A little more of a layman’s post this time around because it’s a new idea (:
-Transient: Noun-lasting only for a short time; impermanent.
-Interesting name for what they are. TIL a new word.
-Inspired by a section of the thread “Similarity System” over at FF by the beast eurusdd. It’s a series of ideas that doesn’t have much to do with the actual similarity system, so I’m glad I didn’t have to read 100s of pages to get caught up. I was lucky to catch it right when it began to unfold.
To me, I read about transient bars and immediately think “levels trading”. It’s quite similar to the B2i, and I hope to combine them and compare levels in the future.
The idea of trading transient bars has two parts: h and k. h is a number that refers to the number of bars to the left and right of a target bar. Although traditionally it’s always the same number on the left and the right, I suppose opening up possibilities to have a different number on the left than the right is completely possible.
A bar is considered transient(or h-transient) if there is no bar H bars away from the bar in question has a higher high or a lower low. Basically an extended fractal or swing identifier. Here’s the H=5 that I posted in the thread:
If a bar is not H-transient, it is H-recurrent.
recurrent=price revisted. Transient=not revisited.
Of course, you don’t know a transient bar has formed until it’s actually completed, just like fractals. Had I been told about this and never read the thread I would have tried an array of things: timing between T-bar to T-bar, range, frequency, time of day, etc. But this thread opened me up to trying something a bit different.
A few things should be known about the market before proceeding that were given by eurusdd. First that most bars are H-recurrent. It’s kind of funny to think that everyone is scared to buy at the top or short at the bottom when really, bars like that are extremely rare! It’s really being proven to me that trends have strength and don’t give up so easily.
Logically, since you can’t trade transient bars (in the future) you have to trade what I call LTB: Left-side Transient Bars.
First, some stats:
eurusdd said that if your H is correct, 97% of the time a bar should be recurrent. I played with the numbers and have this for my current H on my TF
Overlapping bar is an extra stat and refers to bars where a transient bar occurs right after a transient bar has just occurred. Very rare.
So, if true transient bars only occur about 3/100, then you should trade any bar that’s left side transient in the current direction since it’s unlikely to become an actual transient bar right?
Perhaps not. Filtering only for bars that are LTB, the rate increases to about 13%. So if a bar is already an LTB, it’s success rate to be pushed further is 87%. Still not bad but down a bit from 97%.
Normally I think most people would jump on that and try to make something of it. Heck, maybe there IS something to it. But eurusdd suggested that 87% is meh. Strive for more! Strive for.. the possibility of near 100%??
A ‘grail’ is hidden here. There were at least 10 posts of people questioning how it is possible to win in the scenario that you can sell in a top-transient bar and still win.
If a possible transient zone is forming on top (up scenario), mark it as such and mark the area above it as recurrent and sell? Not intuitive. Yet the charts and back testing so far say other wise.
The gray arrow marks the left side transient bar. according to eurusdd, mark up the area as transient, and the area below it (in down scenario) and look for buys. And here, we get it and get out.
How big to draw the entry area? How safe is it? How long do you wait? Remember the second part of this whole thing? k? I think the secret lies in how one deals with the k variable. The H part of it is not too difficult when you understand the concept, but the k is much more dynamic. And as with everything else I’ve learned thus far, my guess is that it should be dynamic, safe, and consistent. Looking for frequency distributions most likely.
Back to work.