Delta Trading: Intro and Vega Prime

SB theory. Here we go again.

Too many concepts with too much to explore, with out a clear path to follow leaves the amateur statistician and trader left with nothing. That’s me. A concept in which something ‘clearly’ exists is hard to find if one simply isn’t looking in the right direction. I’ve felt this way, but there isn’t much I can do about it. The SB concepts I worked on a long time ago were certainly (and I very well knew it) too simple to actually be able to yield something. So I’m trying it again. The concepts that I’ve worked on up until now with waves are temporarily archived (ah, now I understand that term). I don’t think delving into SB theories will gain me the knowledge and success that I couldn’t find in Wave Analysis. Rather I’m hoping that along the way I’ll learn something that will help fill some of the problems I’ve had with WA. Either way, knowledge is gained. With correct knowledge comes progress. And with progress, eventual success.

I went back to dig for SB info. Dig dig dig. Signal bender, 7th signal trader, idouble, jet trader. He has plenty of names, but these were the ones I was able to find some information on. His “original” name was Trade Vector, however I was introduced to him as Signal Bender, hence I have always called him SB. I’ll probably call him various names, but will try to refer to ‘delta concepts’ because that’s what it is.

I understood originally that H-L, otherwise known as Omega or Delta (i think? although I prefer to call it range..) or rather PH-L and H-PL was one way of many to calculate delta relationships. However, I was particularly fixated on it because it clearly has an advantage over any other relationship. It captures all of the High and the Low and blends price together. If you want a complete picture of the action, what better way than high to low? Yet, there is apparently much more to the story. H-L captures all possible action, but it’s really the relationships that occur inside the range, with and according to, that matter. Makes sense. From here we get various different relationships. H-O, L-C, C-O, etc. I was recently introduced to a value known as Distinct Vega, which included in it is a value from Vega Prime.

So what’s Vega prime? It’s the addition of various deltas within a bar divided by the range, H-L. But which deltas? VP has a distinct formula, and I pondered this to be an extremely important part, if VP and the following DV are important. The values were: O-L, C-H, H-O, and C-L. Hm. Why?

There are 4 values, resulting in 8 total relationships.

H-O / O-H

O-L / L-O

H-C / C-H

C-L / L-C

The first value is positive and the second is negative (most of the time). Now, if you only count additive relationships, you end up with 16 different ways to add them. As a random example:

(H-O)+(O-L)+(C-H)+(L-C)

Of these 16, 8 are inverses of the other. 1 pair gives the result of 0. 1 pair gives 2H-2L (with the other pair being 2L-2H). Keeping in mind that all of these relationships are divided by Delta/Omega/Range, this one particularly doesn’t yield a result worth pursuing. So what we really have is 10 pairs, or 5 sets which look like the following:

2H-2C

2H-2O

2C-2L

2O-2L

2C-2O

and of course their inverses. We’re basically back where we started, only with a x2 multiplier. If we want to keep positive values (or plan on using absolute values), then we further this list down more. Down to simply 5 possibilities, with the exception of C-O and O-C, which depend on the bar color. After exploring more, other things becomes apparent. When actually measuring these things, some times they’re the same. The H-C of an Up bar is the same as the H-O of a down bar. Thus, in looking at true relationships, we end up with quite a simple picture.

Untitled

Why is 1 chosen over the others? Hmm..

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