Forecasting

Hello everyone,

I`m Chris and I`m interested in Forecasting. I believe I went through most important threads about this subject on the Internet. I`ve been searching, testing, and now I have some thoughts to share and see what pros can tell about it. I`m a binary options trader and the goal which I want to achieve is to predict if price goes up or down on the end of the day. Forecasting seems to be a good way to search for a proper strategy.

I found the thread about forecasting on TSD couple of months ago. Since that time I`m testing and analyzing programs that seemed to be interesting. In my opinion FuturoFX and WmiFor are best that I found. But maybe there are better programs out there.

I have attached those programs to my charts and waited to see if the prediction is good or not. Unfortunately there were far far away from truth in most of cases.

And then I started thinking, that these programs must have potential. But how to use it? I`m rather technical trader then fundamental and I truly believe in the idea, that market is not chaotic and everything what happened in the past, will also happen in the future. Then the simple solution came to my mind. If these programs analyzing the past and give their prediction upon those patterns in the past, then I have to feed it with more data! I don`t know, maybe I`m making a fool of myself and everyone knows that, but I didn`t find any post about downloading as much as possible data if using forecasting programs. So I have downloaded historical data from Alpari server and now I have data till 1970 in most volatile pairs as far as I remember. Now FuturoFX can analyze about 170000 M30 candles instead of default 1440. So I tested it once again. And I have to say that was beautiful. Having seen the forecast in the morning and then almost the same pattern coming up live. One thing I noticed is that the program can forecast the whole pattern, I mean “the big picture”, but unfortunately highs and lows are unpredictable. It would be too good to be true.



As we can see, the big picture is right, but the strength of moves is different. Anyway, we can see nice uptrend during the upcoming day. It was a winning trade.



Beautiful prediction and even prettier fulfilling. As we can see predicted upward was far smaller then the real one, but it was predicted then nice downward and sideways. Everything in place. That was also winning trade. But now let`s look at those less interesting example, but inevitable.



It went completely other way round. Fortunately it is minority I have also noticed, that not a single “yellow line” answers to one candle which logical thinking could suggest.

And now there is some questions. Due to my tests, most accurate predictions on H1 timeframe were on EURJPY, USDCHF, USDCAD, EURGBP. Why these pairs? Because of their volatility? Apart from them I tested EURUSD, GBPUSD, AUDUSD, USDJPY, AUDJPY. All failed. Is it wise to eliminate those pairs only after a month of testing? Maybe some adjustment? I`m testing those pairs now on M30 and I think it is more comfortable to read the prediction than on H1. One week left to see results. I wanted to select the best pairs on H1 and M30 and then test it for a whole month.

How about predicting price on the end of the week or month? Is it easier to predict upcoming hour or upcoming week or maybe month? Which has bigger probability?

What about the news? Is it wise not to trade using forecasting programs during important news? I mean NFP, GDP, inflation reports? There is huge volatility sometimes during these kind of news, but could it affect the daily trend? Or maybe market tries to stabilize itself and come back to daily trend?

Regarding to candles analyzed by FuturoFX, 170000 candles on M30 timeframe it`s nearly 15 years! If I counted it in a proper way. Best predictions are from around 5 to 10 years backward.

I know it`s so many questions but I think it is an interesting subject to talk about.