Quantitative Price Velocity Alert: High Probability Accelerating Price Velocity

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1 CONCEPT DRAFT By Steve Hall Quantitative Price Velocity Alert: High Probability Accelerating Price Velocity 29, Aug 2018 Symbol: ZBU8 Chart: US 30 YR Futures Chart Frequency: Daily Price Velocity Pattern Recognition Quantitative Velocity Analysis

2 Quantitative Price Velocity Alert Alert Summary The most recent close created a New High-Probability Price Velocity Acceleration Pattern. There is an indication of a high probability that price velocity acceleration will continue at an equal or greater rate as opposed to slowing down. High Probability Pattern Recognition Using Quantitative Price Velocity Price velocity acceleration spiked enough today to create a velocity acceleration signal based on the high probability velocity acceleration algorithm. Price velocity has increased consistently over the previous 3 closes. Negative forces impacting velocity have consistently declined Over the previous 3 closes. This accelerating price velocity started from neutral. High Probability Quantitative Price Velocity Pattern Characteristics Have Been Identified Price Velocity Force Current Price Velocity Current Positive Force Price Velocity Change Total Positive Force Price Velocity Rate of Change Positive Force Change Total Price Velocity Change Current Negative Force 30 YR Futures Chart including price velocity and force measurements at the bottom New Velocity Negative Force Change 2

3 Manage Pre-Trade Risk Risk/ Reward Using Quantitative Velocity Min Risk Calculate Price at ADX +0 at close T+1 and T+ 2 Max Reward Calculate Price at ADX +12 at close T+4 Risk/Reward Evaluation: Reward of ADX +12 is greater than two times the risk of ADX +0 (where the velocity pattern fails) Expectation: 80% probability price velocity will continue to accelerate at an equal or greater rate as opposed to slowing down. Probability Edge: Enter Long Exit when ADX change is < or = to 0 3

4 A Primer on Quantitative Price Velocity It is possible to get a trading edge by applying the laws of physics to your trading rules. We get an edge by entering where physics tells us is the greatest probability of an object continuing at an equal or greater rate. We can use the laws of physics can help us get an indication of a lower probability that one thing will happen over another. This is known as a trading edge. The Object s Acceleration Spikes The Object Accelerated Prior to the Spike Object s Acceleration was Neutral Prior to the Current Acceleration Physics can give you a natural trading edge when you recognize high probability linear energy flow patterns. Look for a new force that creates a high rate of acceleration in a single period that was preceded by a consistent increase in velocity in the same direction. To find your edge, identify when a force occurs significant enough to change the velocity of a neutral object enough to give an indication of a higher probability of the object accelerating in the same direction as opposed to slowing down. Three entry rules using the laws of physics to increase probabilities: Only trade price velocity that has given a signal of strength Only trade price velocity that accelerated prior to the spike Only trade price velocity that was neutral 4

5 High Probability Price Velocity Acceleration Pattern Algorithm (Indication Pattern) Period Velocity (ADX) Force Close T+0 Current ADX Delta > or = 3 Total ADX Delta > or = 4 ADX Delta = + + compared to previous Total Upper DMI Delta > or = 7 Lower DMI Delta = - - compared to previous Quantitative Price Velocity Signal 3-Close Indication VELOCITY ACCELERATION Enter Trade Indication of high Probability Price Close Trade Entry Price DECELERATION TIME 5

6 Strength High Probability Price Velocity Acceleration Pattern Algorithm (Indication Pattern) Velocity Signal (2) Velocity increases over time (1) Velocity spikes Direction Force2 Velocity Price Close Period (3) Velocity increases over time 6