The Pig in the Sky & the Utmost Condition

The pig is an RSI2 divergence that remains untouched. This is bet the farm condition #1.

Yes, it is an embedded oversold market, thus we need to look above to find the starting point of the down move.

The pig is the pink/purple rectangle by the overbought neckline on the image.

The first number is the 1.3x daily true range deducted from the last 15-minute closing value where the 12- sample fractal energy crossed above 53.

   while (!(ChoppinessIndex(12*4,i+1)<53 && ChoppinessIndex(12*4,i)>53))    

Close15 = iClose(NULL,15,i);

Finding the pig:

   while (i2<500){
      if (ExtUpFractalsBuffer[i2]!=EMPTY_VALUE)     
      while (i<i2+26 ){
            if ( RSI2[i2]<RSI2[i] && iFractals(Symbol(),0,MODE_UPPER,i) && High[i2]>=High[i]+10*Point ) break;
      if (ExtUpFractalsBuffer[i]!=EMPTY_VALUE  && ExtUpFractalsBuffer[i2]!=EMPTY_VALUE && RSI2[i2]<RSI2[i] && High[i2]>=High[i]+10*Point ) break;

if (ExtUpFractalsBuffer[i]!=EMPTY_VALUE  && ExtUpFractalsBuffer[i2]!=EMPTY_VALUE &&  i2<500 && High[i2]>=High[i]+10*Point) { UpFractalTime_2=iTime(NULL, 0,i2);    UpFractalTime_1=iTime(NULL, 0,i);   }
if (i<500 && i<i2+26) {   ObjectDelete(0,"HNNN3_1");
      if (plot_divergence_labels){
              ObjectCreate("elixir 40"+High[i2], OBJ_TEXT, 0, Time[i2], High[i2]+FSize*1.5*Point); 
      ObjectSetText("elixir 40"+High[i2], "Rev/DVG", 22, "Tahoma", White);}
while (k<i2-1) {
     if (High[k]>High[i])  break;   
    k++;  }
    if (k>i2-2) {
   ObjectCreate("Virgin"+i, OBJ_RECTANGLE, 0,  Time[i2], High[i], Time[1], High[i2]);

Adding the label

ObjectCreate("Virgin__"+i, OBJ_TEXT, 0, Time[i2-2], High[i2]); 
       ObjectSetText("Virgin__"+i, "P/"+NormalizeDouble(Close15-ATRAVG[1]*1.3,4)+", "+NormalizeDouble(Close15-ATRAVG[1]*1.3-FSize/2*10*Point,4) ,28, "Arial Black", Black);

The second number is the estimated location of the no break extension – FSize is still 32.

The utmost condition is a White Stripe and an RSI2 divergence. This is bet the farm condition #2.

The White Stripe is the End of a Stochastic Bar Overdrive sequence.

Stochastic bar calculation with elimination of values above the lower guard rail:

extern int    K_Period  = 25;
extern int    K_Period2  = 60;
extern int    K_Period3  = 100;
extern int    D_Period  = 3;
extern int    Slowing  = 3;
extern int    TopBorder=90;
extern int    BotBorder=10;
extern int    BotBorder2=5;
extern int    BotBorder3=3;

for(i = 550; i >= 0; i--)
      double St=iStochastic(NULL,0,K_Period,D_Period,Slowing,MAType,PriceType,MODE_MAIN,i);
      double St2=iStochastic(NULL,0,K_Period2,D_Period,Slowing,MAType,PriceType,MODE_MAIN,i);
      double St3=iStochastic(NULL,0,K_Period3,D_Period,Slowing,MAType,PriceType,MODE_MAIN,i);
      ExtMapBuffer2[i] = EMPTY_VALUE;
      ExtMapBuffer3[i] = EMPTY_VALUE;
         if (St2<BotBorder2 && (St<BotBorder || St3<BotBorder3)) ExtMapBuffer2[i] = 15;
         if (St>TopBorder && !((High[i]-iMA(symbol,30,414,0,MODE_EMA, PRICE_HIGH,i))<FSize*10*Point && embeddedoversold)) ExtMapBuffer3[i] = 85;}

White stripe plot

   if ((ExtMapBuffer3[i+1]==85 && ExtMapBuffer3[i]!=85) || (ExtMapBuffer2[i+1]==15 && ExtMapBuffer2[i]!=15)  ) {
   ObjectCreate("Utmost"+i, OBJ_RECTANGLE, 0,  Time[i+2], iHigh(Symbol(),0,iHighest(Symbol(),0,MODE_HIGH,262,i)), Time[i], iLow(Symbol(),0,iLowest(Symbol(),0,MODE_LOW,262,i) ));

Modified Fractals for 30 minute

 int    nCountedBars;
   bool   bFound;
   double dCurrent;
//---- last counted bar will be recounted    
//----Up and Down Fractals
      //----Fractals up
      if(dCurrent>High[i+1]  && dCurrent>High[i-1] && dCurrent>High[i-2])
       //&& dCurrent>High[i+2]
      //----6 bars Fractal
      if(!bFound && (Bars-i-1)>=3)
         if(dCurrent==High[i+1] && dCurrent>High[i+2]  
         //&& dCurrent>High[i+3]
            && dCurrent>High[i-1] )
            //&& dCurrent>High[i-2]
      //----7 bars Fractal
      if(!bFound && (Bars-i-1)>=4)
         if(dCurrent>=High[i+1]  && dCurrent>High[i+3] && dCurrent>High[i+4] &&  dCurrent==High[i+2]
            && dCurrent>High[i-1] )
            //&& dCurrent>High[i-2]
      //----8 bars Fractal                          
      if(!bFound && (Bars-i-1)>=5)
         if(dCurrent>=High[i+1] && dCurrent==High[i+2] && dCurrent==High[i+3] && dCurrent>High[i+4]  &&
        //&& dCurrent>High[i+5]
            dCurrent>High[i-1] )
            //&& dCurrent>High[i-2]
      //----9 bars Fractal                                        
      if(!bFound && (Bars-i-1)>=6)
         if(dCurrent>=High[i+1] && dCurrent==High[i+2] && dCurrent>=High[i+3] && dCurrent==High[i+4] && dCurrent>High[i+5]  && dCurrent>High[i-1] )
         //&& dCurrent>High[i-2]
           //&&             dCurrent>High[i+6]
      //----Fractals down
      if(dCurrent<Low[i+1]  && dCurrent<Low[i-1] )
      //&& dCurrent<Low[i-2]
        //&& dCurrent<Low[i+2]
      //----6 bars Fractal
      if(!bFound && (Bars-i-1)>=3)
         if(dCurrent==Low[i+1] && dCurrent<Low[i+2]  &&
            dCurrent<Low[i-1] )
            //&& dCurrent<Low[i-2]
           //&& dCurrent<Low[i+3]
      //----7 bars Fractal
      if(!bFound && (Bars-i-1)>=4)
         if(dCurrent<=Low[i+1] && dCurrent==Low[i+2] && dCurrent<Low[i+3]  &&
            dCurrent<Low[i-1] )
            //&& dCurrent<Low[i-2]
          //&& dCurrent<Low[i+4]  
      //----8 bars Fractal                          
      if(!bFound && (Bars-i-1)>=5)
         if(dCurrent<=Low[i+1] && dCurrent==Low[i+2] && dCurrent==Low[i+3] && dCurrent<Low[i+4]  &&
            dCurrent<Low[i-1] )
            //&& dCurrent<Low[i-2]
           //&& dCurrent<Low[i+5] 
      //----9 bars Fractal                                        
      if(!bFound && (Bars-i-1)>=6)
         if(dCurrent<=Low[i+1] && dCurrent==Low[i+2] && dCurrent<=Low[i+3] && dCurrent==Low[i+4] && dCurrent<Low[i+5]  && dCurrent<Low[i-1] )
         //&& dCurrent<Low[i-2]
           //&&             dCurrent<Low[i+6]


As I mentioned, I am not following on anyone’s path, but there were people that handed me some tools to work with.
Props for George Lane with his works in Stochastics.
J. Welles Wilder… what would I have achieved without your RSI?
I am grateful to all those contributed in the development of the MT4 platform and the mql language.

I saw the use of RSI2 first from Craig Severson (although he only used it on daily charts for his swing trade), and a lot of the lingo I use came from him.
Credits to Ira Epstein for hammering away at stochastic embedding.
Credits to Simple Ton, who showed that there is no need to be afraid of saying things out loud.
Scott Barkley was an influencer even if in a backward manner: his statements helped me to disprove redundant things.
Like when he mentioned about “Big Boys” having Fibonacci built into their tools. Simple Ton said it first: Fibonacci is only in your head.
It is entertainment for the retail trying to act scientific about something that has no science behind – I could add.
Scott kept on pulling his phrase out from somewhere saying “The retail trader makes 5-8 pips on a trade. If you are doing that, you would have to be right 90% of the time for the rest of your life”. I have disproved every stupidity in this sentence countless times. I had 10% plus days with 2.2 pips average trade gains, with 60%-70% percent trade success rate. I can do a 100% gains in 2 weeks, or even in a week. I made 94.5% last week with 5.5 pips average gain size. A 100% gain means that you can withdraw all of your initial capital and your risk from then on would drop to 0: now you are trading with capital that did not even exist a week or two earlier.
Scott, you just keep at trying to fish out the largest pip size trade – perhaps one day they would start selling bread for the largest pips instead of cash. It would look good certainly hanging your largest sizes on the wall, something to show for and sing ballads about to a grand kid. Keep putting those lines on your charts – especially the heart one, that’s very cute.
I myself haven’t been drawing trend lines and retracements for ages and I intend to keep up the habit till I live.

In closing, I would mention, that I am judgemental of the redundant phrase, “price action”. As Simple Ton put it, “What happened to people’s brain? Did it turn into mash?”

2.4 pips on average per trade did not prevent from making 52.4% gains in 21 hours.

72.55% of the long trades and 60.78% of the short trades being successful did not prevent from making profits.

Day Ralio: Meteoriocracy #2

In the first part I gave you the #1 objective of a trader.

In this second one I’ll give you the second and the third most important rules of trading.

#2: yield to reversal divergences

#3: prepare for a sound barrier failure

My all you can diverge buffet, God Awesome Indicator got an upgrade in the 1.7 version by including a search for the last 3 RSI2 divergences on the up and the downside. They are plotted in gold colour.

The yellow lines are stochastic reversal divergences.

The brown lines are stochastic continuation divergences and the red ones are as well but with a more serious sample bracket.

Why did I sell at the price level on the above image? Because price walked into the net of the last RSI2 divergence (after printing an RSI2 Sharpie at the bottom – purple square). See, price does not have to stop dead at the RSI2 divergence plot, it may exceed it by 1/2 fluctuation size which is 16 pips on the EUR/USD. Only upon exceeding that would I consider the divrgence failed. And if you look left there are additional untested RSI2 reversal divergences nearby. These 4 altogether (one is no longer plotted, the 4th – it has its end at the last upper sharpie) would make for a rather tall order to overcome.

The sound barrier I referred to is the fluctuation size distance which is another plot of the same indicator – the white lines projecting the limitation of a move that does not mange to step outside of the fluctuation range (the box itself is from Fluctuation distance to Fluctuation maximum).

What is important here is gives you with high probability the extent of the move you could capitalize on and spells out a number as well. (I.e. CoVeR 1/2)

An RSI2 divergence can be considered as a root that is likely to yield the untrapped participant 3 pushes in their holding direction. Respecting this would be closing the holdings in the opposing direction and only reinstaging them upon breaking the divergence (by 20+ pips).

I have articles on the Blog about the Fluctuation size as well as about the features of the God Awesome Indicator.

Call me to say how much it would be worth to you to have a copy of it.

The bounce back up was contained in the box, and was a sell again.
Daily fuel limit reached

An extension is a no break after a power move. 1/2 fluctuation size = 16 pips would be a no break. 43-16=27

The utmost condition is no more stars (overdrive) and RSI2 divergence = bet the farm now!

No more stars = white stripe

Day Ralio: Meteoriocracy

You are trading Forex, or the Fake out to Fake out market

Your number one objective is to buy out of oversold in the overbought and sell out of overbought in the oversold

The market type is embedded oversold

Deeply oversold level is 1.13

5% is at 1.1238

Daily fuel on the downside is enough to 1.1253-1.1239

4h is out of overbought as per yesterday – refer to the #1 objective

The 30 minute is embedded oversold, the last run up did not manage to eliminate the oversold condition

The run up from the Fake out of Mr. Maroon (also the spark zone) may be over with as soon as the 4H dojo gets faked out on the upside (1.1305-1.1313)

Intel says (i:) to sell above 1.1307

Ounces of Nuances

Let’s discuss one mistake I made today and the ways I invented in order to prevent committing the same mistake again.

So I made this image the other day about the wave structure. That W4 did not seem right for it went down and back on the same candle. It was a liquidity break.

A liquidity break happens when the market is trying to find footing, trying to find orders. During a news event the participation dies off, so a “larger” stack would turn the price away.

The Burns outlined the Cover Long level – with a displacement of 16 pips on the upside, and the Cover Shorts levels by a displacement of 20 pips on the downside – so this part was already in order.

As you can see, the Green Burns were the starting points of Wave 1 and Wave 3. The beginning and the ending of a move are not that different – this will come back later.

Now, let’s talk about the real Wave 4.

The most obvious thing on the image above is that the wave 4 found footing at the Green River. I have been saying out loud, that the Green River has the power to reverse a move, any move. What’s more is that usually the first leg would land on the closer end and the second would go to the further end.

Dynamics: a subtle thing, but you could read this above as well: the SDU projection box on the upside was thrusted into, the SDD projection box on the downside was left untouched, and the SDU to the upside was blown right trhough (a sign of a starting move).

Of course there are the Green ellipse highlights of the lows by the Wishing on a Star, which mean buys as well as the green rectangle, which represents losing the oversold status (- which is now factored in the candle shading).

The blue arrows represent a right shoulder (for this was a Head and Shoulders reversal). There was a cross up warning earlier.

The 2 new added features are the on screen RSI divergences (in yellow) and the black, computer identified Terminal looking moves (based on 3-4 candle price behavior).

Let’s talk briefly about what happened afterwards.

There was a Failed Buy (no liquidity/too fast run up) that represents a warning: Sell the next cross below RSI2 – 93. This means the first settled 30 minute value below 93 – after being above. If you look in line with the DDI-T print, you shall find it. (I just noticed that the price actually spiked into the DDI-Ts projection box).

The last wave (I would argue that the whole Wave 5 was an ABC up) got kicked off with a Green Burn again. Price failed in the Bull Zone 1 where the Short Time Frame Bulls covered. There was a count sell, the red line got exceeded and there were 3 overlapping terminal lines – as well as a starting, – terminal looking – move to to kick off the move to the downside.

The Successful Sell would urge you to take a sell again on the cross below 93.

The green highlight box is 1 fluctuation size away from the swing above – white line connects it. There is an inversion of the overbought and the oversold lines – this may mean the market embedding – which of course would mean counter trend to the upside, since this is still an embedded oversold market.

If I had to pick a buy zone, it would be the spark zone with the green sticks.

My personal mistake was the wrong wave count and complacency: 235% gains in 2 weeks does not exactly make you being on your tip toes wanting to hedge – the 82% balance to equity ratio and the late night combo made me turn off the Auto Trading (and the auto hedging with it), for at 80% half hedge would kick in and at 70% another half, and overnight a mere wrist move at the broker would push the ratio below 80 even if the price did not proceed further. There was no disaster coming out of this, but I missed out on plenty of monies as a result (i.e. my usual daily 20% and only made 5%).

Another, in your face screen plot from yesterday is yet another way of plotting the daily fuel limits. Now they are two triangles projected from the weight and the fuel overbought/oversold areas are the two flat ending lines of the triangles. The coloring has a path of least resistance logic which is based on the number of near term 4h dojis above versus below.

The 4-h overbought embedding may sustain as long as you do not get 2 opens below the overbought line which is going to be adjusted to the new swing high soon (during the Sunday open). The way not to lose the embedding to the upside at all is by taking out the high in the first 4 hours.

If it loses the embedding, then these 5 waves to the upside were all she wrote.

The real wave 4 – shown in a Picasso art:

A Lesson on Relativity

Risk is just as relative as everything in life. You have the illusion of having time, but you don’t.

You sit up for the notion of setting stop losses, and thinking that your capital is protected. It isn’t. To hold a position into the weekend carries an enormous risk for instance, and it can cost you all of your risk capital if things take an unexpected turn.

The earlier you realize that all of the money is at risk that you put in on a bootleg brokers account, the better off you would be.

I opened an account with a Russian broker once – when I was merely trying to open a demo to find out what their spreads were like. I got a phone call later that was almost threatening: “You opened an account with us, we are waiting on your next move” – they told me. I would never expect that they would care to pay you out any gains even if your account would show them to exist. Who are you going to turn to for justice? Your mommy? Whom are you going to sue in case of an offshore broker say on the Marshall Islands?

You would find that despite all of your efforts, having a pending order placed for a hedge with the broker – to eliminate the event that you go offline, i.e. during a power outage or if the internet provider goes offline, your safety isn’t assured.

One of the brokers I have an account with goes offline during the morning hours quite frequently and does not even feel like they have to apologize for it. I guess the attitude is that people would blame their cell phone connection / provider. But I have multiple accounts with other brokers and I can see that they are on; plus I can log into my home computer remotely and look at the terminal’s journal where it would say “unable to connect”. Other times your app would come back with “common error”. Anything can happen when the market is open even in the matter of minutes, let alone when you are unable to make any changes for hours.

One time I had to phone up the broker when an account went into red lining (margin call, not margin cut) – they claimed that they sent out an email – which I never saw (blaming a French vote taking place during the weekend), and arbitrarily they took away the leverage on a Friday, which meant the 1:300 became 1:50 and the account that was fine got rendered into being under margin call when you are unable to hedge. I had to get them to temporarily re-apply the hedge so to be able to take on a hedge, but as you can read out of this, there are a lot of ifs, and ultimately this poses another risk factor that can cost the account itself. Brokers have the tendency to utilize men made chaos to turn it into a payday for themselves.

So, what is the answer to all these? You need to choose the broker well. You mustn’t use stop losses unless you feel like volunteering for losses. You need to have a hedging system in place instead, that can save your ass, and all of these would account for nothing if do not manage to develop close to perfect senses to what market you are in and be able to anticipate / acknowledge turns incredibly well.

Brokers sometimes do not acknowledge your stops either. I read someone’s story that when the Euro peg was released by the Swiss Bank, and they moved against each other by 42%, he got stopped out from his USD/CHF position with a 10% loss, and was happy with his broker. Others were not as fortunate, and their brokers did not cut their losses until losing 25-30% on the same trade.

Is this an impossible quest then? Not, but it would certainly cost you anything you are willing to give and more. If you are lucky, then you come across somebody like me, whom can spare you losing everything, for I have been through it all, and I managed to learn and develop things for it.

Now, let’s compare quickly the average Joe putting on these perceived risk/reward trades trying to catch the big fish with someone who has a philosophy of “getting some”.

If you listen carefully, you may end up understanding how Capitalism works.

Exhibit A, your so called proactive trader gets very good at his/her game and manages to make some money by the end of the month, in the neighbourhood of 5-10% relative to their deposit size. He constantly volunteers for losses.

Exhibit B, the frequent hedger guy does not get every turn right, and may get called into partial / half / oversized / full hedge, starting from 15% relative draw down, but in return, always ends up making something, very often is holding counter positions that takes away some or all of the risk, has control over when to take a loss, and his objective is to gain equity faster than it is moving away from him. He makes money every day, but to be able to pull out funds, he would have to get very good at recognising and catching the turns – and be not afraid to take smaller losses if that prevents further draw downs. Mr. B can make on his high leveraged account (1:500) 50%-100% gains per week. If things go well, he can take out all of the gains biweekly or so. His risk went to zero relative to the risk capital on the second week of trading: he got his capital back. Now all he has to do is to repeat the same thing 25-50x more that year, without forgetting to take out at least some of the gains when the account has no holdings (open positions). There is a size limit that despite of greed the account should not exceed, which derives from the broker imposed maximum lot size. Once the broker can deny you the ability to hedge, you would lose your edge and you do not want that.

You can also begin understand now that in Capitalism, production, even money production should become more and more efficient over time, and the overall risks would drop further, for the risk capital’s increase would fall short from the increase of the wealth.

A relevant comment from my pal, Dutch:

Had a run in with a binary broker out of Nicosia, Cyprus years ago. Ran $500 to $43,800 in 45 days. Asked for my money. NO response. Finally, called them. Bunch of Russian gangsters but FUCK them. Told them they had 72 hours to get me my money or me and my crew of ex-Marines would board a plane, first to Brussels to lodge complaint with any regulatory body. Then, we were flying down to Cypress for a man-to-man conversation and the outcome would NOT be pleasant in the slightest. Got my money in 48 hours. Nothing worse than waiting for a wire out of some fucking Bulgarian bank.

The Swing of Things

This would be a long one, so grab a cup of a tea.

To understand the story of the market, the very first thing to do is to ditch the single-line moving averages and start using double lines instead – and the correct sample sizes.

Using my LEMA 30N indicator would be perfect for this.

See, you have to be able to decide if you saw a Failure or a Ricochet. With a single line this becomes very uncertain.

With one EMA plotted on the highs and the lows, you can start calling the turn-aways at the closer line as Rebounds / Ricochets and the turnarounds at the further line as Failures. (You may pick your tolerance, but the ones I went with – for the purpose of the screen plots – up to 3 pips beyond and falling within 2 pips of the actual line.)
It is not because an F cannot be under/over cut, but it certainly should give you more confidence that the base would be holding up for a while, and to give you a suggestion for the trading direction: away from the F.

Ricochets simply make price Relapse having to make a part or all of the progression Repeated.

Now, let’s sort out quickly what happened at the Lower Guard Rail – which is at 1x Fluctuation Maximum Measured from the Green River above.

Was that a Failure or a Ricochet?

It was a quick dip into Bear Zone 1 from the neutral. The weak handed / short term bears cover in this area, making it potentially a very bad location to go short at. I would call this a Failure of penetrating into the Bear Zone.

Following the same, “in the vicinity of” logic with the BURN lines, the following can be said:

You want to initiate your shorts just above the white line (the green, overbought line is there to fine-tune), and only for up to 8 pips above the line. After that you would need another white line to be crossed for your next entry position.

Similarly, your covers would be just under a white line, preferably 2 white lines out. (When two lines are much too close to each other, they should be counted as one).

So, why did this consolidation in the Spark Zone (which is between Mr. Maroon and the Green River) played out to the dark side after the area putting on a squeeze?

Well, it is one thing eyeing the Blue Pair, and noticing the direction going in and the R1 resistance plotted above along with the Upper Guard Rail.

The answer is in the market type. The market is long term embedded oversold, that you can figure out with my Comfort Levels indicator.

To quote myself, in the Embedded Oversold Market the Longs Fail and the Shorts Prevail.

So now you have the right music on.

You can see that there was a BUR(N) just printed to keep you to the right side of the market, along with the Blue Ellipses that mean “short” by Wishing on a Star indicator.

I actually did the very things that would make for a good text book:

I sold just above the freshly printed white marker 1/2 size and added another 1/2 upon a move above the next white line.

On the first, 30-minute break candle I covered both, one somewhere on route achieving more than $500 (10% relative to base account size), and the other half pretty close to the next white line (almost 20% gains in twenty minutes – I’m trying to teach the thinking here, this is not about bragging.)

There is more in the way of signs to be had in getting the direction right.

If you were to plot the 88 Luftballons in “thrusts only” mode, you would see the thrust boxes.

The first, DDI-T prompt’s red target box was called off by the F failure at the Green River high. The SDD (Screw Driver Down) had a projection box as well, but an R, Ricochet at Mr. Maroon put a stop to playing out immediately. There was a D, that was grayed out because of its location, and price never made it to those heights again. On the downside you had another SDD printed, and since price spiked into it (and even exceeded it a little), some of the downside force was taken away.

As you can see, that box has a Cover by 1.1211 print at the low (was plotted real time with the SDD print), and as intelligent that routine is, the next projection box, that was a D (Driven) condition to the downside had an additional Cover Below print with 1.1208, but this time at the top of the projection box. (It was spiked into basically immediately.)

So, where are we at now? In an Embedded Oversold Market. The LEMAs have bearish configuration still. Yet, the short term memory is that the bears covered for now and there was a Ricochet at Mr. Maroon. Price is out of the oversold. It has to adjust the overbought level.

The Maroon Fake out – Fake out pair (with the second F in blue) is the cap of the move for now. A brake above it, and you can be headed towards R1 that is now at 1.1264 – the Blue Lema (the 30-minute one) just started coasting into place.

The second doji up is at 1.1239 – right below the current overbought level. This is where I set my long targets to.