Using the protocol I quantified on Saturday seems to have transitioned my application of Numerical Price Prediction such that my average return has increase from around 25ȼ to over a dollar... If I can manage to get to the point where I am making only one losing trade per day or even no losing trades on some days, I will consider increasing my position size from 0.01 to 0.02. Then, if I remain consistent, I'll try to slowly increase it even more until I'm finally trading a full 1 Lot per position.
Tuesday / November 3, 2020 / 8:30 AM PST I pulled out of my positions before retiring for the night in case the markets did anything crazy on election day. Had I not done so, I would have cleaned up big time this morning in that the currency pairs behaved exactly as the forecast models suggested they would, and I had set monster reward-to-risk ratios in terms of my take-profit targets and stop losses. However, this does not concern me as I continue to analyzed my setups in terms of longer-term time frames and tighten the accuracy of my measures. In doing so, there will be limitless opportunities to execute profitable trades going forward. And regarding the tightening of measures, the eight-hour price range and baseline have just emerged as key calculations and have been incorporated accordingly.
I just sent an email to the individual in Alabama letting her know that there's no need for her to get back to me...that this morning I decided against teaching what I know to anyone else. It's now reached the point where I want to focus all my attention on simply executing it, thanks be to God, and then "scaling" it as quickly as possible, if that's feasible, perhaps by teaching trainees to use a platform programmed by a coder I hire at some point in the future. I don't think, generally speaking, most people have the kind of motivation and dedication that would make me feel like I was putting my time to good use mentoring them for free.
Copyright © 2020 by Fred Duckworth I trade using a system I came up with myself, which I call Numerical Price Prediction (NPP) and developed based on five biblical principles: The first was that of testing everything and holding fast only to those things which prove to be good and true. The second was a belief that, as with life itself, when most systems are operating at peak performance, it is often due to the presence of strong, healthy relationships. The third is that a good plan is established in the presence of a multitude of counselors. The fourth is the necessity of being able to rightly interpret the signs of the times. And the fifth is that, once again, as with life itself, the key to positive outcomes is making good choices. So, in terms of rightly interpreting the signs of the times, what I have done is attempted to use a methodology similar to that used by meteorologist to predict the weather—one based as much as possible on statistical analysis and mathematical probability. The idea is to evaluate precise, up-to-date, quantitative data and then calculate the odds of price reaching designated values within a given time period. I’m trying to pattern what I do after the equations, wave functions, and computer models used in weather forecasting. But, instead of monitoring wind velocity and direction, cloud formations, humidity, temperature, and barometric pressure; I’m evaluating the synergy (relationships) between such factors as typical price ranges, reoccurring chart patterns, horizontal support and resistance levels, trend lines and market structure (a multitude of counselors that have proven to be good and true), all in multiple time frames—with the result being a graphical depiction of present conditions that I can then use to help me make precise, well-timed trades (good choices based on rightly interpreting the signs of the times).
In watching a couple of Jordan Peterson videos this morning it struck me that the success of Numerical Price Prediction is in large part due to its being based on truth. There are at least two major assumptions in trading that are flat-out lies. I won't mention them here because I know there will be forum members who disagree with me and I'm not looking for an argument—but it is only because of my having rejected certain dogmatic doctrines adopted by the trading establishment that I am able to now begin the final leg of my journey toward financial independence, God willing.
Generally speaking, exchange rates do not simply travel in straight lines toward some predetermined destination. Rather, their movement is typically characterized by somewhat erratic, semi directionless, zigzagging, helter-skelter patterns. It is for this reason that Numerical Price Prediction tends to rely on envelopes much more than moving averages to represent trends—conceptualizing price action as waves of designated frequencies cutting swaths of area inside the market domain with an observable degree of directionality. What some regard as random patterns more often than not begin to evidence an overall directional bias over time. So again, rather than think of exchange rates as following narrow paths (moving averages) toward their ultimate targets, NPP visualizes rates as cutting broad swaths of terrain as they sweep across specified ranges of territory within the realm of all possible values, leaving in their wake trails of "scorched earth" in the form of price-range envelopes. It is by tracking price as it navigates its way through these well-defined statistical spheres of possibility that a trader can enter positions at key levels which almost guaranty the resulting trades will lead to positive outcomes.
As suggested by some of the statements typed above, the system incorporates the idea of cycle theory, which holds that cyclical forces, both long and short, drive price movements, and can be used to anticipate turning points. It's also compatible with Edgar Peters' fractal market hypothesis, which views financial markets as fractal in the sense that they follow a cyclical and replicable pattern...that they consist of fragmented shapes that can be broken down into parts which replicate the shape of the whole. I used such cycles to generate what some call baselines by conducting a thorough analysis to first uncover the cyclical waves formed in the wake of price action, then define their general frequency and magnitude, and finally plot a centered moving average coming as close as possible to approximating the zero amplitude of the corresponding waves/cycles. So, the notion that there are no "best" moving averages to use when trading is not one to which I subscribe—opting instead to use baselines which I calculated in the manner explained above. However, it is not enough, in my opinion, to stop at merely determining which are the best moving averages to use when trading charts of a given time frame. To trade with the clarity and precision I desire required my also assigning a temporal value to each baseline—to answer the question: What moving average best conveys in which direction and by how much price moves every five minutes? And how about every thirty minutes? Or what about every four hours? Determining the specific moving average that best represented price movement for each of the major time intervals along with their corresponding price range envelopes was the final step I needed to carry out to complete the development of the trading system to my full satisfaction.
Sunday / November 8, 2020 / 6:45 PM PST In the past, I explored scalping strategies, where an 85% to 100% daily success rate was almost guaranteed, but the returns per trade were extremely small... ...and I tried strategies where the payoffs were greater, but were seriously eaten into by one or two even bigger hits (or misses, depending on one's vernacular). However, with the completion of NPP, such losses should no longer occur. So, what makes sense to me now is to scalp at times like the present, when the market is relatively dead, just to make a little bit of lunch and dinner money—an then execute trades where the goal is to reap 10 to 30 pip's worth of profit at times when the market is more liquid and/or volatile, during and sometimes across the London and New York sessions. In other words, I have stopped looking at it as an either/or situation (duh!).
On the Topic of Scalping: In the following video, Trader Nick counsels traders to avoid scalping because they would be attempting to trade what essentially amounts to noise. But from my perspective, that would be like my claiming two people conversing in some other language were talking gibberish simply because I'm unable to understand what they're saying... And in fact, Nick contradicts himself a year earlier when he refers in the video below to a "short-term scalping strategy that really can work" as one of his "personal favorite ways to look at the market." Personally, I rather like the above strategy, except that it lacks the degree of precision to which I have become accustomed.