I do not dispute that it says something, but acting on that information does not necessarily give you a positive expectancy. I value simple and exponetial moving averages highly, but that doesn't mean they carry a positive edge blindly using them. That may be a worthwhile thing to do. What I suggest to you is that you take every signal where that is true. If you don't make $$ with it, then it has no edge. If you add other rules, some of them discretionary, then you are leaving the realm of empirical science. Oh, I never said that either. You definitely can. Indicators aren't them though. Right, volatility is easier to predict than direction. I do not believe it is impossible to predict tomorrows direction with greater than 50/50 probability. Crable does things that are extremely sophisticated and are not mentioned in those books. You cannot even come close to hoping to emulate them without lots of capital. He employs something on the order of several hundred strategies _at_once_. I do not know much about Trout's approach. I will look into that. Interestingly, I see lots of people that point to acrary's articles on ET. I never found anything of use in them, but that may say more about me than about acrary. yw. nitro
You need to understand that ALL price patterns are shadows of patterns in higher time frames. Generally 8 times higher. For example, a "Flag" on a 5 min is nothing more then an inside bar on the 40-45 min. Price behavior is nothing more then meanderings across statistically boundaries of higher time frames. John
Indicators are not a big issue for me at all. Out of 183 binary technical rules I use as inputs for pattern mining only 8 are based on indicators, 2 on ADX and 6 on simple moving averages. What I'm looking for are patterns consisting of 1-3 rules. I'm not interested in indicators as stand-alone signals. It might be possible to predict tomorrow's direction to some extent. But is this prediction useful if the price move is small? Gotta look for fat-tail events instead. I'm not trying to emulate his trading. I was only referring to the contents of the book. And I believe the key to consistency is trading multiple uncorrelated strategies at once. No need for several hundreds, a few is enough for a small trader. Since the start of this thread I already developed a technique to filter out chance patterns to great extent. I construct hypothesis in such a way that I am able to apply Bonferroni correction. Also, for the mining to be valid, it is very important to choose proper targets (what you're mining for), but that's not in the scope of this topic.