what follows a red 14

[hayseed]

this is a question..... a thought..... a wonder..... not trading advice.....

will explain in depth but for start assume,

if, today's sma(50) is lower than yesterdays..... and we count that as a red 1.....

if, tomorrow's sma(50) is lower than today's.... and we count that as a red 2......

if at any point the sma(50) closes above it's prior value, we would count that as a lime(1).....

but assume that sma(50) falls for 14 days..... so we now have a red 14......

tomorrow can only be a red 15 or a lime 1...... which will it be...... can you tell......

is knowing which it will be of any value to us.....
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in the chart below, the gbpjpy along with some numbers are in the brown rectangle..... none of the numbers relate to the sma(50) but the question is the same......

there is a red 14...... what will tomorrow's number most likely be......

equally important, did your answer change......h

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[hayseed]

suppose we were to code a ea that would plot incrementally the rise and fall of a particular indicator..... plot a red dot if the reading was less than the prior and a lime one if it were higher.....

suppose we were to do this for each pair.....

as an example, the chart below has done this for the three pole super smoother....

the top row is the usdjpy and under the arrow is a lime dot..... so, looking at the chart, what usually follows a daily usdjpy three pole super smoother lime 1......

would a usdjpy lime 1 make me more comfortable buying the eurjpy, which also has a lime 1.....

suppose we were to take the daily usdjpy chart and count each individual runs length to get an average length.....

suppose we were to do this on every pair and every time frame....

suppose we were to do this on every indicator on every pair on every time frame....

the results surprised me....

what followed later surprised even more......h
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[Enivid]

My first guess is that the likelihood of getting the same signal tomorrow as today (red after red or lime after lime) increases with the period of the MA and its propensity to smooth the timeseries. What results did you get from your research?

 

[hayseed]

hey enivid..... yes in regards to ma's tomorrows is very dependent on the prior bars included in it's calculation.....h

 

[hayseed]

suppose we were to do this on every pair and every time frame....

suppose we were to do this on every indicator on every pair on every time frame....

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so now, we have the average signals length of every indicator on every pair on every time frame..... a lot of numbers..... a mind burning amount of numbers...... in other words we know how many, on average, the run of red and green bars for everything....

so what's the value in knowing that......

perhaps the best way to understand is to plot it out on a per pair basis..... then we can visually see...... we can compare them to each other...... it will show each indicators strength's and weakness's.... while doing it in indicator fashion would be best, the same can be done in ea's or true scripts.....

when using ea's or scripts, encode the bars close in the each objects name for price reference.....

some indicator signals are known to be timely.... some are not..... some might be several bars ahead of others.... knowing which is what allows us to prepare.....

it's difficult to rank them..... but if you could, sorting them with respect to that rank could give you a heads up of a future signal change.....

knowing, or at least having an idea, of what follows is usually edge enough......h
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