EUR/USD Update

We've been discussing some more conceptual ideas underlying system building. Moving from general non-specific understanding to specific behaviour is a clear distinction every trading strategy needs to acknowledge. It lets you freely play with ideas and entertain possibilities in one area while only executing on a clear set of rules that are predetermined. The predetermination is necessary for measurement and testing. We must have a set of rules defined precisely enough so that any trader who understands them will behave the same. From our expectations yesterday we've discovered (possibly) a new pattern that might carry predictive weight. This pattern must be turned into a clear signal with defined boundaries. Then there must be some clear consequences when we observe the signal, usually behaviour (taking a position in the market).

The new signal we're tentatively including with the rest involves two waves of volatility significantly above average generated in a row in the same direction. There are some nuances that have yet to be discussed; the overlap with our other signals. For example when we generate a wave that breaks a high this event carries a probability. A wave of volatility might also break a high so we need to distinguish between these events and recognise when they are both occurring at once. We generate other opposing signals inbetween these waves, does this change the situation? All these differences will be slowly resolved as we experiment with this new pattern and acquire experience using it. I cannot say if it will be kept or discarded at this present moment but my intuition is telling me this pattern does capture some probability.

Good Trading.