Hi.

Indeed, the starting point of all this was thinking in price like an object with a certain mass subject to a series of dynamics. So I started to apply velocity, acceleration, force and other concepts taken precisely from physics and calculus.

But, the $64 dolar question, the information that a classificator like this one provides could be used as a predictor within a bigger model, just another feature else.

In my case, I got a few lessons:

- Technical indicators and price/volume history matters.

- Even 2-bar SMA is too smoothed to provide an accurate estimation of actual price change. This is important, because getting quite good accuracy with the 2-daySMA is not an easy task, and I found that I could not get a direct profit from it after struggling for a few weeks.

- Comparing the bars and other data to the model predictions provides a mathematical confirmation of what each type of bar and price dynamics should represent, not just the theories and opinions of authors that do not provide one sole proof about what they say or sell.

But, what do we want to maximize? Profits?

Then if profit is the function to maximize and loss the function to minimize, then price, volume or banana is not the target item we should be studying ultimately.

If you want to maximize profit, you need to provide the market information as input data, also any prediction or classification if you want to. But the target should be profit.

And to map market to profit you need a set of intermediate layers. I think that here is where strategy comes. For this, if I would have time to go ahead in the future, I would be for strategy definition and parameter optimization more than purely thinking about a stochastic approach. This reminds me to unsupervised reinforcement learning, but again, maybe more simple approaches to identify the different price areas to detect breakouts, trend reversals, gaps, supports and resistance levels, etc... could be more than sufficient.

So, imo if you already have a good system, just write it and optimize it. But, for anyone not being a programmer knowledgeable at statistics I would discourage of trying it.

The reason why I opened this post was to find out if any forum member was using that kind of information to trade. And to find out if traders were actually using mathematical approaches, intuition or both of them.