Advanced Structured Forex Trading

hoangmphung said:

Hi 7ST,

......TCDs helped me a lot. That was really a :idea: moment for me

Click to expand...

Hoangmphung,

Here is a slightly better illustration of what I'm referring to.

This is a partial snap-shot from inside the engine of the StealthIndicators Meta Module. This is 100% pure metadata as it is derived output data taken from calculations run inside the engine and then stored over a 21 bar period. This is a fraction of the Daily Engine and it shows the TCD performance for the last 21 daily bars.

There is a lot of "stuff" going on in the pic, but focus in on just two columns:

T-Long-F% and T-Short-F%.

Check out the period numbering on the left of the screen-shot. It starts with "Today" and runs down through 21. Today (Friday) is May 5th, 2006. Thus, position number 5 are the results from the Day Trade on May 1st, 2006, this Monday's session.

Understanding this layout of this portion of the Metadata, you can see "why" I say that a really easy way to dip your toes into trading Daily TCDs, is to first find the dominant TCD using your other TCD calculations and then waiting patiently for the Subordinate TCD to Fill to between 90% to 100%+ and then entering a Day Trade 24hr position in the direction of the Dominant TCD.

Look at position number 5. That was Monday. Note the T-Short-F% for that day at 122.39%. An entry at 100% lead to a 22.39% Tac Short draw-down followed the next day by a very nice 115 pip pull back into the Dominant TCD trajectory.

This happens over and over again throughout this week from position number 5 through Today. The only thing you will have to figure out is what your draw-down should be. If you look at what the T-Short-F%'s are, you can clearly see that the average draw down using this TCD strategy was 14.597% of the Max T-Short-F%.

So, this is a very easy way to move into this world of trading using TCDs as your guide and understanding that Price indeed does have structure. In fact, you can see the Daily structure of price by just looking at these numbers. There is much more metadata inside the engine of this system, but this is one small way that I take advantage of the concept of metadata and this metadata cannot be obtained from any traditional charting package.

The live data is on the "Today" row. All other rows are historical for the 21 bar period (in this case, 21 days). The key will be in making sure that you are calculating TCD Absolute Values correctly and then averaging them over the same number of bars correctly so that your data in in-sync when you start storing this kind of metadata.

Without this metadata, it is hard to see the pattern forming and without the T-TCD-F% metadata, one does not know when to enter the trade upon Subordinate Fills.

So, bottom line:

Enter on Subordinate TCD strength (90%-100%+ Fill) and Exit on Moderate to Strong Dominant TCD Fill - or Exit on a good aggregate target measured from all Subordinate to Dominate return Fills taken from the entire 21 bar period.

You have a lot of flexibility doing this on your entry depending on how many pips you want and how many the market consistently gives under this particular trade set-up/scenario.

This should make things a little bit clearer. A picture is always worth a thousand words,

Welcome to the "stealth" world of TCD!

7thST,

Thanks very much for your detailed explanation. I used to do it but without consideration to the dominant and subordinate TCDs so the result was poor. I think I will be more successful now. Thanks for teaching me how to fish. It is much more meaningful than giving me fish

Hi 7th,

Thanks for the details on applying the Trailing TCD's metadata. If possible, please shed some light on how you're applying the Retention and Projected TCD's, and their relationship with the Trailing TCD's.

Thank you very much. Your insights are always appreciated.

Hi 7th,

Thanks from me too for some great tips on using TCDs.

It was also fascinating to read about your new advanced system. It's interesting that you started 6 years ago with magnitude which led to direction, then direction led to timing and all three lead to probability. Whereas now, it sounds as though you've gone full circle and ended up with a top accuracy system based solely on the original focus of your original attentions (even after all you've said in the past about all 4 concepts being a "must have" for any trading system :-0 ).

I hope you have a great week trading the advanced system live (and many more to come), that true "fire and forget" system sounds as though it's very close now.

Cheers

Mike

Hi 7th,

I've studied your instructions and the snapshot. However, I don't understand how you calculate the %Fill. I tried different moving averages but could not match yours. I found that your %Fill values change too quickly for moving averages. Can you give me some hints how you derive that? Thanks.

Hi 7th,

I think I've figured out a basic method to calculate magnitude. Coupled with your tips, it works very well as an anti-trend setup. I was able to scoop about 200 pips yesterday with it in USDJPY and GBPUSD I've yet to code it into Excel so I can't tell about the historical accuracy but I feel strongly that it's in the 80% range at least. Of course, it does not give as many signals as yours but if I monitor all major pairs, it will work out ok. Thank you again for your TCD concept. Now I'm on my way to financial freedom

5/1/06 to 6/1/06 Outlook Notes and Observations


The Signal:

Current Outlook draw-down 290 pips and nowhere near my comfort level. Just for the fun of it, I will allow this 100 lot Outlook trade to run its full course, so two (3) more weeks left before I close the position – or sooner on BE or better.

For those familiar with TCDs, here are the current numbers as of EOD Friday, May 12, 2006:

Monthly SAC TCD Long = 733 pips
Monthly SAC TCD Short = 211 pips
Omega = 488 pips

Weekly SAC TCD Long = 379 pips
Weekly SAC TCD Short = 119 pips
Omega = 222 pips

Daily SAC TCD Long = 202 pips
Daily SAC TCD Short = 63
Omega = 112 pips

Aggregate SAC TCD Long = 438 pips
Aggregate SAC TCD Short = 131
Aggregate Omega = 274 pips


It should be abundantly clear where the Dominant TCD and Subordinate TCD reside.

My goodness – you’ve got every single TCD Long dimension bigger than its own Omega value. WOW! Only a couple times this week did the Day attempt to poke a hole to the Short side but only to be sucked back into the Monthly upside vacuum (nature abhors a vacuum! ) This is why waiting patiently for the Subordinate TCD to fill and then riding it back into the Dominant TCD, is one of the easiest ways to get your feet wet using TCDs as tools for trading.

All of those types of Day trades this week worked to perfection. They are the easiest to make using TCD’s and you don’t need an elaborate trading system wrapped around every decision you make. All you needed to make those trades was basic knowledge on what a TCD is and how to set-up its metadata to take advantage of it when the opportunity arises. With this very basic approach, you don’t get as many trades as a more advanced system, but the trades you get are almost a 99% guarantee of success to at least some kind of basic profit level that most traders can live with. This week, these simple trades turned out to be huge in every case – so I hope you caught some of those Stealth moves.

As far as the Outlook Trade Profile is concerned, the past month fully outlines in big bold letters why it is so important to use TCD data well beyond the time-frame in which you trade. This extreme bull market slipped right under my radar even though I had the ability to detect it back in December of 2005, if I had simply included additional TCD metadata that is not currently in the system. The key to seeing this 900+ pip move was locked inside the Annual TCD.

Had I built Semi-Annual and Annual TCD metadata (which I’ve thought about but never used in the past), there would have been enough extended (down range) Long TCD signal to use as input in the Swing and Outlook engines. That would have been enough to reverse the “predictive” Short input in both medium-range signals over the past two (6-8) weeks.

As a quick refresher. Each signal in this system has three (3) input types:

Long
Short
Mixed

Each input type has an associated or linked Probability Measure in numeric (%) form, such as 78.12%. Each Profile will always have both Long and Short signal inputs vying for the right to be displayed on the Dashboard. This is necessary for a decision support “predictive model” trading system. So, when you see one big red arrow signaled in the Dashboard indicating that the trade profile is “Short” for that trade, keep in mind that at the Engine level, there are also Long inputs as well. In fact, there could be 59 Long inputs and 60 Short inputs and depending on how the system is weighing both sides of the equation at the time, that could result in a Long signal, or it could resolve to a Short signal. The system has the job of reconciling which trajectory should be the “tradable” trajectory for that session - whether the session is a Daily, Weekly, or Monthly session/trade/bar.

What makes the signal appear on the Dashboard as either Short or Long is not a simple process. It is a fairly complex calculation of a probability statement that balances both Long AND Short inputs into the signal cluster that generates a “single signal” (big arrow) displayed on the Dashboard. A fairly complex process that needs to be balanced well at all times. So, there could be a big red arrow indicating a Short trade on the Dashboard, while underneath at the Engine level there could be more Long input than Short input for that same signal, where the system has decided to give more weight to the Short input and thus counter or reverse the underlying Long input that would have otherwise been allowed to appear in the Dashboard.

This is part of the Metadata Engine as this is a Predictive Model Trading system for all trade profile types. Its job is to properly balance Projections with current Market Momentum.


The Problem & The Solution:

I typically don’t lose money when I trade – period and have become accustomed to that level of success over the years. I also typically do not trade Swings or Outlooks as I found it easier (at first) to code the system to map and navigate the hyper-short term 24 hour Trajectories. The system does an outstanding job of managing the hyper-short term 24 hour trade and has been doing that well in excess of 90% accuracy for several years now. However, the Swing and Outlook trades were always used as input that shaped the underlying Day trades. Up until now, Swing and Outlook signals were used to hone in the Day and create low risk Day Trade profiles. The problem with Swing and Outlook trades is that I have never used bigger bars of data to shape and form the Swing and Outlook trades the exact same way that they shape and form the Day trades.

The solution came when I noticed the very low degree of Weekly Short TCD magnitude and Monthly Short TCD magnitude (the routine tendency for the previous low to be revisited on a weekly or monthly basis). I began looking at the Annual TCD data and BINGO there it was! An Annual SAC Short TCD from 2005 having filled in excess of 100% and terminating its trajectory at $1.1640! When I looked at the Annual SAC Short TCD terminated at $1.1640, I scratched my head and wondered where I had seen that number pop up before.

This was the EXACT (I’m getting really excited now) same Floor that I called way back in the final quarter of 2005 on DailyFX as the current price was in the $1.1780 range when this system was projecting a Monthly Outlook Ceiling of $1.2305. Back then, the price moved from the 1780 level, sank down to the Floor of 1640 and then rocketed to 2325 on queue. The Monthly Engine was able to see the 1640 Floor with a 2305 Ceiling back in late 2005, but there was no Annual Engine in the system. Both would have seen 1640 as the Floor, the Swing would have seen 2305 as its Ceiling and the Annual would have seen 3700 as its Ceiling – all back in December of 2005 (according to the data)!

Here’s the key: The system’s view beyond the Monthly (Outlook Trade profile) data was limited to its own event horizon which cannot see the full year! Had I been using Annual SAC TCD data, the $1.3700 “Annual Ceiling” would have been clearly in play from the shared Floor of $1.1640 back in 2005 – a picture perfect Annual TCD Long having its initiation directly in-ling with the late 2005 Outlook Trade profile targeting a 2305 “Outlook” Ceiling.

So, this “big move”, according to the new Annual TCD data that I’ve looked at was supposed to happen this year.

It never dawned on my to actually implement super-extended long range TCD data like Annual Bars into a hyper-short term predictive model Day trading system like this one, but BOY O’ BOY it really does make perfectly good sense. You might not see how much sense it makes for six (6) months during the course of a year PRIOR to the Annual TCD initiating, but at some point BOOOOOOM that Annual TCD kicks in and ZOOOOOOM the price goes ballistic just….like….now leaving a lot of people scratching their heads wondering why.

I just love this business – you learn something new every day/week/month and year if you pay attention. Just the same way that I allow the larger signals to periodically override the Day Trade signal, I can also code the engine to allow the larger Annual TCD data to override the smaller Swing and Outlook signals. The hard part will be in finding the correct balance and the correct weighting so that the timing on the overrides coincides with the start of all new Annual TCDs. This should be far more than enough to greatly improve the Swing and Outlook performance.


The Market:

Who cares – I don’t!

At this point, I don’t care what the market does anymore – in the future, it won’t matter. This run up, at first, really had me scratching my head there for about 4-6 weeks as I was looking for answers as to why the Weekly LocBind and Monthly LocBind variables were not unlocking/resetting and reversing to the downside much more strongly then they are right now. It is OK if the price continued to go UP in the aggregate for the past two (2) months, but I could not understand why there was no Short side LocBind that was tradable on the Swing side of the equation during the bull run which is the absolute norm for most of the data that I’ve looked at.

Albert Einstein said: “You cannot solve a problem at the same level that it was created.”

I’ve always tried to use this as protocol for building this system. The answer was sitting right under my nose and I blew it off like it did not matter. I thought the Annual TCD data was simply too extreme – too far away to impact the smaller TCD LocBind variables in the tiny sub 24 hour windows in which I make a living each day. I was wrong. Once that Annual TCD kicks in for the year – look out! It does have the ability to stretch the smaller time-intervals such that the Subordinate TCD gets so weak that it makes the risk/ratio too large to allow entries to the Subordinate TCD side on a Daily, Swing and even Outlook (Monthly) basis! That is the power of an Annual SAC TCD that is in its early stages of initiation like this EURUSD Annual SAC Long TCD. The beauty here is that the same exact TCD principle that applies to the Daily bar ALSO applies to the MUCH BIGGER Annual bar.

It is a bizarre paradox – having the larger TCD lead the smaller TCD as on the surface you might think that the smaller is needed to give shape and form to the larger. However, the Twin Paradox Theory is likewise “bizarre”, but most likely true. This is not the so-called “Market Trend”. Go look at the EURUSD back on December 27th, 2004. The so-called market “trend” back then was Super Long and the high price that day was $1.3667. The bulls were out and running just like they are right now. Warren Buffet was raking in the cash hand over fist at this time too shorting the USD.

What happened next? Warren Buffet and many others Shorting the USD got hit with an expired Annual TCD well in excess of 100% Fill. I’ve always wondered what happened to Warren – how could he lose over $1 billion by continuing to short the USD – the Man is a genius at what he does, but something happened in 2005 that he could not foresee coming.

I never paid much attention at all to the Annual TCD data, but that data by December 27th, 2004, put the writing on the wall for the next move Long. In 2005, $1.1640 almost 12 months and 2,027 pips after the 2004 top came into focus as the US dollar went into what the market called an way over valued condition. Warren lost more than a Billion during this Annual TCD SAC Short phase. Economists and Politicians alike were claiming that the US dollar was too hot and people were saying the EURUSD would fall down to below $1.1050! This is the problem with “Trend Think”. You cannot see beyond the horizon. The TCD allows you to see slightly over the horizon. Having the Annual SAC TCD metadata would have made all the difference in the world for all of this years Outlook profiles and most of this years Swing profiles with two bad Swing weeks this year but each of them fully recovering to the upside the very next week. Simply, beautiful.

After examining the Annual TCD data for several years and from 2004 to 2005 to 20006, I have no complaints whatsoever about the “news”. In light of the Annual TCD data, I really have zero complaints. I just wish I had built the Annual Meta Engine when I finished the Monthly Meta Engine over one year ago. The Daily and Weekly Meta Engines were completed many years ago. The more Engines, the stronger the system will become.

The market is going ballistic to the upside right now simply because it had to in order for it to retain its historical TCD patterns on the Annual level. Since I don’t typically trade the bigger bars, I paid no attention to the connection. But, the connection is unavoidably clear and makes absolute perfect sense after future analysis.


The System:

Though the system was not designed as a long range bomber, I now know exactly what I need to implement in order to make it a super long range bomber! I will be implementing the Annual TCD metadata into the system as soon as I can. I’m not sure how long it will take to fully integrate that new data and the algorithms necessary to override the shorter term predictive inputs in the Swing and Outlook profiles, but once completed it should prove to be a rather effective Swing and Outlook Decision support trading system. I also suspect that Swing and Outlook overrides that come a direct result of the new Annual inputs will extend up-range into the Daily Trade profiles signals as well making them much more effective than ever before.

System Trade Accuracy is measured over 280 consecutive trading days using ONLY Day Trade signals. I’m not a long range trader and never have been. But, I did want to see what the longer range signals looked like during a period of time when I was not day trading the markets each session. So, the accuracy of the system has moved back up to 93.25% for the Day Trade profiles give the perfect score of 100% accuracy for all of this week’s Day Trades. That’s a good sign as it tells me that regardless of the type of market conditions surrounding the system, it does a good job in getting the Day Trades set-up correctly. So, I can spend my time focusing on the Annual TCD data integration to bring the Swing and Outlook Signals up to the same performance level of the Day Trade profiles.

Sometimes it takes a really big error to move to the “next” level of trading. Not including the Annual TCD data into the system a long time ago was a huge error that could not be seen fully until the Annual Long TCD from 2005 extending into 2006, had a change to spool-up. This is a predictive model. Therefore, some things cannot be seen and/or corrected until way down the road after larger time-frame data can be analyzed. So, I had to wait approximately 6 months for this wake-up call as the 2005 Annual TCD Short expired and the 2005/2006 Annual TCD Long spooled-up and launched.

I won’t get caught by that missile twice! Next year in 2007, I will know exactly where to be in order to catch that year’s “Annual” extreme run, whether it is Bull or Bear – I will know where the high probability super long range trade is most likely to kick-in.


Current Trade Related Projects:

The multiple Day Trade project has been revised, modified and honed down to 3 trades per 24 hour period. As a consequence, the targeting package has improved and I’ve gained a deep understanding of three (3) primary Trajectories that exist in all EURUSD day trades. I will continue to implement the new Day Trade profiles into system as I move along. Next week I will be trading and tweaking (where necessary) these three (3) key daily trajectories and getting more comfortable with them at the same time. Once I get them were I want them, I will then integrate their visual aid into the Dashboard.

I’ll be back for next Friday’s Outlook Trade profile report and I’ll try to get to some of your questions between now and Monday. Time to head out for the golf course – have a great weekend – it has been a very eye opening and productive week!

Hi 7th

Do you plan to build your Annual SAC TCD similar to the daily, weekly and monthly ? Because
I am not sure if I can get enough data for that with EURUSD. Or will you change the SAC period
to something else ? Or build a semi-annual or quarter TCD ?

What is your opinion of using USD Index as an alternative ?

Thanks
SD

hoangmphung said:

7thST,

Thanks very much for your detailed explanation. I used to do it but without consideration to the dominant and subordinate TCDs so the result was poor. I think I will be more successful now. Thanks for teaching me how to fish. It is much more meaningful than giving me fish

Click to expand...

No problem, Hoangmphung. Just knowing about TCDs puts you several steps ahead of most traders when it comes to pure Day Trading. Once you know about them and how to set them up, the rest is mostly about refining and tweaking your entries.

I wish you the best with them!

darktwight said:

Hi 7th,

Thanks for the details on applying the Trailing TCD's metadata. If possible, please shed some light on how you're applying the Retention and Projected TCD's, and their relationship with the Trailing TCD's.

Thank you very much. Your insights are always appreciated.

Click to expand...

The “Projected” TCD is telling you what the real-time Fill% is of the Long TCD and the Short TCD respectively using the Omega value of the current trading session. It is telling you how much of the “next” TCD is being filled IF the trading session was closing at that moment in time. Because the Forex/Interbank is a 24hr market, there is no real “close” or “open” for the daily bar. So, in reality, the “close” of “today” is the “open” of “tomorrow’s” session. So, “Projected” is always pointing at the “open” of “tomorrow’s” session and telling you what the TCD fill will be precisely at the open of “tomorrow’s” session. If the Short Projected TCD happens to the be the Subordinate and it is showing a 100%+ fill and the Dominant Trajectory is Long, the opportunity to enter Long is considered very near. The inverse is also protocol.

Take a look at the 5/17/06 session on the EURUSD. Dominant Trajectory was Long Subordinate Trajectory was Short. The Trailing Short TCD filled to 109.74% percent and its Projected Short TCD was filled to 115.58% at the “close” of the session which for me was 0000GMT. That set the “next” Day Trade to “Long” and on 5/18/06 the EURUSD move up for an absolute value 129 pips long. This is a classic example of how my system uses Projected with Subordinate and Dominant.

Retention TCD is a slower moving measure/indicator and it does a good job of measuring Intra-Day Momentum by telling you how much of the Trailing TCD is being “retained” in real-time. Thus, you will never find a Retention Fill% greater than its corresponding Trailing Fill% as it should always calculate to “a percentage of” the Trailing value and in this way show the internal cohesiveness of the Trajectory.

The Retention TCD is basically a TCD within a TCD. A Trajectory within a Trajectory. The Trailing TCD shows the absolute value of the Magnitude behind the move for any given trading session and the Retention TCD shows you how much of that Trajectory is being “retained”, or what percent is being released to the opposite direction.

Take the same session, 5/17/06 and you will see that the Retention Short TCD Fill% ended the session at 81.82% (provided your close was 0000GMT) while the Trailing Short TCD Fill% ended the session at 109.74%. 109.74% – 81.825 = 27.92%, showing you that this Short Trajectory was beginning to split as it was shedding about 28% of its total Magnitude by the end of the session on 5/17/06. This ultimately made sense as the EURUSD then went on to capture 129 pips on the rotation from the Subordinate back to the Dominant on 5/18/06.

Again, yet another way this system utilizes the various TCD extensions.

Hope these examples help!

echelon4x said:

Hi 7th,

....Whereas now, it sounds as though you've gone full circle and ended up with a top accuracy system based solely on the original focus of your original attentions (even after all you've said in the past about all 4 concepts being a "must have" for any trading system :-0.....

Click to expand...

All four (4) are still inextricably embedded in the system and cannot be removed. They are not actually going “away”. The new set-up in the profile logic simply explains them, or defines them by definition of the new trade profiles existence. The fact that the new trade profiles exist by logical extension “defines” Timing, Direction, Magnitude and Probability.

In other words, the “profile” becomes Timing, Direction, Magnitude and Probability all rolled into one without explicitly stating each one independently. In other words, I now have a superior vision of the TCD Cycle than the one I had several years ago. Different aspects of the primary TCDs make better sense now and that results in taking better measurements of the entire daily TCD lifecycle.

Those four (4) are still required for any long-term trading system that is of a high caliber and that generates consistently accurate day trading results. The difference now is that they are “implied” in the profiles themselves, or come as a direct result of the profile itself.

hoangmphung said:

Hi 7th,

I think I've figured out a basic method to calculate magnitude. Coupled with your tips, it works very well as an anti-trend setup. I was able to scoop about 200 pips yesterday with it in USDJPY and GBPUSD I've yet to code it into Excel so I can't tell about the historical accuracy but I feel strongly that it's in the 80% range at least. Of course, it does not give as many signals as yours but if I monitor all major pairs, it will work out ok. Thank you again for your TCD concept. Now I'm on my way to financial freedom

Click to expand...

Yep - on the Day Trading side, they can be very powerful and they can explain why "price" behaves the way it does regardless of what the longer-term "trend" is doing.

Now, you understand why I say that "trends" don't exist for the Day Trader. By the time "price" is "recognized" as a "trend" by the Day Trader, it is too late – game over in most cases and you end up getting whipsawed to death. With Trajectories, it matters not what the trend is doing because you will be able to enter both Long and Short positions in UP, Down and Horizontal markets as long as you are able to accurately track and project the Dominant and Subordinate Trajectories/TCDs.

The safest way is the wait for the Subordinate TCD to fill before entering the Dominate side. This is the easiest and least complicated way to get your feet wet. When you develop enough tools you will be able to enter those Subordinate Trajectories that lead to your Dominant entries. This will double the number of trades that you make. When trading Subordinate Trajectories, you must be very precise on your Exist points. So, in the beginning when you get advanced enough to trade the Subordinates, you might consider trading only partials – only part of the Subordinate Trajectory and not all the way to the Dominant entry point. This way, if your measurements are off in the beginning when you are new to trading the Subordinates, you can still exist with smaller profits until your Dominant trigger is reached. You still get two trades, but the first one will be a partial until you can develop tools that will help you more accurately measure the extent of the Subordinate magnitude.

If you are new to TCD’s, I’d ONLY Demo trade the Subordinates until you get good at measuring their magnitude on a daily basis.

soccer_daemon said:

Hi 7th

Do you plan to build your Annual SAC TCD similar to the daily, weekly and monthly ? Because
I am not sure if I can get enough data for that with EURUSD. Or will you change the SAC period
to something else ? Or build a semi-annual or quarter TCD ?

What is your opinion of using USD Index as an alternative ?

Thanks
SD

Click to expand...

You can get the Annual data by parsing the Monthly data and that can be found at www.interbankfx.com. Download their MT version 4.x trading platform, login to your demo account and go into: Tools > History Center. There you will find Monthly data for each major currency pair. Use their Export function from inside the History Center and save the .CSV file to your hard-drive. Open the .CSV file, re-sort the rows so that “today’s” data is on top and you will have your Monthly data. From there, simple go through a manual parsing procedure to get your Annual data and then store that data in Excel or your Database. Update it once per year and you now have Yearly Bars of pair data. Pretty straight forward.

The USD Index would not be an “alternative” to Annual TCD data. I’ve never found an alternative to TCDs in the six (plus) years that I’ve been working on this project. TCD’s are unique to any Indicator or technical trading tools that I’ve every encountered and I don’t know of anything that even comes close to approximating the concept when TCDs are fully unfolded in all of there dimensions. There just has not been a concept like this before in conventional TA that I’ve ever seen.

However, the USD Index, I would assume could be useful along side TCDs. I have not explored that path. So you could come up with another TCD extension using USD Index that no one else on the planet has – if you decide to do that research and study. The sky is the limit when adding to TCDs, altering the TCD that I’ve discovered, or researching and discovering new ones that have never been seen before! That is part of the fun of system development.

5/1/06 to 6/1/06 Outlook Notes and Observations


The Signal:

Current Outlook draw-down 211 pips and still nowhere near my comfort level but down slightly from last week. 100 lots still outstanding and position current being held. 9 more trading days left in this Outlook profile and break-even is now the goal with Outlook Target having been moved to $1.2426.

For those familiar with TCDs, here are the current numbers as of EOD Friday, May 19, 2006:

Monthly SAC TCD Long = 733 pips
Monthly SAC TCD Short = 211 pips
Omega = 488 pips

Weekly SAC TCD Long = 331 pips
Weekly SAC TCD Short = 196 pips
Omega = 222 pips

Daily SAC TCD Long = 140 pips
Daily SAC TCD Short = 101
Omega = 112 pips

Aggregate SAC TCD Long = 401 pips
Aggregate SAC TCD Short = 169
Aggregate Omega = 277 pips


Still Dominant Long in the aggregate with the Subordinate being Short after having gained a small amount of strength over the past week or so. So, for the “toe dipping” TCD Day Trader, the trade you seek should be crystal clear on a “daily basis” using Daily Subordinate Fills as your guide and targeting a reasonable number of pips on the Dominant Day Trade.

Knowing what I now know about the Yearly TCD data and having run the data, I can clearly see that both the Swing Trade Short and the Outlook Trade Short would NOT have been signaled by the system given the close proximity of the newly initiating Annual TCD Long projection at the end of 2005 (December) and the start of 2006 (January). So, I am glad that the system would have disallowed both of these “long-term” type trades – very happy to see that change when the Annual data is applied to the system!


The Market:

“Who cares – I don’t!”

...were the words I used last week and they still holds true this week. All Day Trades using the additional Annual TCD input into the Day Trade signal cluster not only increased the number of pips per trade this week, but also eliminated one trade that would have had par results at best. Another 100% precise week on the Day signals with an actual increase in the magnitude and number of pips per trade.

So, the Annual data really does provide solid support, even down at the much smaller Daily TCD level. I’m very happy and I must admit somewhat shocked/surprised to see this so firmly articulated by the system.

In the past, I simply felt that the Annual data was going to be too far removed to be of any real help in the Day trade set-ups, but that assumption was simply wrong. Day trading in this system using “some” Annual input to the signal cluster has provided a real boost in pips and precision on all Day trade entries. So, given that I am a pure Day Trader, I am extremely happy about this development.


The System:

With the addition of the Annual TCD data, running smoothly. Nothing to report.


Current Trade Related Projects:

Still refining and tweaking magnitudes and entry points on all Day Trades, but very happy with performance and the new pair of eyes (vision) the system seems to have right now using the new Annual Data as an anchor for pivots into Day trades. I’m still taking measurements and making the necessary adjustments before I make the visual changes to the Dashboard to reflect the new Day Trade set-ups.

I'll be back EOD Friday of next week to update the Outlook Trade and handle questions that might pop up. I should be back to my regular day trading schedule in a couple of weeks as I work on other projects at this time.

Feels good to be away from trading and working on other projects!

Hi 7th

Thanks for your time to reply. I guess I probably haven't worded my question too well ... as
usual and causing confusion.

What I meant was that since number of years of historical data available is limited in general,
I am not sure how I can come up with enough number of Yearly data (synthesized from
monthly) to produce the Annual SAC TCD and I just wonder if you change number of periods
in your calculation for that purpose. For normal RT and Tac TCD, I can see enough of data
to get an idea ... just the SAC TCD that I am scratching my head over..

Thanks again
SD

7thSignalTrader said:

You can get the Annual data by parsing the Monthly data and that can be found at www.interbankfx.com. Download their MT version 4.x trading platform, login to your demo account and go into: Tools > History Center. There you will find Monthly data for each major currency pair. Use their Export function from inside the History Center and save the .CSV file to your hard-drive. Open the .CSV file, re-sort the rows so that “today’s” data is on top and you will have your Monthly data. From there, simple go through a manual parsing procedure to get your Annual data and then store that data in Excel or your Database. Update it once per year and you now have Yearly Bars of pair data. Pretty straight forward.

Click to expand...

Hi 7th,

One more thank from me too for your tips. Now I understand your concepts better, it is really revolutionary

I'm now looking at the synergy between daily and longer time frame data. May I ask from your experience, the influence of longer time frame data on daily signals comes mostly at extreme points or all the time? My intuition says it is mostly at extreme points but I'm not so sure.

Hi 7th,

I somehow thought you wouldn't have done away with the core 4. Though it would have been amazing if you'd found a way to solely trade at high accuracy levels from magnitude concepts alone.

I've seen how useful Magnitude, Direction, Timing and Probabilty can really be and how they all interlink and logically progress from one to the next

Around a month ago, you mentioned that we would benefit from researching further into other indicators:

I've got some additional indicators that go along with those baseline 30, that you guys should also be aware of, but I did not want to overwhelm at first. Let me know when you guys are ready for them. They dove-tail into the baseline 30 and start to give you that "beyond the horizon" ability in your trading, but the math has to be set-up correctly in order them to work out.

Click to expand...

I think we're all uncertain as to how to know when we're "ready" enough

Research is progressing well and organisational/change control aspects of actual development are now being addressed so we'll have a solid plaform for on-going research and testing.

If you get a spare moment, drop in on the group to see how we're getting on - it would be nice to have a confirmation of whether we're still heading in the right direction or not.

Feels good to be away from trading and working on other projects!

Click to expand...

I bet it does You must be very pleased with the Annual data as that will give you that extra edge to trading outlook signals as your other projects progress.

Cheers

Mike

Hi 7th,

Thanks again for another wonderful post. This certainly helps me see the connection of the Trailing, Retention, and Projected TCD's much better, and being able to apply them properly.

There's still one thing that is still fuzzy, which is when a Retention TCD goes negative. This tend to throw things off for me since the Trailing and Projected TCD's are always positive. I would appreciated very much if you can please give some hints as to how you interpret negative Retention TCD's and some hints on dealing with them mathematically.

Thanks!

soccer_daemon said:

Hi 7th

Thanks for your time to reply. I guess I probably haven't worded my question too well ... as
usual and causing confusion.

What I meant was that since number of years of historical data available is limited in general,
I am not sure how I can come up with enough number of Yearly data (synthesized from
monthly) to produce the Annual SAC TCD and I just wonder if you change number of periods
in your calculation for that purpose. For normal RT and Tac TCD, I can see enough of data
to get an idea ... just the SAC TCD that I am scratching my head over..

Thanks again
SD

Click to expand...

No problem. Go to: www.interbankfx.com. Download MT version 4.x. Install their application and set-up your demo account. Log in and click on the Icon in the Icon Bar called: Market Watch. This will open up a list of FX symbols. Right click EURUSD (or, whatever pair you are researching) and click on New Chart (you can format this chart anyway you want later by using their formatting tools). With the EURUSD chart open, right click the chart and select: Periodicity (a stupid word – theirs not mine) > M1 (Monthly). This will convert the default chart’s time-frame to the Monthly Bar and also makes this bar available in the History Center.

Close the Market Watch window, keep the Monthly EURUSD chart open and click on Tools > History Center in the menu bar of the application. This will open up the History Center. Under the Securities window, you should see: EURUSD, Monthly. Double Click on EURUSD, Monthly and those bars will appear in numeric format below in the Preview section of the History Center. You can select the number of bars that you want to keep in the ”Keep” drop-down list between the Securities and Preview sections. Select the maximum number of bars to keep.

Click on the Export button on the lower right hand corner of the History Center window. Save the .csv file on your desktop. Open the .csv file using Excel. Note that the bars of Monthly data coming from Interbankfx will need to be sorted to get this Month on top as row 1. Sort the rows of Monthly data accordingly. This will place this Month’s bar on top (there are a number of different ways to do this – just make sure the data is sorted and listed correctly from this month to the last month on the bottom row. Make sure no rows are missing and that all rows have the correct date associated with them.

Once you have verified the data after the sort, add a new column to the left of the date column. Use this new row to parse the Monthly data into Years by simply inserting the number “5” (because this is May) on the first row and counting down to number “1” (for January). This gives you the first five months in 2006. Start the next row as number “12” (for December 2005) and count down to number “1” (for January 2005). This gives you the previous Year’s bar. Repeat the parsing until you have segmented the Monthly data into Yearly data.

You only have to do this parsing once and then update each bar each year thereafter.

Once you have the data sorted, parsed and verified, you can then dump that data into your database and begin your research. This should give you about 17 years worth of data to work with. It won’t be the same 21 period database like the Day, Week and Month, but it is more than enough data to work with. You can use the same parsing method on this new Yearly data to obtain 6 Month, 3 Year or 5 Year bars as well.

This will give you TCDs for each parsed period. So, you can parse the Monthly data anyway you want to obtain any TCD greater than one month. You won’t get 21 Yearly, 3 Year or 5 Year bars, but it should be enough to generate usable TCD data for support of the Day Trade calculations and to help in finding the Dominant TCD.

If you can find another data source that provides already formatted and cleaned Yearly FX data, then that would be best as long as they provide for export into Excel via .xls or .csv file formats. If it is .csv, then you will have to sort it, parse it, clean it, verify it and format it. If it is .xls, then all you will need to do is sort it and verify it.

Hope that helps.

hoangmphung said:

Hi 7th,

One more thank from me too for your tips. Now I understand your concepts better, it is really revolutionary

I'm now looking at the synergy between daily and longer time frame data. May I ask from your experience, the influence of longer time frame data on daily signals comes mostly at extreme points or all the time? My intuition says it is mostly at extreme points but I'm not so sure.

Click to expand...

The extreme "tips" provides the "higher probabilities". That's what I've been referring to as "high density probabilities". Gathering all of the “results” data when the pair goes “extreme” and then calculating the probability for each time it made a move back into the Dominant TCD and where that move lead to a minimum number of pips that works for me personally as a Day trader, has been the crux of all my Day trading.

On 5/19/06, Subordinate Fill was 109.04% Short. The very next session, today (5/22/06) the Subordinate Fill was 106.88% leaving the Dominant TCD ripe for filling from an ”extreme condition”. Because the Dominant TCD is still Long, the probability for a move back into the Dominant TCD side from an “extreme” Subordinate Fill condition is much higher than trying to enter Long from any other position along the Dominant TCD path. This also places your trade several steps ahead of the “trend traders”. They can’t see TCDs, so all they can do is wait for “dips”. But, they have no way of defining and/or measuring a “dip”. That’s why they call them “dips when the Dominant TCD is Long, or “rallies” when the Dominant TCD is Short.

With the knowledge of TCDs, you are able to more clearly and precisely define and measure when the so-called “dip” has expired or when the so-called “rally” has expired.

Day Trading with TCDs is like having an IFR equipped aircraft when flying in the clouds –vs- having ONLY a VFR equipped aircraft while trying to fly in those SAME clouds. Not very wise, yet that’s what most people do every day.

As you get really good results from this Subordinate-to-Dominant methodology, you can begin to move cautiously into the Dominant-to-Subordinate side of the equation. That one is more difficult to master and you WILL need more mathematical tools at your disposal (that’s what this system is all about). Once you research and build your tool-set, it will become easier to measure the Dominant TCD and develop good entry points for trading “against the Dominant TCD” using the Subordinate TCD to take you back into a Dominant TCD entry range.

This will bring your Day Trading full “circle” and making that 360-degree move by being able to trade BOTH major Trajectories has been the epicenter of all my research. Having the Yearly TCD data has been a total surprise as I simply underestimated how beneficial it could be when synergized with the underlying Daily, Weekly and Monthly TCDs.