Trend or Range and beyond it: Market state analysis

Market state analysis. Trend or range detection.

Markets states by Jason Fielder

By JohnLast 2852 days ago Comments (9)

Here I would like to share another view of classification of the markets by Jason Fielder. It is different and more simple than the more complex classification of Curtis Faith (I am not talking about the fractal extention of the theory together with the fractal dimension analysis).

Here we have something simpler. What is really interesting and innovative in this approach is that the market state classification is immediately linked with the choice of the market strategy.

As the E-book is freely I will add a link on it so you can download ot from its source. I suggest you use you spam mail accout and not your real mail account.

The three Fielder market conditions are:

Trend (meaning price are moving in the same direction - up and down - over a period of time).

Counter-trend (also known as "sideways market", this is a situation where prices change little and move in a range over an extended period of time)

Break - out (this occurs when prices "break through" to a new high or a new low).

What is interesting in the Fielder approach is that those market conditions are exclusive. The market can remains only in one market condition at the time.

In fact Fielder is only popularizing the market analysis of the French Matematician Louis Jean-Baptiste Alphonse Bachelier. In 1900 in his PhD Thesis he wrote.

"Random noise is what defines the normal market behaviour. There are only two other types of market movement that are outside of the zone of random noise: market spikes and trends"

Well fielder identifiyes his random noise with the Counter-trend state and the market spikes with the Break- outs.

Today our community, we know a little more thanks to the fractal geometry and the biased random walk.

According to Fielder this holds true for every market and every instrument.

And here comes the 60:30:10 principle.

60 % of the time the market is staying in countertrend state.

30 % of the time the market is trending

10 % of the time we have break - outs

And the idea of Fielder is that most of the traders are trading the market as it would be trending or having a break - out but actually it is just remaining in the counter - trend state.

Next what Fielder does is to actually count the trending, countertrending, and break - out days on the daily time frame and he gets those results the same ratio appears again. He does this for example for the GBP/USD pair.

As a consequence his idea is that a specific strategy has to be developped for the different market conditions. What he calls predictable moments of opportunity. And that is what matters for the forex traders who really want to beat the spread.

He uses the predictive levels of volatility during the day in the Forex market.

For example when the US banks close at 4:00 PM eastern but before the Asian banks re-open at 7:00 PM Eastern. The volume during this time drops and you could use counter-trend strategy.

Another predictive low volatility period is before the major economic announcements. But I am pretty scared to do this kind of strategy. As for the night low volatility strategy I actually was trading this. However I used my own cycle strategy with SSA and neural net optimization. Even if it was repainitng using Neuroshell I did quite good trades.

And here end the free report ends. So there are missing when the counter trend periods are and when he trend periods are.

I can say for sure that a good break - out entry would be at the beginning of the European and London session.

As for the trend entry I do not know what his approach is and how he actually defines the trend, because there are many different approaches to do that.

I think if you look at the screen shot at the beginning of the article it ia a bit contreversial the utility of this approach as we see an impulse, a consolidation forming a technical analysis pattern and a tradabel break - out  from that pattern. So this is the bread and butter of the technical analysis trader. What is new?

Finally what is interesting is that Fielder is popularizing the opportunity window trading. I mean this could be new for the novice trader. In fact the novice trader open the terminal when he has time and start to look for break - outs and patterns etc. No it does not work like that if he want to trade a break - out you need to be at specific time at the terminal not whenever you have time. If you miss the opportunity window you  would better not trade.

The relationship between opportunity window and time of the day and popularizing this idea is what makes this different. As london trader points out that many things are written for technical analysis but trading forex requires specific understanding of daily volatility.

I know that the guys on TSD were very critical about this system, because it was obviously overpriced. Of course I do not suggest you buy anything and I do not have any relationship with this guy.

Howverever I think that there were some VALUABLE AND WELL EXPLAINED IDEAS in his materials and videos from somebody that is obviously an experienced FX trader. What I want is to take something good and make it better.

• JohnLast 2852 days ago

I did not finished the article yet, I just posted a part because o get scared to loose the text before posting.

hey what minute chart ru using to trade

• JohnLast 2852 days ago

As you know I am looking for the fractal dimension and the fractal state. I would trade at the places where I have a better predictability horizon.

The ideal market state for me is when I have a good predictability horizon at the 5 m time frame. In that way I know if I have a winner or not very fast. And if I have a winner I can close the first one pretty fast. and diminish the risk of the trades later, and let the other run with the stop close to the zero point.

According to Joe Ross you need to open at least two positions, one of the position has to be closed fast and the other later trying to catch a bigger move. According to him if you are trading with only one position you are gambling.

Another approach is to open a position and add other positions if the first is profitable.

In fact what differentiates the good experienced retail trader and the non experienced is the ability to manage multiple positions. How to cover a loosing position is an art, because inevitably they happen.

For me a good money mangement criteria is that a reasonable position size is a position that you can psycjologically open without a stop level (without a stop does not mean that there are not exit rules). For example if you have 1000 usd and you open a position of 0.01 lot you can open it without a stop whatever it may happen it will not ruin your account. On the contrary if you open 2 normal lots with 1:500 leverage you have to be very carefull with the timing and the stops otherwise your account is gone.

I have seen how a good discretioanry trader turn 50 USD in 2000 USD in 8 hours with leverage 1:500. That was an amazing story. But ... this is not for 99 % of the readers of this blog post (including me of course).

if joe ross was so good of a trader,he wouldnt be selling books,he would be reaking profits,and hiding his profile somewhere in a nice carribean beach house full of hot chicks

thats my thinking

actually this is very good thinking,but its somebody elses,i can assure u that its not the guys who owns this website,since good traders dont need to scam people,they are already full of money,and they know how hard it was to gain it,and to give up all that hard work,on a lousy 50 bucks ,or someother smackaroo price,i dont thin k so

successfull traders are loners,they dont trust anyone and no-one because they believe we live in a jungle and camoflauge is key

and thanks for mentioning me here

• jaguar1637 2851 days ago

Hey

Did you try ForexMasterPlan ? is it another scam ??

• JohnLast 2851 days ago

However how much are making professional traders? It is not even 20 %. Please take a look at the BarclayHedge. You can see the performance of large Hedge funds anddiscretionary traders. Have a look!

Actually  The professional Currency Traders are ahead from the beginning of this year with 0.92 %. GREAT. Simply GREAT. So any profit stream is welcome, :).

• JohnLast 2851 days ago

I think the scam part of everything is that they promise impossible results.

Well for the rest the question is if the Moving Average is a scam because all those strange names rely heavily on moving averages etc.

Howver what is interesting is that sometimes interesting ideas are shared and particularly those ideas can be realized by other means.