The market is a controlled dynamic system. - page 236
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There is a possibility of precipitation.
... But also no indication of credibility :)
... But also without an indication of credibility :)
what and ?
Can you explainwhat andunder what conditions is a prediction, as far as forex is concerned ?
I can try.
The weather forecast, by the way, is also made according to the scheme"price in time t1 will be in the range Price1<X<Price2 with probability P1". Only instead of price the temperature and probability P1 is usually not announced, so as not to scare people))
The situation with the weather is more certain than with the market. Because weather has a strict annual periodicity. It is clear that there are some variations, but those variations are in a fairly narrow corridor -- summer temperatures are summer and winter temperatures are winter, and they will not roll over. The presence of a strict annual periodicity makes it possible to determine some baseline temperature for each day of the year in any given area. Having such a baseline is a very significant advantage.
But it's not the weather forecast we're interested in here ;)))
I can try.
Of course, Alexei. Formulate it.
Of course, Alexei. State it.
Trying.
A forecast for any controlled dynamic system is information for assessing the situation - no more, but no less.
At the same time, the stage of evaluation of the situation is directly followed by the stage of decision-making, so the forecast is interesting not in the sense of how things will end, but only in the sense of what has begun.
Hence, the consequence: it is meaningless to use the result of the forecast to determine values of TR and SL, but it is stupid not to use it when making decisions about opening or closing positions.
To twist Carl Clausewitz, let me try to quote him: "...Military science should not accompany the commander directly on the battlefield, it should only prepare him for this battle...". Something similar (:
Why do I need a forecast?
To take a profitable position to enter the market. I do not know where the market will go next, but I know exactly where to enter the market based on analysis with the most probable successful result. My task is to retain profitable trades, cutting off unprofitable ones. If I follow some rules, my TS will always be profitable over a distance. The market is, surprisingly enough, predictable. It only needs to be understood. Of course it will not work quickly. Years of patient study will pay off.
In the early days of my fascination with Forex I used to see virtuoso accuracy of multiple entries and exits of other traders. This hurt my ego and made me learn the secrets of the market step by step. Every day the market is getting easier and there are fewer mysteries.
Forecaster :
Here you have the probabilities present. This means that you have to define them beforehand in order to be able to make a prediction. You are not assigning these probabilities out of the blue. Since Forex is a non-stationary phenomenon, the probabilities are changing all the time, and you should periodically update them (ideally on every tick). There are a lot of questions, which need to be answered and have no unambiguous solution --- and it is only for calculating probabilities, without forecasts, which add their own complications. Well, if you're doing all this, you should know what intermediate tasks need to be solved. And, I should point out, those tasks are sometimes quite extraordinary.
But it would be much clearer if you could show the forecast for some convenient for you tool XXX/YYY. This particular example of the forecast could clarify many explicit and implicit tasks and problems. This would immediately give specificity and meaning to the discussion about forecasts.
Anyway, give me the forecast -- let's pick it apart.
Is this a question for me? I have a simpler approach: input ecnomic data, output prediction of the tool 1 or 2 steps ahead, inside model like y[n+1] = F(x[1,n],...,x[m,n], x[1,n-1],...,x[m,n-1],...) where n is time index, m is index of input parameter. The main thing in success is:
1. choosing the right input data
2. correct conversion of the input data
3. selecting the correct model
You also have a model with inputs and outputs. The output in your case is a position decision: open, close, do not touch. The output in my case is a numerical prediction of the instrument. In your case the output is price input. In my case the input is economic data. Currency pairs are not predicted because they depend on two countries' economies and I already have 10 000 economic data for USA only. I already posted the S&P500 prediction a few pages ago.
Economic models can be different. For example Steve Keen's model based on differential equations and cash balance http://keenomics.s3.amazonaws.com/debtdeflation_media/papers/PaperPrePublicationProof.pdf It is believed to be the only model that predicted the crash of 2008. But it also has its problems. The US Federal Reserve uses the Dynamic Stochastic General Equilibrium (DSGE) model. Its Matlab code is here http://www.mathworks.com/help/econ/examples/modeling-the-united-states-economy.html My model wants and is close to the DSGE model, but differs considerably from it. Please read this link and you may learn something new.
Is that a question for me?
Not necessarily to you. More to the forecaster in general. More specifically, the forecaster who very often, in and out of place, repeats like a mantra "probability-probability-probability-probability...".
My model is simpler: the input is econimic data, the output is a prediction of the tool 1 or 2 steps ahead, inside a model like y[n+1] = F(x[1,n],...,x[m,n], x[1,n-1],...,x[m,n-1],...) where n is time index, m is index of input parameter. The main thing in success is:
1. choosing the right input data
2. correct conversion of the input data
3. selecting the correct model
You don't reveal the functional relationship of F(). Don't think I'm trying to deduce it -- no. But I suspect, (and something tells me ;)) That it's a regression... and that...
It's a well known pattern. It has been known for a long time. A lot has been said about it since the 1960s, considered up and down. It works in the steady motion sections. Problems arise when the trend changes. Especially in the switching mode. Many works have been devoted to this problem. But there is no satisfactory solution until now. Thus, the limits of its satisfactory work are known.
But there is a nuance. If your model does not operate with probabilities, then there is no ground to speak about probabilities on the basis of your model. Unless you post facto calculate the frequency of the model result in some compact region. But these are, generally speaking, crutches.
Why do I need a forecast?
To take a profitable position to enter the market. I do not know where the market will go next, but I know exactly where to enter the market based on analysis with the most probable successful result. My task is to keep profitable trades cutting off unprofitable ones. If I follow some rules, my TS will always be profitable over a distance. The market is, surprisingly enough, predictable. It only needs to be understood. Of course it will not work quickly. Years of patient study will pay off.
In the early days of my fascination with Forex I used to see virtuoso accuracy of multiple entries and exits of other traders. This hurt my ego and made me learn the secrets of the market step by step. Every day the market is getting easier and there are fewer mysteries.
That is the slogan. Moreover, an internally contradictory slogan.