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I've run accross this FFT cycle indicator in the past couple of weeks. It is very interesting to say the least. I would like to know if anybody else has any experience with this type of cycle analysis.
I've know of Hurst, Clyde Lee, and Brian Millard. Brian Millards' work is among the best I've seen. Check out this page if you haven't seen his work yet: Brian Millard
The only thing is I am unsure as to the correct usage of this indicator.
I've been watching how these cycles work for weeks. Sometimes they are spot-on, other times they are out of sync. And, I think they are out of sync because of news that causes a major shift in the outlook of a currency. Its like throwing a stone into a pond. New waves cause the other waves to change phase.
Just playing around this morning (at work!?!?), I wanted to see how these cycle indicators would react. So, after the news, I began watching prices.
I'm using the 1M EURUSD because my account is small (FXCM), but the cycles still seem to work. From these pictures, the RED indicator is a composite of the highest magnitude of 7 cycles. The other colors are the top 4 cycles.
After the news, prices hit the daily pivot. The composite and individual cycles predicted a down move after that "Winding spring" just below the daily pivot at around 1.4320. The light green and orange cycles are topping out. The dark green and aqua are already on the way down. So I got short just before the downside break at 1.4312.
Putting my real money on the line, I made a nice low risk 45 pips for the day.
I've been using a version of cycle analysis (digital filters) for a while now with success ( i don't use normal minute or 5 minute charts though). IT's my understanding from what you are showing that the indicator repaints. Every bar a new transform is done, and the line is modified. I've been witness to it in action and never took the time to appropriately view in real time how this method could be used. Perhaps i'm wrong and this is something different than what i have seen? Attahced is what i found on my computer (FFT).
cl
Last edited by clahn04; 09-05-2008 at 04:49 PM.
Reason: picture
Yes, I think you have the same indicator I have. That is the default template. I have added a volatility channel breakout indicator (blue and red arrows) to help with timing (mindhero). It would seem that by taking the signals with the direction of the composite would be in our favor. Yes, it does re-calculate the waves on every bar. But it seems to me in forex, you have to based on the constant flow of news affecting prices. If we were trading stocks, news is not as fast paced, and a descent prediction may occur well into the future (90% accurate to 100 days - per Millard). That is why I find myself sticking to the lower timeframes, where the cycles are established and quickly absorbed by the news.
I've been trying to read about FFT. The math is way over my head. I like SSA too (over-priced for me). It has a prediction mode which I like, to extrapolate the cycles into the future. I am going to try to do the same with this indicator, but can only do it with the waves. I tried re-creating the composite by adding the individual cycles (should work in theory), but couldn't get it to work.
The FFT routine does something extra in computing the composite that I don't know about.
If I can just extrapolate enough into the future to at least project a timeframe where a turning point should occur would be ecstasy.
But currently, by adding some trendlines and by using a little pattern recognition, I think we'll have something.
I've run accross this FFT cycle indicator in the past couple of weeks. It is very interesting to say the least. I would like to know if anybody else has any experience with this type of cycle analysis.
I've know of Hurst, Clyde Lee, and Brian Millard. Brian Millards' work is among the best I've seen. Check out this page if you haven't seen his work yet: Brian Millard
The only thing is I am unsure as to the correct usage of this indicator.
I've been watching how these cycles work for weeks. Sometimes they are spot-on, other times they are out of sync. And, I think they are out of sync because of news that causes a major shift in the outlook of a currency. Its like throwing a stone into a pond. New waves cause the other waves to change phase.
Just playing around this morning (at work!?!?), I wanted to see how these cycle indicators would react. So, after the news, I began watching prices.
I'm using the 1M EURUSD because my account is small (FXCM), but the cycles still seem to work. From these pictures, the RED indicator is a composite of the highest magnitude of 7 cycles. The other colors are the top 4 cycles.
After the news, prices hit the daily pivot. The composite and individual cycles predicted a down move after that "Winding spring" just below the daily pivot at around 1.4320. The light green and orange cycles are topping out. The dark green and aqua are already on the way down. So I got short just before the downside break at 1.4312.
Putting my real money on the line, I made a nice low risk 45 pips for the day.
"mindhero." Its on forex-tsd somewhere, just do a search. Its a volatility based channel breakout indicator, which I explained on the first post.
Big Joe,
I know. I am a bad boy. But, I have a great job that gives me lots of flexability. In fact, I can stay a little later today to ease my conscience.
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