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Bryant Tharp wrote:
>
> Walt Downs wrote:
> >
> > nwinski wrote:
> > >
> > > bobrabcd wrote:
> > > >
> > > > FYI, have been running Krausz's Fibonacci Trader on the 30 day trial. Here
> > > > is one interesting chart using the Zones and Fibo Rato Oscillator after the
> > > > first 30 minutes of trading today.
>
> >
> > Interesting to note here, that all 3 failures came when the stated
> > Fib levels went against market statistical probabilites. Krauz's
> > Fib Trader makes the mistake of not taking these calculations
> > into account. :)
> >
> > If , statistically, you are holding a "pair of deuces", it doesn't
> > much matter WHAT the "natural" law of the markets is saying. :)
> >
> > Would like to add though, that combining Fib analysis in conjunction
> > with high probability confirmed some of the prettiest trades to be had
> > on the chart.
> >
> > Walt Downs
> > CIS Trading
>
> Could you elaborate ,, Statistical probabilities ?? Are there any books
> , or source of imfomation on determining the probabilities ,,,
> Thanks
> Bryant Tharp
Bryant,
In reference to Bob's chart, I was referring to a series of patterns
and short-term bar formations that have statistical signifigance.
I don't have the chart in front of me, so my times might be a little
off, but quoting from the left of the chart to right:
Nice selling opportunity on minor retracement of breakout from
"head and Shoulders/Triangle formation. Probability of market
continuation downward = 65-70%. Fibonacci confirms reversal level.
Time is 13:50
Nice selling opportunity on expansion bar up. Peak of "Rising wedge".
5th Elliot wave count? Probability of market downward move = 80%
Fibonacci confirmation of reversal level. Time is 11:00
Sell breakout from triangle formation. Probability of downward market
action greater than 55%. Fibonacci support level failure.
Similar occurrence about 1 hour later.
times: 13:00 and 14:00
Statistical reversal based on relation to lower triangle apex.
Minor reversal to original lower triangle's lower trend line,
followed by a strong upward move. Probability of continuing
upward market direction = 70% Very nice confirmation from
Fibonacci support levels
Time: 14:30
In real trading, we would have had to hold some of these positions
overnight, but the probabilities worked out pretty well all in all.
I seem to be the only trader relating pattern theory and statistics to
each other to this degree, so literature might be hard to find. :)
Most of the statistical analysis is my own. The only book I know of
that addresses this type of trading, is Curtis Arnold's book,
"PPS (Pattern Probability System) Trading System." Curtis evidently
made a lot of money trading it, so it can't be all that bad. :)
For information on "expansion reversal bars", see Larry Connor's
and L. Raschke's book, "Street Smarts" Look for the chapter on
the "80/20" set-ups. Larry also presents some interesting statistics
on the probabilities of success of 80/20's.
This type of trading can't be used mechanically all the time, but it
CAN give you an idea of your probabilities of success or failure, and
can often significantly enhance performance when used as confirmation
for whatever methodology you follow.
It is very similar to being dealt a hand at the Poker table. If you
are holding a straight flush, you know that the odds
are in your favor.
Walt Downs
CIS Trading
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