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Hi Dennis,
>First of all the right hand (starting) example you posted did not look
to be drawn from the correct lower right hand point. <
Your assuming there is a correct set of pivots to use, that is not the
case. Every triad of pivots is correct ( i.e., 2 pivot lows with the
intervening high and vice versa) in the sense that they can point to
significant pivot points; however, they don't all lead to significant
reversal points.
There are a lot of them (also remember some CIT points are pointed to
by more than 1 triangle) which is why I need to do a detailed analysis
to see how useful they can be. Duffy says significant pivot points and
trend lines that touch more than 2 pivots yield better results but I
cannot confirm that (yet).
>I took a one minute ES chart and plotted as many as I could for the
last couple of days. I found just one that hit a CIT bar. I would
not bet a dime on these odds.<
Not really a good choice. If you recall, I mentioned that some times
the reversal only lasts for as little as 1 bar. A 1 bar (or few)
reversal on a 1 minute chart is not likely to be significant; however,
trading off 10 minute bar CIT points on a 1 minute chart could work
out. Also remember that the precision with which the lines are drawn
is critical.
Wavemechanic is right on target when he says this is not a trading
method, it is just another trading tool to be used in combination with
others.
Wavemechanic also referred to Reversal Magic in his post and it does
appear to be partly based on the square and angle construction in
Duffy's book.
The RM vendor posted some projected Forex currency hourly CIT points
in this forum message thread:
http://www.forex-tsd.com/suggestions-trading-systems/4252-reversal-magic-trading-system-4.html#post194232
In the specific post that link points to, he demonstrates how you
could have traded traded NZD/USD on 2/29/08. The results were 7
trades, 4 wins, 3 losses, 131 pips profit (over $1000 per lot traded,
I don't know the exact NZD/USD conversion rate, he also is likely to
have chosen this day because of the good results).
This is an interesting post because ot gives some insight into how you
can interpret the CIT points for trading purposes.
Bill
--- In amibroker@xxxxxxxxxxxxxxx, Dennis Brown <see3d@xxx> wrote:
>
> Hi Bill,
>
> You are right I did not understand that you were only talking about
> time axis.
>
> I have no theory that says it is a study with an edge. I can only
> come up with why you might be fooled into thinking it is.
>
> First of all the right hand (starting) example you posted did not look
> to be drawn from the correct lower right hand point. These are daily
> bars (I usually work in minute bars), but if you mark every bar that
> could be considered a CIT bar, you will find that there are a lot of
> them. If you plot every possible 3 point setup, you will also find
> that there are a lot of them, of which you only picked 3. Now if you
> look at the probabilities of pointing to a CIT bar, you might find
> that any random selection has about a 25% chance of hitting one
> (eyeball guess). The eye/brain has the wonderful capacity to filter
> out all the choices that don't fit the desired pattern.
>
> I took a one minute ES chart and plotted as many as I could for the
> last couple of days. I found just one that hit a CIT bar. I would
> not bet a dime on these odds.
>
> The theory I previously outlined to you has some logic to it, and it
> does have a statistical bias based on human behavior.
>
> However, I encourage you to test it out for your self. There may be
> something I am missing.
> No need for an AFL, just hand draw 20, then pick what price you would
> propose buying (like the open) and selling (like the close 2 or 3 bars
> later) at and see how it works. Fill out every case, without seeing
> into the future where they cross and then see how many are right. If
> you can not get about 75% right, you will have a hard time making
> money with this setup.
>
> Best regards,
> Dennis
>
> On Jun 28, 2008, at 10:21 PM, bilbo0211 wrote:
>
> > Hi Dennis,
> >
> > I think you missed the point of the CIT indicators. This is strictly a
> > time based indicator it is not a S/R point. It points to a specific
> > bar on which the trend should change direction.
> >
> > The point where the 'trend' lines cross is usually not very close to
> > the price. It usually points to the exact bar where price changes
> > trend.
> >
> > That is why I said "it must be tapping into some underlying market
> > symmetry or cycle".
> >
> > Look at the 3 examples drawn on the current NDX daily chart pointing
> > exactly to 3 pivot high bars (black lines) on the file I just posted
> > in the files section (changeInTrend1.png).
> >
> > Bill
> >
> >
> > ------------------------------------
> >
> > Please note that this group is for discussion between users only.
> >
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> >
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> >
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> >
> >
> >
>
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