I’m in the process of attempting to adapt a Forex scalping strategy with about a 90% daily success rate to more of a quasi-swing/day trade hybrid with similar outcomes. But at this point I’m not even close to reaching my goal. And yet, I believe I have all the pieces in place to get me to my destination rather quickly. The system rests on a handful of simple moving averages selected on the basis of statistical probability rather than established norms. As with scalping, I trust the secret to success will be in using these moving averages to buy and sell assets when the statistical odds of price behaving as forecast is at optimal levels. Toward that end, I created the above graphic to help me employ an almost automated-like approach to interpreting the indicators rightly. It will assist me in quantifying the duration and degree of movement as price transitions from one category to another, but only after establishing precise, well-defined parameters for assigning price to one category as opposed to another. Using this tool, it should not be too long before it is fairly obvious which moving averages and types of transitions are most significant, and in turn, when and when not to enter positions if the goal is to virtually eliminate losing trades.
BUY EURGBP By remaining within the region of 0.8973 during the first 4½ hours of this week’s open, EURGBP is the first currency pair fulfilling the recently defined parameters required to transition it to an opposite category. So there are a number of questions I will be looking to answer… Will it remain bullish or will it cross back over into bearish territory? If the latter, how far will it advance before doing so If the former, how far will it advance before finally returning to a bearish sentiment? How long will this take? How much of a profit will this return in U.S. dollars if the volume purchased is 0.01 lots? If the rate pulls back at the start, how much room will it require to avoid being stopped out of an otherwise winning position? I will be using four carefully selected simple moving averages to diagnose market conditions. When the slopes of the two longer-term moving averages are both pointing north, an asset will be categorized as bullish. If the slopes of both longer-term moving averages are pointing south, the asset will be deemed bearish. If the two MAs are not both pointing in the same direction, the asset will be categorized as neutral. If the slopes of the two shorter-term moving averages both match the trajectory of the two longer-term moving averages, the situation will constitute a "full advance." If only one of the shorter-term moving averages matches the slope of the longer-term moving averages, the situation will constitute a "partial advance." If the slopes of the two shorter-term moving averages are both pointed in the OPPOSITE direction of the trajectory of the two longer-term moving averages, the situation will constitute a "full retreat."
USDCHF is the second foreign currency pair fulfilling recently defined parameters required to transition it to an opposite category, but this pair is of particular interest to me in that the overall trend is so decidedly bearish I find it hard to imagine this current trip north can last for any significant amount of time.
Will it remain bullish or will it cross back over into bearish territory? It remained bullish. If the latter, how far will it advance before doing so? Not Applicable If the former, how far will it advance before finally returning to a bearish sentiment? So far it has advanced approximately 35 pips. How long will this take? From roughly 7:30 PM Sunday Pacific Time to now has been about 8 or 9 hours. How much of a profit will this return in U.S. dollars if the volume purchased is 0.01 lots? 35 pips returned $4.49 which was about 13¢ per pip. If the rate pulls back at the start, how much room will it require to avoid being stopped out of an otherwise winning position? Not Applicable (It never pulled back.)
On Monday morning, at about 4:45 AM Pacific Time, USDJPY also transitioned to an opposite category while priced somewhere between 111.09 and 111.17. So far it has dropped as low as 111.03 so at this point it would have required a minimum of 15 pips breathing room.
Will it remain bullish or will it cross back over into bearish territory? It remained bullish. If the latter, how far will it advance before doing so? Not Applicable If the former, how far will it advance before finally returning to a bearish sentiment? 59 pips How long will this take? About 10 hours How much of a profit will this return in U.S. dollars if the volume purchased is 0.01 lots? Approximately $7.61 If the rate pulls back at the start, how much room will it require to avoid being stopped out of an otherwise winning position? Not Applicable (It never pulled back.)
Will it remain bullish or will it cross back over into bearish territory? It did not remain bullish, but rather, fell into neutral territory. If the latter, how far will it advance before doing so? It did not advance at all, but fell almost immediately. How far will it advance in the long run before finally returning to a bearish sentiment? I took profit at 0.9739 when the pair began evidencing signs of weakness, about 36 pips later. How long will this take? It took roughly 22½ hours (unless the pair eventually heads even higher). How much of a profit will this return in U.S. dollars if the volume purchased is 0.01 lots? 36 pips returned $3.69 which was about 10¢ per pip. If the rate pulls back at the start, how much room will it require to avoid being stopped out of an otherwise winning position? It would have required a minimum of approximately 21 pips.
Will it remain bullish or will it cross back over into bearish territory? It did not remain bullish, but rather, fell into neutral territory. If the latter, how far will it advance before doing so? It hardly advanced at all, opting instead to fall almost immediately. How far will it advance in the long run before finally returning to a bearish sentiment? I took profit at 111.51 when the pair began evidencing signs of weakness, about 44 pips later. How long will this take? It took roughly 20½ hours (unless the pair eventually heads even higher). How much of a profit will this return in U.S. dollars if the volume purchased is 0.01 lots? 44 pips returned $4.01 which was about 9¢ per pip. If the rate pulls back at the start, how much room will it require to avoid being stopped out of an otherwise winning position? It would have required a minimum of approximately 29 pips.
This is my destination. Thankfully it took less than a week to get here. The potential daily ROI using this methodology is much better than 1.8%. Accordingly, I will be transitioning from my former Numerical Price Prediction Guerrilla Trading System to whatever this approach might be properly called. (Numerical Price Prediction Swing Trading Strategy?)
I have been told, advised, and warned that my Numerical Price Prediction system is built, grounded, and predicated on totally fallacious, unfounded assumptions, contentions and principles. So having just now (apparently) thoroughly completed my investigation into how I might best use the system both for scalping (guerrilla trading) and for longer-term intraday (pseudo swing) trading, Monday marks the beginning of my attempt to prove that, though it supposedly lacks any validity whatsoever, the method will nonetheless work trade-after-trade, day-after-day, week-after-week, over an extended period of time, which I will do by documenting its results on a daily basis from September 3, 2018 to September 3, 2019. Should, God willing, the system actually lead to an exponential growth in profits to the point that posting daily returns begins to feel like a distasteful exercise in “showing off” rather than simply verifying that the approach is not a hoax or a sham, I will at that point begin posting the graph by itself, without including dollar amounts, to continue recording the strategy’s performance while avoiding, or at least attempting to avoid, an overabundance of pretentiousness.