Financial Trading with Five Regularities from Nature
Subtitle: Mastering the Fifth Regularity for Price Action and Pattern Trading
Technical analysis for the financial trading and investment has nearly several hundred years of history. Traders use the technical analysis to collect the scientific evidence to find out the probable market direction and volatility for their trading. When many people spot the same thing in the financial market, I think we should take it very carefully, especially if they are based on the scientific evidence. Price action and pattern trading strategies were extensively used by many successful traders to identify the trading opportunity to profits in the market. Price action and pattern trading strategies concern less on the traditional technical indicators. However, they concern more on raw price patterns. With the recent development of many brilliant trading strategies within the price action and pattern trading, their usefulness is already beyond the expectation of many of us.
As a quantitative developer and trader, my job allows exploring nearly thousands of different trading strategies to validate and verify. Several price action and pattern trading strategies have shown me that their operating characteristics are much different from the typical momentum and mean reversion strategies. Those price action and pattern trading strategies are powerful. However, the idea behind these powerful trading strategies is poorly understood by many traders. Therefore, I have decided to come up with the new concept the “Fifth Regularity” (Equilibrium Fractal-Wave process) because I was not able to encapsulate many proven trading strategies used by traders last 100 years using the existing theory.
To visualize the concept of the Fifth Regularity for trading, I had to create more comprehensive Price Pattern Table to explain those price patterns outside the trend and seasonality framework, which are the backbone of the many analysis techniques for univariate price series. I have come up with the view of the five regularities to cover the most of price patterns in the financial market. The main purpose for all this work was to communicate with traders for the potential market dynamics for the profitable trading. On the other hands, I wanted to bring the topics for the mainstream scientific research in the future.
This book is geared up for your practical trading. Therefore, just explaining why the strategies work is probably not sufficient. This book covers many working price action and pattern trading strategies in details and with examples. Especially, the book covers the support and resistance in great depth. We cover both identification and trading for support and resistance. We provide the six support and resistance patterns with examples for the twelve different trading setup. Furthermore, the book connects the concept of support and resistance to several advanced trading strategies including Harmonic Pattern, Elliott Wave, Triangle and Wedge Patterns. The book uses several chapters to provide you the practical guideline of the Harmonic Pattern, Elliott Wave, Triangle and Wedge Patterns for your trading.
At the latter part of this book, I have also provided some useful information towards your trading management. We provide some practical knowledge on risk management and portfolio management for your trading. Especially I highly emphasize the importance of the risk management. I tried to offer the digestible information as much as I can. In addition, many free tools are available from the website: “http://algotrading-investment.com” for free of charge. Especially, you might need the Peak Trough Analysis tool to follow some of the chapters in this book. You can freely download the Peak Trough Analysis tool from the same website above. Finally, reader should note that this book contains some strong technical language.