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Relativity
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Postby Relativity » Fri Dec 23, 2011 11:49 am

Just some doing some self reflection on a quiet friday night.

I am going to talk about a very contraversial and difficult topic. Regarding indicators. A lot of the thoughts here are both my reflections + research + experience creating indicators.

There are 2 types of indicators :
Measuring / Direct Indicators
Derivative / Indirect Indicators

Most indicators will work using these 4 types of data :
Price - height
Time - width
Speed - slant
Volume - depth

Although one might see some kind of physics here, its not. It looks like it, but we have to remind ourselves that the market is just a reflection what other people are thinking.

Speed / slant may look like a indirect measure. Its not. Think about a tick data chart. What you see immediately? Price moves up and down all the time, but always in a certain slanted angle.

Also I am assuming its hard to get good volume data, since good volume data requires good tick data, so thats leave the topic of volume out for now.

So we all know most of us can't get good quality tick data. So our next best is candlestick charts.

http://youtu.be/4riPZUmn4Z4?t=7m31s

Frankly, candlesticks itself are indicators already, since they compress price into certain sets of time. This alone actually makes it a derivative. But its not that bad actually. M1/M5/M15/M30/H1 are still quite ok. We can still treat these timeframes like ticks. Just compressed ticks (LOL). An hour is an hour. Can't argue with that. The problem starts from H2 onwards. Timezones make a hell of a mess of everything. You won't know if the data real enough or not, since we want to have a good measure of what the entire world is thinking. The chart has to reflect it as much as possible.

But alas, even though we have all the H1 candle data we need, we still need someway to string them up together. Candlestick reading is a good attempt, but frankly, its not perfect enough. In fact, if you study the art of candlestick reading and its origins (read Felipe Tudela's book), you will find that the key to candlesticks has nothing to do with the candlestick itself, but understanding how price moves in waves 1st! This reminds us of the perfect tick chart.

So knowing how price moves in waves (at least on the technical side... we have not gone into psychology yet) is considered fundamental.

High and Low. Nothing else. Ignore the open or close for now. If you want to trade, buy low and sell high, right? Right. So what happened? Is trading really that hard that we must confuse ourselves?

Therefore indicators IMO, should do the following :
1- Correct technical charting problems; all the complaints I had stated above
2- Magnify important price movement ; how high and how low and how fast
3- Gather statistics based of time and price
4- Help the trader observe and find edges that concide with market reality faster and better

So all Measuring / Direct Indicators should qualify on these 4 terms, no more, no less.

After we 'correct' these issues and put them aside, the rest is really all in your head psychology. So many traders just cannot get past this. Thats why I said MT4 or most major charting software are created with the broker in mind, not the trader. If it is created for the trader in mind, there will be no business. Think about it!

I hate this personally, as it is a way to create losers in the markets. Most markets are zero sum. So if you can 'popularize' some kind of indicator, you will know there weaknesses immediately. This is why I don't use those common MAs and MACD and stuff. Not even pivot points.

These are Derivative / Indirect Indicators. These indicators distort reality and serve to distract the uninformed trader. False and incorrect information, in any war, creates weaknesses. In the trading war game, in order to win, you look for weaknesses. And press ahead for the win. Or better, create the weaknesses and expliot them and see them drop like flies.

Now, we can argue all day about successful traders using certain indicators like MA and earning a ton of money. My counter arguement would always be : what if the market changes? The most common type of change, at least technically speaking, would be changes in voliatlity. Would the indicator reflect and warn the trader of the change?

FYI if we talk about changes in voliatlity on the psychological side, it would mean stuff like bank interventions, market makers pushing price in certain directions deliberately, fear raising in public sentiment... etc

However, there are certain Derivative / Indirect Indicators that are considered acceptable. These Derivative / Indirect Indicators look for inhernited weaknesses of the market due to its nature and structure. Thats another topic altogether.

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Humble
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Postby Humble » Sat Dec 24, 2011 12:05 am

Nice post relativity.

Enjoy your Christmas and some time away from trading.
Is price closing higher or lower than something? Simple yet powerful question. ..MO

Relativity
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Postby Relativity » Sat Dec 24, 2011 3:16 pm

Merry Christmas!
Released RELA_MM.mq4 v1.1 - 24 Dec 2011
Money Management with Risk of Ruin Level
If MO says 10% and $1k, then lets do it >;D

Relativity
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Postby Relativity » Mon Dec 26, 2011 3:08 pm

Updates!

Added Market Profile
RELA_TrendTrader_SemiAuto_FULL v2.60 - 26 Dec 2011

Money Management with Risk of Ruin Level & Space Wars Box
RELA_MM.mq4 v1.5 - 26 Dec 2011

MarketProfile.mq4
Market Profile on its own. Market Profile is a registered copyright of the Chicago Board of Trade (CBOT). I will not support this indicator, although I will support the one integrated with RELA_TrendTrader_SemiAutomatic.mq4

Updates #2!

RELA_TrendTrader_SemiAuto_FULL v2.61 - 27 Dec 2011
Legend to show which displays are on/off and better display control

RELA_StatisticsBasicPriceAction.mq4 v4.51 - 27 Dec 2011
Renamed from StatisticsBellCurve.mq4 and did minor fixes/adjustments

Relativity
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Postby Relativity » Mon Jan 02, 2012 5:22 pm

RELA_GMMA_Short_mod.mq4 v2.1 - 03 Jan 2012
RELA_GMMA_Long_mod.mq4 v2.1 - 03 Jan 2012

RELA_TrendTrader_SemiAuto_FULL v2.70 - 03 Jan 2012
Allow AVAFX specific settings
Removed Market Profile. Found a much much more better way using modified GMMA. But this doesn't mean I am tossing MP. Just archiving it.
Done more minor fixes in the coding efficency + display.
Summary display.

RELA_StatisticsBasicPriceAction.mq4 v4.53 - 03 Jan 2011
Allow AVAFX specific settings
Done more minor fixes in the coding efficency + display.

RELA_MM.mq4 v3.0 - 03 Jan 2012
Allow AVAFX specific settings
Lots of updates, including TP projection and entry alarm

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Relativity
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Postby Relativity » Mon Mar 26, 2012 10:29 pm

Woah. Perfection?
Attachments
full set of stats.png
full set of stats.png (116.8 KiB) Viewed 1995 times

Jeffreyvnlk
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Postby Jeffreyvnlk » Sat Apr 21, 2012 6:16 pm

Hello Relativity nice to meet you

Relativity
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Postby Relativity » Sat Apr 21, 2012 6:23 pm

Lol you found it.

Anyway, the indicators are outdated IMO but still very usable. I've done lots of bug fixing and enhancement, but just lazy to post.

ahmedalhoseny
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Postby ahmedalhoseny » Sun Apr 22, 2012 3:22 pm

:)

xptitan
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Postby xptitan » Tue May 22, 2012 3:41 pm

where to get the latest indicator, rela?

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