Yes, but there are other methods like https://www.sciencedirect.com/science/article/pii/S1876610211011672
I came up with the strategies I use at least three years before I ever even heard of cycle theory, fractal market analysis, or J. M. Hurst, so I’m not really all that acquainted with his model. All that I know about these topics is the fragmented bits of information I began compiling from the Internet when I encountered them after having already pretty much finished developing my own system. Basically, after determining that the only two things that mattered in trading from my personal perspective were trend and price range, I used MetaTrader 4 to code adaptive price range envelopes derived from a few key painstakingly selected baselines, which were also initially generated using code I wrote myself. However, now that I’m pretty familiar with how the exchange rates (or should I say the market makers?) behave, precision in the indicators is not as important to me, so I have replaced most of the mathematically generated graphics, which ate up an awful lot of memory, with the closest possible approximations I could select from among MT4’s standard/customary indicators—but not always—and especially not on the one-minute charts I use to pinpoint exact entries and exits. (Those are all standard simple moving average envelopes displayed in the image in Post #57.)
Thanks for the reference. Oddly Lei Hong wrote that paper and apparently disappeared off the face of the earth at least from an academic perspective (https://www.researchgate.net/scientific-contributions/2065255981_Lei_Hong) and he hasn't responded to my email, so I wonder what happened to him.
Thank you. I appreciate you taking the time to explain and comment. Fractal make sense in some way but how do you formulate a mathematical fractal model? Fishing for information is similar to fishing small signals out of a very noisy environment in telecommunication. In telecomm they do Fourier Transform because they know what to look for in frequency space but how do we know what to look for in frequency space for price action? In fact what is frequency in a price chart? I am not challenging your statement, just want to understand the issues better.
If prices were cyclical or "waves" then by the definition of those two words they would have a frequency of those cycles or waves. If they have a frequency, then you'd see it show up when you did a Fourier transform of the time series, again by definition of the Fourier transform. I saw effectively a random popping up and disappearing of frequency components when I experimented with it, such that there was no predictive power there, i.e. there was definitely a wave for a day at frequency x but it disappeared the next day not to return until some random time later again for only a short period of time. Not saying there isn't something predictive there, although I would question if anyone could really find it with the rigor inherent in "analyzing" a chart. I certainly didn't look at all asset classes or time frames and this was back in the late 90s. Although I've kept my eye on the literature since then and the major body of research shows not a lot that's actionable there. Shame because it's something I want to believe exists.
Thank you. Have you also look at pattern recognition technology/algorithm? I don't mean searching for head and shoulder, flag... but looking at things from action-reaction buy-sell supply-demand perspectives?
The fourier transform is an electrical engineering thing and I was a newly graduated electrical engineer when I looked at it, so it was right up my expertise ally and I mistakenly thought/hoped there weren't enough other EEs in finance so they missed what seemed obvious to me. The blissful ignorance of youth. Pattern recognition isn't something I have enough expertise in to actually write algorithms to test out, maybe when I sell my company and have extra time on my hands. Right now I'm more focused on little corners of the market where either some participants are forced to cause inefficiency or the total arb opportunity is so small that it's not worthwhile for a professional to write the code to take advantage of it. Since it's just a hobby for me that's enough for now.
Nope. I'm a simple guy and adaptive envelopes is what made sense to my rudimentary mind, and given that this system seems to be working better than just about anything else I've seen anyone else use, and doing better each day now as I get more accustomed to using it, I have absolutely zero motivation to pursue anything else.