't get into the full idea that I've developed because quite frankly, I believe that once I'm finished, it will become my preferred edge. However, I can say that my observations thus far, do confirm my original hypothesis to a large extent.

A basic Trajectory is nothing more than the Delta between two data points. That's it (at least for the basic concept). So, if I take High [0] and subtract it from Low [0], I simply get the High:Low Trajectory, or High-Low Delta.

Thus,

EURUSD
High = 1.40212
Low = 1.40031
HLD = 18.1 (where, HLD = High:Low Delta)

So, out of the entire price block of OHLC, I can derive as many as five (5) Trajectories. This gives me something that trend traders cannot see. Therefore, I automatically get an edge in the analysis of first order derivative of price. I'm creating data for analysis that the majority of the market simply does not use and does not see.

If you look at ATR, you will note that it is a first order derivative of price. Yet, how many people go beyond the simple ATR. In fact, most traders scoff at ATR, or overlook it because they don't see much value in its output. This is a huge mistake. Remove ATR from the market and you have no market to trade. So, how can the single most important derivative of price, fail to have significance.

I have added to the basic calculation of ATR and created my own indicator that I call: Omega. That was more than 10 years ago. Today, Omega has become the OmegaWave indicator and its structure is rather complex mathematically. But, it is all predicated on a very simple Trajectory concept.

My trading system is predicated on what I simply call, Trading The Delta. I'm a Delta Trader. I don't trade where price has been, I look to trade where price has the highest probability of going "next." Therefore, I'm constantly buying and selling, slightly ahead of the market and letting the OmegaWave carry my position to its exit or Limit level. I only get burned, when the Delta Probability gets burned and historically, that is less than 7%-10% of the time.

A Trajectory is simply movement. I don't care what the direction of movement happens to be (up or down). I just need the market to move from Point "A" to Point "B" on a historically consistent basis. If it does that, then I can trade that Delta, or that Trajectory. I don't need to be in the market to capture the next 100 pips. But, if I can capture 17 of the next 40 pips, or 7 of the next 17, or 5 of the next 10, or 23 of the next 67 - then I can consistently remain profitable over long periods of time, while not having to worry about locating the trend.

All of my trades are Leading Edge positions. Sometimes the position is contrary to the trend, but sometimes it is with the so-called trend. My research confirms that trends don't really exist. They do however, provide nice psychological comforts in a business where uncertainty is ramped. The only thing that exists in the market with 100% certainty, is the Trajectory. Thus, every indicator in my trading system is Trajectory based, or Delta driven. The Delta is the hydrogen fuel that drives my trading system.

There are an endless number of Trajectories, yet to be discovered and explored. I've only briefly talked about the most fundamental of them all, here. However, a Trajectory can be as simple or as complex as one's own imagination can make them. In my opinion, most conventional Technical Analysis has been hindered by the Moving Average. Trapped inside an MA calculation, most conventional TA lags the market while remaining hostage to a first order derivative of price that has tremendous difficulty seeing around the corner. This is why I call Trajectories, the Undiscovered Country. It is a place where mathematically, logically and algorithmically, there are no such barriers.

I've given a simple bar [0] to bar [0] Trajectory, using the High and the Low. But, what about: [1] to [13], [2] to [7] and [4] to [5]. That's called a Trajectory Sequence, or a Transequential Non-Contiguous Delta (TNCD). The most basic of all Trajectory types is the Transequential Contiguous Delta (TCD), which was the first Trajectory type given earlier.

Using the slightly more complex Trajectory Sequence above:

bar [1] - bar [13] = Trajectory X
bar [2] - bar [7] = Trajectory Y
bar [4] - bar [5] = Trajectory Z

You derive Trajectories that output three (3) distinct Delta values. Obviously, the number of Delta values determines the complexity of the Trajectory Sequence. When I run this calculation merely one time, I get three (3) Delta values X, Y and Z. Those values in and of themselves, don't tell me much. However, when I calculate them across a sufficient number of bars in the currency pairs history and then compare their values, I might begin to see a pattern emerge from the data. Or, I might not. If I don't then I move on by selecting another Trajectory Sequence until I find a pattern. This is how I conduct some of my most basic and fundamental Delta research. These are not Harmonic Patterns. They are Delta Patterns, which are rather unique.

Now, in the above Trajectory Sequence, you can use High and Low as I did in my earlier example, or you can use any of the four (4) fundamental anchor points: OHLC. This is where the first layer of complexity comes in as the number of combinations begins to grow exponentially if you decide to push it that far. This is part of the reason why I call Trajectories the Undiscovered Country. The number of combinations (amount of research) is endless.

In the above example, I'd be looking for the Magnitude of the Delta within Trajectories X, Y and Z. Since I know that every bar produces OHLC and I know that each M5 bar (for example) lasts exactly 5 minutes, I can begin to make some educated assumptions about price action. If the historicity of price action within Trajectory X (for example), demonstrates N% activity to occur within the "next" 5 minutes - and - I know that I've seen something considerably less than N% in that same Trajectory, then (using historically calculated comparative data) I can calculate a probability for price move into Trajectory Y from Trajectory Z, and into Trajectory X from Trajectory Y. I can then monitor (or, design the system to monitor) to what extent price fulfilled some portion of N% activity in each Trajectory.

This gives me the beginnings of a Trajectory Framework in which I can start to build some rudimentary logic, in an attempt to ultimately predict the "next movement" within that framework. My advanced system has dozens of these kinds of Frameworks, each with their own set of rules that are predicated on the nature of the Trajectories contained within the Framework itself. Each Framework contains baseline Trajectory calculations that produce indicators, which in turn produce signals that then get filtered by the Framework, such that the highest valued signal is returned to the systems Signal Engine.

This is why I call it, Delta Trading and the Trajectory is at the heart of the system. A Harmonic Trajectory, is simply catching multiple Trajectories with a high probability for movement in the same direction within multiple time-frames.

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