My new chaos findings implemented in forex trading

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Paul&Paul
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Where did EURUSD go?

Postby Paul&Paul » Tue Jan 03, 2012 7:33 pm

Good evening.
Though history matters to few, it is the only tangible evidence what goes right or what goes wrong from the point of view of a fortune teller. The market does its own thing.
This crisis could have gone not that far, yet somehow it begins to sting even the most shock resistant bodies. We are forced to believe that only huge amounts of money can come to the rescue of faltering entities, economies and zones. Meanwhile there is no shortage of margin visible in trading in the world of big names and who not. So what sort of money is in shortage?

On Nov.26 I wrote that on EURUSD we were heading for lower lows, not a humorous element of the whole affair.

4.669 is at 1.3161.
9.1299 is at 1.2871.
14.208 is at 1.2532.


It was November 26 of 2011.
Bonds, confidence, turbulences, triggers, panic, crash.

EURUSD plunged to 9,1299 of a trigger down which is 451 pips from 1,3322.
How many pips did you get from this slide?

Today on January 3 of 2012 EURUSD returned to a UPO @ 1.3070 giving some respite to ECB witchmakers.
2.4220 of the first from the low trigger up is at 1.3103.
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Paul&Paul
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Just a little b it of EURUSD

Postby Paul&Paul » Wed Jan 04, 2012 6:51 pm

The return to a UPO @ 1.3070 must have cost a lot of energy. EURUSD did go up in an orderly way though, so some plan has been achieved. What happened next goes almost without saying.
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sts
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Postby sts » Thu Jan 05, 2012 1:26 pm

Dear Paul&Paul,

First of all, thank you for this mind opening topic,
I've been reading it and trying to understand the basics for some time. Great inspiration!!!

Please excuse me if you have already mentioned the answers to these two details which I couldn't fill the gap myself:

i) The time itself is in fractal and chaotic nature.
So THEORETICALLY constantly using a particular time period in the charts (such as 5minute, 120minute...etc...)
is not the proper way since this is some sort of a linear approach towards the chaotic environment?
"But we live in a pragmatic world. One can face the cons. of using a constant period of time...and do live with it" is this what you think?
If not, what should be the proper "time interval choosing method" in theory?
Shortly, I couldn't sort out how you choose the time interval in the charts?
For example why don't you use tick-data, would that be wrong?

ii) Some of the UPOs hit hard, some behave nice...
for example 1.3070 in EURUSD hit the market real hard and twice...
Is there a ranking between UPOs...
Or is there a practical guide (or personal observation) on this...
When do you think the market is hit hard?

I will be reading your inspirational analysis...
wish you a happy new year...

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To sts

Postby Paul&Paul » Fri Jan 06, 2012 10:20 pm

Thank you for your post and the queries which are suggestive to me.
I might be able to answer them right away in a manner totally disrespectful for these problems. Neither you or the problems mentioned deserve it. So I will simply try to answer to some aspects of your queries only and I will write what is soundly based on the theory and evidences found by myself in the markets.

Time is such a great mystery, the greatest mystery of all. I made my first fractal model with time as a variable and several years later I discovered that in fact time is not there in common sense. It still puzzles me why is that because the principles of the model are intact, they have not changed at all.

About charts I use - this needs to be properly understood, that what you use and what I use are candle charts and their closes. The closes are so important because they are like Poincare's cross-section in topology.
If you do not want to see everything happening, you need to see the condition of the market only from time to time and on the basis of this little information you try to formulate the future behavior of the system.

Now agreeing that we observe some cycles in a given scale of time - (or loops in the language of topology) I must point to the fundamental difference
between a classical cycle which is for example a 5-wave pattern, whereas
in topology we are interested in different cycles - namely in returns to UPOs.
And also in fractal expansions.

A classical cycle is an open thread, like a piece of a string with two ends.

A topological cycle is a closed shape. The ends of the thread are connected. And depending on the length of the cycle this thread can be short or very very long.

Theory says that any chaotic system is best described with low-period Unstable Periodic Orbits. For practical reasons this is not enough for us who want to forecast and/or trade, because the most devastating cases occur when we ignore long-period UPOs. They are marginal in their number vis-a-vis low-period orbits but the consequences of their existence can be
really killing.

Perhaps it would be useful to know some real names market forces behind but maybe even such an information would give illusory help.

I basically use M30 charts. The reason is very simple. This time frame is basic for professionals who use expensive stations. Naturally this should be closest to what most professionals see while studying and making decisions.

I use other time frames for a broader look as well. Strange time frames like M155 serve both the theory, and practice. Alas, we cannot set the time frame in a similar manner like we used to tune to a radio station by turning a knob but I would like to very much. I came to a lot of dissatisfying pictures when I chose some arbitrary strange scales. But chaos is in an arbitrary time scale be shure.

...I will continue tomorrow.

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To sts continued

Postby Paul&Paul » Sun Jan 08, 2012 8:38 pm

It is important to note that Feigenbaum value F and other constants derived from it are a limes when n goes to infinity. So you should expect the market to be in a different condition pricewise when n is far from infinity, and something different when n approaches infinity. We do not know that n value.
We can surmise that n has approached infinity when there is some distinct reaction to the calculated border. It seems that it is good for nothing, yet kindly notice that by viewing triggers in the opposite directions you will know
which direction is easier, or which direction attracts more players. Thus it is a piece of information. Sometimes very valuable information.

So in general the evolution of triggers requires enough time for n to become big enough. Sporadically small triggers expand very fast in time but even that is not a rule. Very big triggers require a lot of time to evolve fractally. Intuitively it seems quite obvious and natural.

A glimpse is enough to see in the charts attached that some marked trigger is visible on the far left of the page and some border of chaos is marked on the far right of the page. From left to right there is time for that n to become big enough and be nearing infinity.

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To sts continued

Postby Paul&Paul » Sun Jan 08, 2012 8:59 pm

The hierarchy of UPOs.
Theoretical disserations found in books on chaos prove to be completely impractical. Without going into too much detail, don't you think that you require to know an absolutely always winning strategy secretly embedded in chaos?
This impracticality means that it takes too long to find out. Full stop. Even if you knew the hierarchy of UPOs for just one given session, you could become a multimillionaire. It is just attractive.

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To sts continued

Postby Paul&Paul » Sun Jan 08, 2012 9:09 pm

A simple candlework cannot tell you anything about the involvement of players. Nothing about their interest in a particular direction.
The evolution of triggers tells a lot about it. But some disciplined work is needed
to make out something. It takes quite a lot of time but then you know more than less and you can think about the way to express what you see and/or propose how to implement it.

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To sts continued

Postby Paul&Paul » Sun Jan 08, 2012 9:51 pm

I do not use tick data.
I used to use tick volume which was rather costly data from Reuters. I can do without tick volume. It is some kind of a mathematical mystery that it works.
You would agree that tick volume is rather crude as a data. But you should also agree that this crude variable must be generating something more sophisticated and less crude and eventually you do not need such costly data. Mathematicians would call it information preserving transformation.

I suppose that people would have made some very sensitive and rather simple indicators based on tick-volume long ago had they had free access to such data, I think. But I doubt it would be better than MACD is for example. Some indicators created in a very intuitive way hide marvelous mathematical secrets which nobody cares to prove. And few suspect a sparkle of geniality. Standard tools are a mixture of geniality and simple s**t. A blend of poisons and medicines. A bag of plumbing tools and surgical tools. Brokers should be killed for selling such stuff or for giving access to it free without a proper warning.

sts
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Postby sts » Mon Jan 09, 2012 3:28 pm

Dear Paul&Paul thank you for these details...

"...they are like Poincare's cross-section in topology." this expression made the point.

I am not an expert on mathematics or any field near to the subject...
But I know from what I have read about "Poincare's cross-section" that
the time interval should be choosed as a " natural period associated with the system."
This should be the reason why you mentioned the "big players" and "their observation periods" ... now I get it.
So -with a very straight forward logic- this "period" can also be dependent on the observers nature aswell.
I mean one can simply choose to work on daily charts since "end of the day" is the greatest intersection of all intraday time intervals.
And trade the long term waves... as Elliot analysts say...

Well, as I read your comments, new questions like this arise for me to think upon.
Wishing to make a contribution I'd better be reading your valuable comments before I go any further : -)


best wishes,
sts

Paul&Paul
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To sts continued

Postby Paul&Paul » Mon Jan 09, 2012 5:49 pm

Hi sts,

I would not be so shure about those dailies. I have my own objections to them being used unreservedly. And after a longer thought it occurred to me that the biggest bigger players' headache is to hide what they are doing.

Chaos prompts one intrinsic way and that is to use a customized time scale and stick to it, at least until your targets are hit. The nature of chaos is such that you and only you will be seeing a unique picture of the market. In some way it will be like looking at a 3-D tree from a different angle.

All laws pertaining to the dynamics of the system remain intact so there is no danger that you would be sticking to something very stupid. Imagine it is a frequency band and you wish to transmit through the channel you allotted yourself. Chaos creates a lot of possibilities for big players.

Dailies seem way too trivial.

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