Category Archives: Delicate Secret

Hit bars expanded

I took the idea of the hit bar and did some work on it taking in the delicate secret theory.

However before getting into the data, the thread has been an eye opener in two ways. First, it has allowed me to get a glimpse of what Rel mentioned a long long time ago about the types of traders: Wave, Level, and Volatility. This has shown me a little bit about the types of things level traders probably look at. Secondly, it’s given me a target for EoT (End of Trajectory) trading. One of my ‘mantras’ if it could be called that, is that if you want to trade profitably, you can do it in two ways: either know when the current trend is ending, or know if the current trend is continuing. Statistics seem to favor the latter, but this project has given me some insight to the first one. In the ideal of ideals, I want to wait until the market shows me a clue, and then have a pattern edge that favors the trajectory either continuing or ending.

There are two possibilities for a hit bar: either the bar closes through the level (above for longs, below for shorts), or it doesn’t (like a wick on a R/S level). I thought there would be some difference between the two types of bars and the effect that would come after it. Turns out to be right, and for a good reason: bars that wick the top already have momentum to go back to their original level. Remember, I’m looking to short at the green level and long on the red level. Very important filter. Bars closing through have momentum!

probability

I added the 30 hours just as a rough estimate of giving the bar until EoD to complete. (used the not through criteria) Comparing the 1 day, 30 hours, and 1 week, there’s clearly diminishing return on probability to time, but even so, nearly 90% chance to hit the level during the course of the next week is pretty darn good odds if you ask me. Of course, a good chunk is completed by the end of 24 hours, but it’s still nice to know a level might be valid if price hasn’t touched it yet.

 

Then, the usual house keeping:

Of instances where the level is returned to within 30 hours, half the time the level is hit in the very next bar.

time

Yet, potential is pretty good from the High of the hit bar (or whatever high comes after that) and the low of the bar that hits the level.

pot

I don’t have to check but I know results are slightly skewed to the high side given how markets have changed over time. This has some good clues on where entry should be. However, there aren’t any clear stop signs in the data yet…