The Power of Weighted Bias

[UrmaBlume 10]

Over the weekend one of our beginning/student traders was exploring the practical application of combined and weighted biases as an indicator.

 

A bias can be as simple as a fast moving average of price is above a slower ma or that an indicator of the balance of trade is making higher lows or lower highs.

 

This bright young person ran standard indicators such as the Jurik adaptive moving average, a moving average convergence and divergence based on different speed and phase settings on the Jurik, an adaptive rate of change and a couple of others on price and our indicators of the balance of trade, trade flow, trade instensity and commercial net trade.

 

He came up with about 12 indications of bias in each of 3 different volume frames, posted them to mapped variables. In a volume frame lower than any of the 3 he retreived, combined and weighted all of those biases into one indicator.

 

The purpose here is not to discuss how we calculate bias but to point out that using very basic indicators biases taken from different volume/time frames can, when properly combined and weighted, provide timely indications of a change in the bias of price.

 

I found this person's work to be worthy of note and below is posted about 4 hours from yesterday's trade in ES, times are PST. The originator of this indicator is now using 3 workstations to try and optimize the weights on the 3-4 dozen inputs that make up the indicator. With some hard work and a bit of serendipity, this is how useful trade decision support technologies are born.

 

[BlowFish 10]

Are Neural Networks horribly out of vogue at the moment? Back in the day these biases would have been great candidates for inputs to a NN. (Though would still probably benefit from appropriate weighting before being fed in).

[UrmaBlume 10]

Are Neural Networks horribly out of vogue at the moment? Back in the day these biases would have been great candidates for inputs to a NN. (Though would still probably benefit from appropriate weighting before being fed in).

 

Out of vogue is a good thing. Neural Networks, Genetic Optimization routines, Bayesian Networks and MARS (Multivariate Adaptive Regression Splines) and others are alive, well and making tons of money for the very small percentage of users that have learned how to deploy them.

 

These are the same technologies that allow a missile to defeat a smart pilot in three dimensions at Mach2 - surely when properly applied they should be able to tell you something about the next few minutes of the S&P.

 

As I mentioned before - the concepts and indicators we show here are but inputs to our final layer of processing/technology. To stimulate original, out of box/vogue thought by smart, thinking, ambitous traders like yourself is why I make these posts.

 

In vogue is buschwa like VSA, Wyckoff, price pivot points, candles and other worthless techniques and processing. The public uses these because they lack the ability to grasp anything that has not been publicly discussed or more important, the ability to create their own.

 

If all it took to beat the markets was to spend a few thousand dollars on software and change a few parameters you couldn't get a cab. Using the sameO, sameO is why so many are either blown out or still trading 2 lots after years of trying.

 

No big, continuous trading success that I have ever seen has come from ANYTHING I have ever seen posted on this or any other board and that includes my posts. I know of no such successful technologies that are available for sale, lease or discussion and that includes ours. Inputs, maybe - final layer - no way.

 

cheers

[zdo 20]

"No big, continuous trading success that I have ever seen has come from ANYTHING I have ever seen posted on this or any other board "

Well DUH!

 

Have a great weekend.

[UrmaBlume 10]

In spite of trading at 65% of normal volume and volatility, this new work on bias still offered up several good opportunities during today's session and no serious losers.

 

Below that graph is a shot of the level of intensity at yesterday's session extremes.

 

Bon WeekEnd EveryBody