Hour Compositions Pt 4: Winners by time elapsed

Just waiting and collecting more data now.

Here I took a look at the trades that had 1 or more reversal points (aka, BCDE waves). Time elapsed is measuring the time from the ‘hour’ start until the point where the wave can officially be deemed a “at least a B wave”. This type of study isn’t reallly for trading purposes (although it certainly can be) but it’s one of those tidbits that jive well with the story of trending and reversals. We can see that the best win rates are among those with about half an hour elapsed or more.

time elasped

Win rates in this case correspond to the probability that price follows the original trend.

ABC

If the green line is the final outcome, than the signal is a “win”. If instead it is the red line that occurs, it is a “loss”.  Why does more time elapsing (to a certain extent mind you, because 45+ win rates decrease slightly) lead to a higher probability for price to close in the original direction?

I think this is in part due to the nature of taking 1 hour snap shots. That is, this data does not take into account any past bars or data. As a result, the “trend” that we witness originally may be a new trend, in the middle of a trend from the last hour, or the end of a trend. However, if we make the assumption that trends… well.. trend, then more time elapsed in a trend equates to more distance. I think what this data may be suggesting is that while price moves up and down, if a trend survives 30 minutes (plus whatever from the previous hour), the next move (in the opposite direction) will not be strong enough to over take it. In other words, this could be again helping the trend theory.

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