A problem that has plagued many technicians is that elusive search for the 'right' indicator or chart pattern to emerge that will lead the trader to have profits. It turns out this search is a result of the trader's attempt to make up for the lag of the indicator or predictive method when analyzing price action (usually with a price chart, but it can be an excel spreadsheet, dom, level 2, etc. If there was a method that could determine trend direction in real time without averaging historical prices or attempting to predict future price patterns, then at least one of the problems facing technical analysis (TA) would be resolved APAMI for metatrader 4/5 is a real-life example of how coincident price action can be observed and measured in practice. Attached pdf is the abstract for the whitepaper that explains how concurrent trends can be measured without the lag, guessing, or repainting. There's still the 'problem' of what to do once the trend has been identified, but in my experience that is much more obvious once the trend direction is clear What do you think of the possibilities of coincident price trends?
Coincident price trends is two line theory. It was first explored about the same time as Dow Theory. Then as now, for you, you are focussing on the dependent valiable. I will not interupt the thread further, but it is possible to develop and design using the connection between the independnet variable and the dependent variable. Good luck
I gave examples of using this technique inside channels on this thread... http://www.elitetrader.com/vb/showthread.php?s=&threadid=220303 As Jack says it is an old technique - it works. There was a guy wrote a book about it when he rediscovered the wheel (happens a lot in TA). I think he called it the New Elliot Wave or something like that. Anyway his theory was that when wave 2 is not the same length as wave 1, then W3 will be more like W1 and W4 will be like W2. Enjoy your discovery
Jack, could you go into more detail as to the 2 lines you are referring to. And the dependent / independent variables you are referring to? The user must determine how to qualify the trend, but the core function of APAMI forces a pass/fail criteria to guarantee a higher-high/higher low (uptrend) and a lower high/lower low (downtrend). I do understand if you would prefer to do it privately, as certain users may follow you here for other reasons than to contribute to the thread's topic I will take a look at the thread and advise later The technique proposed in the whitepaper does not use hindsight. It is a linear, consistent, no-lag approach to determining a trend. Each trend detected, walking forward, is completely independent of each other. There is no additional patterns, unless the user wants to sprinkle on additional interpretation. I don't think the wheel was reinvented. The fundamental truth behind it is not new; no truth is ever new, only old/new to the person bumping into it ;D But where else has this (coincident indicator) been done in financial markets, any platform (or at least metatrader as shown in the first post or whitepaper)? Everything I've seen on 'price action' is hindsight-based, or smoothed/predictive.
Measured moves. Sometimes it works profoundly well. Like exceptional, even off longer time frames. Worth pursuing to catch reversals with tight stops. Sometimes it doesn't work, at all. And no, this method actually works (sometimes). Check it out. The green lines are the exact same length. As are the yellow lines. Catching 100 pip moves.
I'm not familiar with the algorithm used in your measurement system, so i cannot comment except on what I see. Not sure what you mean by "...Sometimes it works profoundly well....." The concept demonstrated in the APAMI whitepaper works every time, the same way, as long as the trading platform stays open with a real-time datafeed. I noticed that the moves in your screenshot all start at the bottom/top of the bar. APAMI enforces the measurements rules tick-by-tick, and does not artificially pick tops and bottoms based on the high/low of the bar. moves can and often do start and finish intrabar. Actually, timeframe or type of chart has no impact on how APAMI calculates length. However, the user would want to use a larger timeframe like 30-60 min bars for longer moves (> 100.0 pips) and a smaller timeframe 1-15 min for smaller moves to make it visually easier to see the measurements across ticks and/or see the historical moves. Using a daily bar to measure 10 pip moves would result in visually having a lot of moves stacked on top of each other per day. People would state things by hand.
"works every time"..... good luck with that.... if that were true you wouldn't be selling an indicator, or discussing it on a public message board, you'd be trading it.