# Dear Journal #5

Haven’t had too much time to get work done with my computer have a boot failure and needing to completely factory restore it. In the mist of buying a car, finding time to get as much work done as I would like is proving difficult. Here’s some things I’m kicking around atm.

First, how I got to these ideas. I’ve been reading through “The Ultimate truth” on FF, and the gist is really just trying to eek out a small edge and combining it with a bunch of other edges presented in the same data sequence. It’s basically stretching out the idea of linear prediction (if there are 4 reds in a row, what’s the chance of a green on the 5th?) to include different types of count (if there has been a red every other bar for 4 bars in a row now, what’s the chance of a green on the next?) And combining all of these might show an edge. I like the idea, but I’m not sold on it’s value in it’s basic state. Bar color can only show so much, and remembering the words of Rel, a correct model needs to show price as accurately as possible. Because of this, and in the recommendations of Pelt, I think the next logical direction is to find some way to incorporate what I’ve done with my waves already.

So here’s actually what’s up. Predictability works best when the data size is greatest, because the edge shines bright. If a coin has 2 sides, you’ll know rather quickly, and it will be quite hard to dispute if the coin favors one side over the other. Rolling a 6 or 20 sided dice will take more rolls to discover if a particular side is favored. Therefore, rather than working with my 8 wave types, what I would really like to do is to find some way to morph this into 4, or even better, 2 wave types. Wave types A-B-C-D account for about 90% of the days, which I think is quite good. If I could find a way to better characterize days that are NOT of that type to not trade, or even trade and lose until it is confirmed that a non-A/B/C/D is occurring, I think I would be fine. The issue of downsizing data and crunching it is of course removing data that may or may not be important. Keeping it in presents a sort of skew since those days are so rare. What I am considering is a slightly different way to create those waves, and possibly create a filter, like some sort of time requirement, that would get rid of the EFGH waves, and turn them into some extended C or D wave.