Forecasting Indicators

Hi,

Please check out the updated WmiFor and WmiFor30 indicators for the new MT4.

Attachment 5644

Regards,
Igor

Thank you, Igorad.

Excellent - Thank you, Igorad.

Originally Posted by igorad

Hi,

Please check out the updated WmiFor and WmiFor30 indicators for the new MT4.

Attachment 5644




Regards,
Igor

Hi Igorad, this is a great indicator, but is it possible to add an alert to it to signal when you have a buy or sell signal and not have to watch it all day?

Hi igorad, the WMIfor indis look great, but I havn't seen any explanation so far about the mathematical background. Can you provide some infos here ?

....so far I found this description for WMIfor30:
Forecast indicator is based on the story of a couple. Taking a specified interval (default 12 bars), we move into the past by comparing the closing sequence of candles. The comparison is performed by the algorithm Dynamic Time Warping . After accumulating the required number of the most similar samples (default 5), we project the price movement that took place in history after all samples found at the moment. Real bars, superimposed on each other, form a corridor of possible price movement. DTW algorithm has significant advantage over the algorithm by comparing Spearman used in previous versions of the indicator WmiFor . DTW algorithm takes into account the distortions and highlights really similar situations in the past.

This I found for WMIfor:
The principle of operation is relatively simple. Taking a specified interval (default 24 bar), we move into the past by comparing the sequence with sequences LWMA LWMA sample. The comparison is performed by Spearman and optionally, adjustment of the sample (the default height difference may not exceed 10%). After accumulating the required number of the most similar samples (default 5), we project the price movement that took place in history after all samples found at the moment. Real bars, superimposed on each other, form a corridor of possible price movement.

Is this still correct ?

intereresting paper about forecasting stock indices using DTW:
Fast nonlinear deterministic forecasting of segmented stock indices using pattern
matching and embedding techniques.

Time Series Matching with Dynamic Time Warping | (R news & tutorials)

Hello Levonisyas, could you share your video on the HindSightOracle?
The link above seems to be dead.
Thanks
Jozo

Talking Points:

• Must You Know What Will Happen Next?
• Is There a Better Way?
• Strategies When You Know That You Don’t Know

“Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.”
-Michael Steinhardt

"95% of the trading errors you are likely to make will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table – the four trading fears"
-Mark Douglas, Trading In the Zone

Many traders become enamored with the idea of forecasting. The need for forecasting seems to be inherent to successful trading. After all, you reason, I must know what will happen next in order to make money, right? Thankfully, that’s not right and this article will break down how you can trade well without knowing what will happen next.


Must You Know What Will Happen Next?

While knowing what would happen next would be helpful, no one can know for sure. The reason that insider trading is a crime that is often tested in equity markets can help you see that some traders are so desperate to know the future that their willing to cheat and pay a stiff fine when caught. In short, it’s dangerous to think in terms of a certain future when your money is on the line and best to think of edges over certainties when taking a trade.



The problem with thinking that you must know what the future holds for your trade, is that when something adverse happens to your trade from your expectations, fear sets in. Fear in and of itself isn’t bad. However, most traders with their money on the line, will often freeze and fail to close out the trade.

If you don’t need to know what will happen next, what do you need? The list is surprisingly short and simple but what’s more important is that you don’t think you know what will happen because if you do, you’ll likely overleverage and downplay the risks which are ever-present in the world of trading.

• A Clean Edge That You’re Comfortable Entering A Trade On
• A Well Defined Invalidation Point Where Your Trade Set-Up No Longer
• A Potential Reversal Entry Point
• An Appropriate Trade Size / Money Management

Is There a Better Way?

Yesterday, the European Central Bank decided to cut their refi rate and deposit rate. Many traders went into this meeting short, yet EURUSD covered ~250% of its daily ATR range and closed near the highs, indicating EURUSD strength. Simply put, the outcome was outside of most trader’s realm of possibility and if you went short and were struck by fear, you likely did not close out that short and were another “victim of the market”, which is another way of saying a victim of your own fears of losing.




So what is the better way? Believe it or not, it’s to approach the market, understanding how emotional markets can be and that it is best not to get tied up in the direction the market “has to go”. Many traders will hold on to a losing trade, not to the benefit of their account, but rather to protect their ego. Of course, the better path to trading is to focus on protecting your account equity and leaving your ego at the door of your trading room so that it does not affect your trading negatively.

Strategies When You Know That You Don’t Know

There is one commonality with traders who can trade without fear. They build losing trades into their approach. It’s similar to a gambit in chess and it takes away the edge and strong-hold that fear has on many traders. For those non-chess players, a gambit is a play in which you sacrifice a low-value piece, like a pawn, for the sake of gaining an advantage. In trading, the gambit could be your first trade that allows you to get a better taste of the edge you’re sensing at the moment the trade is entered.



James Stanley’s USD Hedge is a great example of a strategy that works under the assumption that one trade will be a loser. What’s the significance of this? It pre-assumes the loss and will allow you to trade without the fear that plagues so many traders. Another tool that you can use to help you define if the trend is staying in your favor or going against you is a fractal.

If you look outside of the world of trading and chess, there are other businesses that presume a loss and therefore are able to act with a clear head when a loss comes. Those businesses are casinos and insurance companies. Both of these businesses presume a loss and work only in line with a calculated risk, they operate free of fear and you can as well if you presume small losses as part of your strategy.

Another great Mark Douglas quote:
“The less I cared about whether or not I was wrong, the clearer things became, making it much easier to move in and out of positions, cutting my losses short to make myself mentally available to take the next opportunity.” -Mark Douglas

Happy Trading!
---Written by Tyler Yell, Trading Instructor

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