| Market Logic |
|
MARKET LOGIC link (members only) The Market Logic tables are a tool that exists to assist a trader in making entry and exit decisions in the forex market. Developed in conjunction with the funds management firm Erebus Capital Management LLC and based on their quantitative short and medium term models the market logic table, aggregate certain statistically significant indicators to assist in decision making. There does not unfortunately exist a holy grail to making profits in the financial markets, a majority of technical analysis used in the markets today is so subjective that it is not only wrong but quantitatively useless. The reality is that a majority of the time the short term market moves are completely random in nature. Trend moves do occur in markets at times and last for differing time frames, but how can you discern between the random which occur a majority of the time and the trend move? Do you attempt to trade on a short term time frame in a random market? How can you make money? The models used by Erebus Capital have been designed to bring scientific method and objective analysis to the currency trading arena. Market Logic Definitions: Market Logic Proprietary Trend Indicator is exactly that. It indicates which direction the short term (1-5 days)/med term (4-8 weeks) is for that particular currency pair. There are 5 modes for the indicator 1. Up (strong short or med term uptrend) 2. Neutral Up (uptrend, but market by volatility and reversion to mean) 3. Neutral (best to stay out) 4. Neutral Down (weak or weakening down trend) 5. Down ( strong down trend, short market) Momentum Indicator is scaled from 1-5, with 5 being the strongest momentum. Attention must be paid to a rising indicator any value above 2.5 indicates positive momentum. Below 2 is neutral momentum. Overbought/Oversold indicator signals a market that enters this stage. Care must be take as markets may remain this way for extended periods, usually reflects powerful trends. 1-5 in scale 5 being most overbought or oversold Reversal Risk is an indictor that tries to quantify the risk of a reversal. Usually works best in the short term. None, Small, Medium, High risk scale. Bounce/Pullback Trade Opportunity warns of a potential bounce, or pullback for exit of a current open trade or entry of a new trade. These indicators should not be used independently of each other, they work best when used together. (client changes) |
