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nwinski wrote:
>
> Walt Downs wrote:
> >
> > Fellow RT'ers,
> >
> ......
> > judging from Rick's last response, I can see that our current thread
> > The Trex SETUP:
> >
> > I use a proprietary formula to determine the building of the time and
> >
> > price levels for a market. This formula consists of a "living" ratio.
> >
> > I allow points in the market which have statistically shown me their
> >
> > signifigance, to build the ratio for me.
> >
> > Sound like Gann or Fib theory? It isn't, and here is why it isn't, and
> >
> > why I feel this approach is better than Fib or Gann sequences:
> >
> > Fibonacci and Gann:
> >
> > Both these methodologies use a slightly different sequence of
> >
> > "NON-LIVING" ratios. These ratios do not change with the underlying
> >
> > market. The formula for their application is similar:
> >
> > 1. Find a signifigant hi to hi, lo to lo, hi to lo, lo to hi....etc
> >
> > and apply the ratio to the distance between the points in order to
> >
> > determine where the market will turn.
> >
> > People also apply this ratio methodololgy to days as well....
>
> ..... this viewpoint based on YEARS of statistical studies I
> >
> > have run on major Fib and Gann sequences, and their derivitives, both
> >
> > on price and on time. Throughout the testing periods NO major Gann or
> >
> > Fib set proved itself statistically signifigant enough to trade, and
> >
> > NO subset proved itself statistically signifigant enough to trade.
>
> NW: Walt, I would like to know what Gann methods are you nvestigating?
> This doesn't sound like the Gann I know. Were the methods you tested
> Astrological? Afterall, the main thrust of Gann's work was Astrological,
> at least that is what Gann's partner of 10 years told me. The other
> stuff was just the fine tuning dial on the Gann radar screen. Fellow
> RTer Clyde Lee previously presented an excellent study and proof that
> the Lunar Cycle has a statistically significantly correlation with many
> markets. Is this the sort of study you are discounting?
> Gann would have replied to your criticsm of using ratios that you can
> not use them at random. These are to only be applied at the key times,
> when time and price come together. This is first determined by the
> planetary cycles. Walt, is this the Gann approach you tested?
> As for your concept of "living ratios" my guess is that it's a fancy
> way of saying you are tuning the analysis to the market, i.e. pattern
> recognition. Analyzing and forecasting the market is much like playing
> "Name That Tune". You are given a few notes and must guess the rest in
> advance. It is silly to assume that every tune is going to be written in
> the same key, just as the market periodically changes keys and "tunes".
> This usually happens following an important turning point in the market,
> i.e. when the market turns it is like striking a tuning fork which
> manifests the nature of this new wave. All harmonic movement of the new
> wave should be tuned to this key. I qualified this because this is
> always some noise factor. Being able to distinguish the noise from the
> music of
> the market is also very helpful in trading.
> Recently, it was my thinking that the US stock market has been in a
> Elliott wave IV of minor level. I knew the level to watch (SPX 893) for
> two weeks in advance and also forecastted Aug. 18 as the low day for
> Aug. I knew that if SPX 893 area held, that the market was "singing" to
> a harmonic series that is usually only found in Wave IV and if that
> level held for the next several weeks and a new high is made that we can
> forecast the next low with a very high confidence level. This harmonic
> series is not on the usual Fibonacci harmonic series, but is indirectly
> related, as it does have the Fibonacci ratio as a component of its
> result.
> Anyway, not to ramble, this stuff words pretty good if you know how
> to use it correctly. Unfortunately, very few do. In short, Walt you are
> correct in that you can not use same ratio(s) indiscrimately. This would
> be like turning on the radio and always expecting to hear Beethoven's
> 5th Symphony just because that happened a few times before. You are
> wrong to imply that the only way to use those fixed ratios is randomly
> and indiscrimitaley. It is not an all or nothing situation. Perhaps
> there are applications of these harmonics of which you are not familiar?
> Although the market does exhibit different patterns at different times,
> most of the time they are harmnically related. Then, the question comes
> down to what prices and what times are the important ones that are worth
> trading?
> Without the answer to this final question in advance, one is reduced to
> the myopic focus of very short term trading, analegous to a blind man,
> trying to figure out what is before him, measuring an inch at a time the
> dimensions and proportions of an elephant. Having a schedule that the
> circus is in town and that the Elephant parade is due to go by at that
> particular time surely would be a great aid to that blind man.
>
> Harmonically,
>
> Norman
>
> >
> > In other words, you could never know with any real sense of confidence
> > WHICH set or subset was going to prove to be the right one.
> >
> > Therefore: whether Fib or Gann truly calls market turning points is
> > irrelevant. A single trader, unless he has an HP3000 mini-computer to
> > do all of the calculations on Decade,Year,Month,Week,Day,minute and
> > tic, and can get a few of these points to line up, hasn't a prayer of
> > anything better than a random chance of picking the correct
> > turning point. Even with the computer your chances of picking a
> > SIGNIFIGANT trading reversal are about 1 in 25. Unless, of course
> > you pick so many points, that you can't miss. :)
> >
> > This is my analysis and my viewpoint, but it wouldn't be fair unless
> > I quoted some exceptions, and explained why indeed they ARE exceptions.
> >
> > Joe Duffy and W.D. Gann:
> >
> > If my arguments and Premis are correct, how is it that W.D. Gann was
> > so successful at trading stocks, and Joe Duffy has been successful at
> > trading commodities using these ratio sequences.
> >
> > It is my contention that these two traders happened to simply be
> > EXCEPTIONAL traders, with a natural gift for trading. The
> > methodologies they used were of no signifigance. Their analysis and
> > understanding of the markets they traded, their patience,
> > discipline and innate skills, are what made them successful.
> >
> > These traders could have traded the numbers off of their laundry
> > lists, and been successful doing it.
> >
> > The proof of my argument:
> >
> > OK, we have mentioned W.D. Gann and Joe
> > Duffy. Name ONE other trader who has successsfully traded, real time
> > real money, using these methodologies. If you are out there, please
> > speak up, because I haven't found you yet. :) I am not talking about
> > one or two trades, I am talking long term profitable (5 years or more)
> > I am not talking hypothetical mumbo jumbo, SHOW ME THE MONEY. Unless
> > I am really missing the boat, and despite the fact that it is
> > tremendous fun, isn't that why we are trading?
> >
> > I am not stating some sort of idiom here, I am simply telling people:
> > I have analysed these methods, and this is what I found. Because Of
> > what I found, I do not utilize them except in the context of how
> > other traders trade them.
> >
> > THE TREX DIFFERENCE
> >
> > Since, for my own trading I did not feel comfortable with what Fibonacci
> > and Gann theory had to offer, I started looking for another way to find
> > turning points that could PROVE to me that they gave me a signifigant
> > statistical edge. Hence the birth of TREX market levels.
> >
> > Rick asked me to define what a "turning point" day is to me, and this
> > seems reasonable. So here is my idea of what a turning point day is:
> >
> > TURNING POINT DAYS
> >
> > A turning point day is a SIGNIFIGANT market reversal.
> > I usually define "signifigant" in cash terms of $500.00 or
> > more. I am willing to trade in the higher volatility environment
> > because I know the reward will be worth it.
> >
> > My definition of a successful turning point is that it must come
> > extremely close to the TREX reversal point. If the market stalls
> > 20 points from the TREX line, and then starts to move away, obviously
> > I am not going to sit there like a zombie. I am going to take the
> > trade, and place my protective stop below the TREX line.
> >
> > A less aggressive trader might wait only for the price to hit or
> > trade through the TREX before initiating a trade on a reversal.
> >
> > HOW THE TREX POINTS ARE ESTABLISHED:
> >
> > ONCE a TREX setup has been established, a mathematical formula then
> > starts tracking the TREX level and the day. From that point on, each
> > day will produce a TREX level for the day. If you were to view this
> > on a chart it would look like a trendline.
> >
> > A statistical time and price has now been established which will
> > enable a trader to judge if the market is high or low.
> >
> > Some TREX lines might never be hit, but when they are hit, then
> > the time and price parameters for that day have been met, the
> > market has gone too far, and a reversal is likely.
> >
> > Now the trader doesn't have to worry if the "reversal" he is
> > seeing is a high or a low.
> >
> > So, the main difference between Rick's philosophy and mine is
> > that I don't really care WHAT day the reversal happens on.
> > I only want to know that at a certain date and time the market
> > WILL very probably reverse if TREX parameters are met.
> >
> > IN COMPARISON:
> >
> > A "Time Day" methodology will say :
> >
> > "On Jan 25th the market will reverse"
> > Sup/Res at: XXX, XXX, XXX, XXX, XXX, XXX
> >
> > TREX would say:
> >
> > On January 25th, if the market hits ONE PRICE it will
> > reverse. You have a 75% chance of success. Your protective stop is
> > below the TREX level. Your maximum risk is the difference between
> > your purchase price and the TREX line. Your Maximum gain is $500
> > to infinity.
> >
> > I like this better :)
> >
> > WHERE TREX IS AT RIGHT NOW:
> >
> > We have done the warm and fuzzy stuff, but now let's review the
> > current state of TREX.
> >
> > Most of the testing has been done via brute force calculation,
> > because the TREX program for TradeStation is still being
> > written.
> >
> > I will be happier when I can present statistical runs to prove
> > the system's veracity over time.
> >
> > I can show many examples of charts with the TREX methodology
> > applied, but I prefer not to do that, because It doesn't
> > prove anything. I did show the turning points on the
> > British Pound because I thought people would find it
> > interesting. Also, when Rick laid claim to no other system
> > picking turning points better than time days, I posted the
> > TREX gif to show that YES there were methodologies that
> > could do much better (In my opinion of course.)
> >
> > Eddie, was kind enough to give me a site on the RIT forum.
> > What I would like to do as soon as my RIT page is fully
> > functional, is start posting some of the TREX levels for
> > people to watch. That way we can see them in action.
> >
> > Their success or failure will be an interesting test.
> >
> > Walt Downs
> > CIS Trading
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