Overview June 2014

About a year ago was when I first started attempting this new approach to the markets. I have become convinced that the markets are not random, however finding patterns that are actually trade-able to exploit these non-random movements is still out of my reach. One of the perhaps coolest things I have learned is the process and progress of “leveling up”. I had faith that waves, statistics, and programming were keys, but I had to really work through it to see and appreciate the value in it.

Here’s how I see some of the groundwork, my overview:

1. Waves

  • Waves aren’t purely trade-able patterns. You don’t just trade the current up pattern which will turn into a down pattern. They’re meant to show price.
  • The reason why there’s so much work that goes into them being “correct” and “accurate” is because in a sense, they replace the standard OHLC time frame candle chart.
  • Nothing is more pure than OHLC data coming in every time there is a change in one of those elements. The question is how best to record these movements? OHLC every 5 minutes, hour, 24 hours, is a way to do this(standard). Waves are another. However, since the OHLC TF data is all that we have access to (as it’s the universal norm) it appears that waves are derivatives of price, with OHLC being the ‘true chart’ when this is not the case. OHLC and waves are both derivatives of true price movement which is almost intangible.
  • Thus when one trades CCI, stochastics, RSI, etc, they’re really trading patterns that someone else discovered. Do they still work?? Maybe. But one really should know the actual formula and how these double derivative indicators work before simply trading a divergence on one or above/below a certain level on another.

2. Statistics

  • A lot of people seem to say they don’t trust statistics because they change. Actually first, a lot of people don’t think there are any statistical edges in the market… and they’re just wrong. But statistics never lie. They’re just numbers. It’s how we interpret them and make conclusions using them that creates lies and other false information.

3. Programming

  • This is just more of a self thing but damnit is it difficult. Originally I set out to try it, ultimately to quit because it was too difficult. I attempted a second time, quitting again because although I could appreciate it’s value, I had no value to gain from it. Now, I am on my third attempt. I see it’s value for me personally, but the difficulty has not changed. I write all the code which looks ok to me but nothing appears on the chart. Why? I haven’t a clue. Clearly it’s zeroing out somewhere, but not having the step by step debugger like I’m use to in VBA makes it very very challenging.

As for actual trading and progress, I’m at the point where I finally fully appreciate the need to move to waves(I think). Not to zigzags or barros swings or signal bender waves, but rather just a generic term for trading a price structure that isn’t single time frame. It’s also not the case that one can’t make bound-time frame data work, but instead, it’s that moving to waves broadens the range of possibilities for which an edge can be found. This is one of the cases when you realize what you were missing out on and now you can never go back. Perhaps its time for a real haitus for blogging? I really think I need the programming skills now and at the rate that I’m learning(zzz), it’ll be quite some time before I can program anything, really. I’m considering bumping my excel based research down to maybe just 1 day a week for a sake of uncovering statistics that I’ve thought about but never really had the motivation to do, and spending the rest of the time trading to code.


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