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I will try it again with a picture.
Thanks a lot, GU_Night.
Entering nearby the confirmed TZ (A) gives simply the best risk reward, but it depends on ones personality if he wants to enter the trade earlier, price comes not always back to the confirmed TZ for the best entry.
That’s for sure! But I think that the more you’re trying to optimize your R:R by entering short close to the upper zone the higher the probability that this upper zone will be hit. It’s a slippery path, IMO.
For me it is clear that it has to do with a confirmed TZ on one side and a PTZ on the other side, and trading in the direction of the PTZ and away from the confirmed TZ, it is as simple as that.
Got that now – thanks again!
Hitting is in my opinion not a big problem, as long it not closes below the rectangle, then I’m happy.
The interesting post from Zelo started me thinking, if I understand him correctly (maybe Zelo can confirm or not confirm that if he reads this) does he mean that below or above the rectangles is transient but the rectangles themselves are recurrent. It is a thing I often notice, that price bounces back if it touch the zone above an upper rectangle or below a downside rectangle. It creates a new possible TZ at that moment, I trade away from that one, and often are that very good trades. The EURCAD trade I posted yesterday is such an example.
It is a thing I pay more attention to in the coming time. If that is true than it becomes a combination between “FX-Jay’s” way (the target) and “Eurusdd’s” way (the low risk entry).Zelo said; maybe found FX-Jay “K” without knowing it, that can be true in my opinion. The last picture I posted EURJPY shows an entry to my understanding from what Zelo means, a buy below the rectangle in the transient zone back into the recurrent zone.
There are children playing in the streets who could solve some of my top problems in physics, because they have modes of sensory perception that I lost long ago. ~Oppenheimer
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This is how I understood that post and the related others at the time…
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Guys, try not to over complicate things
Let’s try to understand his equation. What EURUSDD was talking about should be crystal clear so there is nothing to be confused about. He explained it with this simple formula:
So what this is saying is that the price g is contained within Xt(t) – k and Xt(t) + k. And this is what this statement looks like visually to me. I could be wrong so correct me if my interpretation is wrong.
So based on this explanation, that means its the K amount that the price will be recurrent for. Does that make sense? And try not to think of price as a candle, think of it as price in time, at any given time to the microsecond or smaller. To take this a step further to further your understanding, what this is talking about is that the price will have a k amount pull back when its H_Left transient from its high or low. He said, recurrent if whenever X(t0) (just like saying price at some time) is between the high and the low of a bar, then at least one of the previous or next h bars passes through this same exact price at time = t0.
What EURUSDD said is not really a surprise, we all know this to be the case. He just used fancy formula and made us think of it in terms of probability. I guess we were just mistified by the simplicity of this equation and thought there was more.. haha Now this doesn’t mean that we cannot come up with any other theory and be correct as well using TZs. What matters is the probabilities and the R:R
Focus, Patience, Determination & Order in chaos
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The Russians are ahead of you… :-}
Use Bing or Google translator.
http://tradelikeapro.ru/strategiya-transient-zones/
G.
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Hmmm – again: maybe I’m wrong, but my view on TZ theory simply says that after this first TZ has been confirmed (marked K) there is simply no statistical evidence of price zone K being revisited within a certain number of bars or not. I have never seen any stats posted that deal (in a mathematically sound manner) with revisiting probabilites of price levels AFTER confirmation of a TZ. I just don’t understand the assumption that the probability that this zone will NOT be revisited is just 0.024 * 0.024 – as the red text in the pic suggests. I would call this simply wrong. My simple understanding of the above pic at the moment: We defined a value h in a way that the probability of any price zone for becoming recurrent is 97 %. Such a value of h can be found and defined for most pairs / TFs. These stats look at a specific h range and will define resulting transient zones. That’s what the pic shows. IMO, after a transient zone has been confirmed the specific price level formed by this zone has no special properties at all which would emphasize the importance of that level over a randomly chosen level between the last upper and lower TZ. At least not to the extent of finding a probability of 0.024 * 0.024 for remaining transient. Any different thoughts? Again: I’d be happy to learn!
This is just what I have come to understand from what I have read. And I believe the .024 x .024 does work since for the two zones to be the same they need to be in the K and H, which would be very rare. Also if you want to know the probabilities of getting heads on a coin toss two times in a row. you do .5 x.5 =.25, we are doing the same thing instead our coin in 97.6/2.4 so mathematically it should be sound, again this is just from my understanding. I no where near good at mathematics so my logic could be flawed.
This is also why I believe Eurusdd name the area above the zone recurrent. we are expecting price to pull back above the zone that forms(he is expecting by at least 5-10 pips and then it will pull back to the zone. If you look at chart once an old tz is revisted the zoned marked how i did in pictures is always revisited if price is a clean break(most time revisit happens on the same candle that broke the zone
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The ever elusive K
In general it must be small…
It can be self defined (static) or based on a percentage of the bar…
All prices exist within it’s width…
???????
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The ever elusive K In general it must be small…
Rhimseven, I actually take it back. I’m not sure if I can agree with what you said in your figure. I think I replied without thinking too much because your figure is almost accurately representing the equation, just need a small fix based on the way I understand what’s stated.
If I am to turn EURUSDD’s equation into written text, it should sound like this.
Every price point that exists within plus or minus k from a price at some time must be recurrent within H bars.So from the sounds of that, it seems it’s the K amount that the price will be recurrent. Not K amount that will be transient. And then in definition 2 he went onto explain what recurrent means, which we already know.
What you are saying is almost the opposite of this. You are saying every price point that exists within plus or minus k from a price at some time could be transient within H bars. Your figure is on point for the most part but I think the K should be the retracement, the 1-10pips the way the equation is stated.
I think K being the amount of pips (take profit) that it would be recurrent makes more sense than it being the height of the transient zone in my opinion.
Focus, Patience, Determination & Order in chaos
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I had my university math teacher explain the proposition to me and all it saying that all prices (G) exist are H(T) recurrent except when the exist in the width of area defines by K. the X,T(t) that is added or subtracted from K are the zones that are recurrent for the timeframe and what zones are left are transient(defined by K, H(T))
This is how he explained it to me. he has a masters degree in mathematics but He has absolutely no experience trading markets so he may not have interpreted it correctly.
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I had my university math teacher explain the proposition to me and all it saying that all prices (G) exist are H(T) recurrent except when the exist in the width of area defines by K. the X,T(t) that is added or subtracted from K are the zones that are recurrent for the timeframe and what zones are left are transient(defined by K, H(T))
By width, I’m assuming you mean the height in terms of price and not time, right?
Also it’s not the X,T(t) that’s subtracted or added from K, its K that is subtracted or added to X,T(t) since K is the constant.
I mean, this equation is crystal clear to me, EURUSDD laid it out very clearly what he meant. That the price that exists within X,T(t) -k and X,T(t) + k is recurrent within H bars.
So what this means is, if the price of 100 is H_Left transient and if we say our K is 10. Then the price should retrace back to 90.
X,T(t) = 100
k = 10
The +/- is there to count for down and up fractals.
Another way of saying this is, when there is a fractal, the price would have retraced back away from the fractal k amount. This is like obvious because thats the reason why we would end up with a fractal at that location, because it retraced a certain amount of pips. Know what I mean?This is why I distrust EURUSDD because what he gave was something very obvious in a very confusing manner. Many don’t understand these equations so it can be confusing. FX-Jay just figured out a way that actually worked and I think it would have worked regardless of TZs in my opinion. TZs just help him set the exit levels.
———————–
Let me also add a very important thing that will clarify everything. Remember what he said about k. He said that k is small. If K was large, then the probability would drop. Smaller the K is (smaller the expected retracement), the higher the probability it would be. Makes sense, yea?
Focus, Patience, Determination & Order in chaos
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PiratePip:
This is just what I have come to understand from what I have read. And I believe the .024 x .024 does work since for the two zones to be the same they need to be in the K and H, which would be very rare. Also if you want to know the probabilities of getting heads on a coin toss two times in a row. you do .5 x.5 =.25, we are doing the same thing instead our coin in 97.6/2.4 so mathematically it should be sound, again this is just from my understanding. I no where near good at mathematics so my logic could be flawed.
If the odds of flipping a single coin are 50% then before two flips the odds of both coming up heads are indeed 0.5 x 0.5. However, after the first flip, if the first flip comes up heads, the odds for the next single flip coming up heads is still 50%, NOT 25%. The odds change back to the single flip odds for the next single flip. So if you had a coin with 98% tails and 2% heads, for any single flip the odds are 98% tails because the prior flip is independent of the next flip. So it basically comes down to how independent the two events are as to what the true probability is, so the rare-rare idea is interesting but probably not accurate.
However if you really want 0.25 odds, flip both coins simultaneously. Can we do this in trading?
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The ever elusive K In general it must be small…
Rhimseven, I actually take it back. I’m not sure if I can agree with what you said in your figure. I think I replied without thinking too much because your figure is almost accurately representing the equation, just need a small fix based on the way I understand what’s stated. If I am to turn EURUSDD’s equation into written text, it should sound like this. Every price point that exists within plus or minus k from a price at some time must be recurrent within H bars. So from the sounds of that, it seems it’s the K amount that the price will be recurrent. Not K amount that will be transient. And then in definition 2 he went onto explain what recurrent means, which we already know. What you are saying is almost the opposite of this. You are saying every price point that exists within plus or minus k from a price at some time could be transient within H bars. Your figure is on point for the most part but I think the K should be the retracement, the 1-10pips the way the equation is stated. I think K being the amount of pips (take profit) that it would be recurrent makes more sense than it being the height of the transient zone in my opinion.
Thanks for that correction. Make perfect sense now. My eyes have FINALLY stopped spinning…LOL . Time to get back in the lab and do something with this. Thanks
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I had my university math teacher explain the proposition to me and all it saying that all prices (G) exist are H(T) recurrent except when the exist in the width of area defines by K. the X,T(t) that is added or subtracted from K are the zones that are recurrent for the timeframe and what zones are left are transient(defined by K, H(T))
By width, I’m assuming you mean the height in terms of price and not time, right? Also it’s not the X,T(t) that’s subtracted or added from K, its K that is subtracted or added to X,T(t) since K is the constant. I mean, this equation is crystal clear to me, EURUSDD laid it out very clearly what he meant. That the price that exists within X,T(t) -k and X,T(t) + k is recurrent within H bars. So what this means is, if the price of 100 is H_Left transient and if we say our K is 10. Then the price should retrace back to 90. X,T(t) = 100 k = 10 The +/- is there to count for down and up fractals. Another way of saying this is, when there is a fractal, the price would have retraced back away from the fractal k amount. This is like obvious because thats the reason why we would end up with a fractal at that location, because it retraced a certain amount of pips. Know what I mean? This is why I distrust EURUSDD because what he gave was something very obvious in a very confusing manner. Many don’t understand these equations so it can be confusing. FX-Jay just figured out a way that actually worked and I think it would have worked regardless of TZs in my opinion. TZs just help him set the exit levels.
Indeed
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Guys, try not to over complicate things
Let’s try to understand his equation. What EURUSDD was talking about should be crystal clear so there is nothing to be confused about. He explained it with this simple formula:
So what this is saying is that the price g is contained within Xt(t) – k and Xt(t) + k. And this is what this statement looks like visually to me. I could be wrong so correct me if my interpretation is wrong.
So based on this explanation, that means its the K amount that the price will be recurrent for. Does that make sense? And try not to think of price as a candle, think of it as price in time, at any given time to the microsecond or smaller. To take this a step further to further your understanding, what this is talking about is that the price will have a k amount pull back when its H_Left transient from its high or low. He said, recurrent if whenever X(t0) (just like saying price at some time) is between the high and the low of a bar, then at least one of the previous or next h bars passes through this same exact price at time = t0.
What EURUSDD said is not really a surprise, we all know this to be the case. He just used fancy formula and made us think of it in terms of probability. I guess we were just mistified by the simplicity of this equation and thought there was more.. haha Now this doesn’t mean that we cannot come up with any other theory and be correct as well using TZs. What matters is the probabilities and the R:R
My understanding is the same as you. (if I understand correctly). But those situations exist on both sides. Upside, downside. Different timeframes. What I’m trying to say, trading from K to K seems to me the ideal situation. Best RR. Besides, I think that is why some people can maintain a 90% winnings percentage, I can easily be wrong.
There are children playing in the streets who could solve some of my top problems in physics, because they have modes of sensory perception that I lost long ago. ~Oppenheimer
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Simplex, Sorry i can not explain to you because i lost that code.
And i work on a lot of idea recently, so i dont remember when i code.
I could be WRONG!!! It is very easy to get high stats!
Sorry if i mislead you
Thank you, GU_Night.
Only you understand me so far
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I hope you guys realize the power of this method. There are practically very small number of TZs and there are no top/bottom fractal TZs when trading this way properly. Because what you are trading are retracements. The only thing is that the TP will be somewhat small. That’s why I went after FX-Jay’s method since he was getting good number of pips. But after trying that for a while, I’m thinking its probably best to focus on smaller number of pips but with higher accuracy
I hope everybody is having a great weekend!
Focus, Patience, Determination & Order in chaos
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Just to give an idea. For EURJPY, M5 with H=20, the probability of success is about 98% for K = 3pips
When k = 10pips, probability drops to 95%, still not bad
For H1, I can get 97% by setting k = 10pipsBut like I said, the problem remains with the SL. That’s the flaw of this method. With SL I’m not sure if it would be as profitable. And without SL, it has the chance of blowing up the account
Focus, Patience, Determination & Order in chaos
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remember The issue of SL probabilities is not a flaw of the method it is just not calculated for us via current indicators.
Happy Holidays Every one!!!
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Just to give an idea. For EURJPY, M5 with H=20, the probability of success is about 98% for K = 3pips
When k = 10pips, probability drops to 95%, still not bad For H1, I can get 97% by setting k = 10pips But like I said, the problem remains with the SL. That’s the flaw of this method. With SL I’m not sure if it would be as profitable. And without SL, it has the chance of blowing up the account Great saver0, i have the same in my head. K must be small, valid only for each TF. So, for different TF, we have different k. And I like your warning about SL. To solve this, can we use Hedging and good money management?
About +-k , this is the area of “Acting”. Let say we have a confirm “real” Even TZ (i named it R-TZ), and price goes far enough from it. So we have opportunity:
1) we trade in the direction of that confirm TZ area. Our target is the nearest level of the confirm R-TZ zone, minus K. Ex. if the price below the zone at the moment, we do a buy, our target is the lower zone level – k. ( just want to make sure that our target will be hit. Our profit decrease with small value of k, it is no problem for me).
2) if price goes more than expected, it will clear the zone and passes the far level ( it goes through the other side / level of the zone ). At this time, we have another opportunity, we trade in the opposite direction of our last order ( point 1 above). Ex. Price passes the upper level of R-TZ. Then we do a Sell ( we do not need to wait for candle to close first ), assume price will reach +k to -k area of a target level p. I just think that p+k to p-k is the area near our R-TZ. How big is the k? I think it is depend on the height of the bar.
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About +-k , this is the area of “Acting”. Let say we have a confirm “real” Even TZ (i named it R-TZ), and price goes far enough from it. So we have opportunity
Could you please give an example?
I’m not too sure if i understand you
Focus, Patience, Determination & Order in chaos
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Based on stochastic, We can redefine our recurrent and transient zone.
They are just states. Like our state/mood: happy/sad…
I think you notice them from time to time.
I will available in chat rom for 1 hour.
Invite me to private chat, i will happy to share what i think.
Eurusdd is wrong when he said price is no absorbing states.
In fact, when price in absorbing state, it means price in consolidation zone.
If you notice tick chart when market is ill liquidity, you will see some time price doesn’t move at all.
It just my observation.Maybe he is wrong too. LOL
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Hi Saver0,
Sorry i did not explain it clearly, using images is better
For this purposes, i use H=12 (just for example only).
From images below, i think transient zones can be divided into 2 :
a) Transient Zone at the end of swing, which has fractal in it. I call this Fractal Transient Zone (F-TZ). This zone can has Even zone, but mostly are Uneven zone. Most of us call them TTZ (Top TZ) if it exists at top, or BTZ (Bottom TZ) if it exists at bottom.
b) Transient Zone at middle of bar, it must be Even zone, i call this Real Transient Zone (R-TZ).
The value of k can be static (may be about 3-5 pips in M15), or can be dynamic depend on the bar. In this case if we take dynamic k = 10% X HiLo of the bar.
But may be i am wrong …
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Based on stochastic, We can redefine our recurrent and transient zone. They are just states. Like our state/mood: happy/sad…
I think you notice them from time to time. I will available in chat rom for 1 hour. Invite me to private chat, i will happy to share what i think. Eurusdd is wrong when he said price is no absorbing states. In fact, when price in absorbing state, it means price in consolidation zone. If you notice tick chart when market is ill liquidity, you will see some time price doesn’t move at all. It just my observation. Maybe he is wrong too. LOLHey zelo I am not sure you understand how an absorbing state in a markov chain works. if there was an absorbing state the Price chart would end at this state. If there is an absorbing state in the chart the only place it can be is 0 as this is where price will be absorbed and the chart would end.
the absorbing state is the end of the chain/process/chart/price. As the chain moves from state to state it will come to an end when it reaches an absorbing state. Price can not have an absorbing state other than 0 as the chart will go on forever and there is no limit to how high the price can go
all of the zones you marked would be considered recurrent as price reoccurred multiple times within the boxes you drew.
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in our markov chain there are only 2 states(could say 3 with 0 being absorbent state but we will never see price reach this point). recurrent and transient and prices shifts between them. i drew this in one of my first post on FF.
The market is binary 1=transient 0=recurrent. It just shifts from 0 state to 1 state and spends most of its time in 0(97%)
1000100100100010001000100000100010000001
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Pip, IMO, Let’s say our S have 100 bars, and we interest only X contain only 11 bars of S, with height of 10, from 1.20 to 1.30,
We have 2 state, State 1 is 1.20 to 1.30, State 2 is 1.30 to 1.40 that we want to examine.
Can we say that price in X is absorbing in state of 1.20 to 1.30???
I think FX Pricing Model is Wiener process, you was banned when you bring this subject, right?
Why we should limit ourself thinking only recurrent and transient?
Why not?
Because they are stochastic, can we find another way to calculate the probability of price go to the next state,
or next level? But we still have good RRR.
When k = 10pips, probability drops to 95%, still not bad 
For H1, I can get 97% by setting k = 10pips But like I said, the problem remains with the SL. That’s the flaw of this method. With SL I’m not sure if it would be as profitable. And without SL, it has the chance of blowing up the account 
It just my observation.
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