The Power Of Data Mining

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We leverage the power of data mining and statistical analysis, powered by today’s high speed computer processors, enabling smaller traders to analyze the markets like their billionaire multinational counterparts.

Taking tens of thousands of data bars, weeks into the past, tools like the Flux compare week after week after week and days into the past like a personal high-powered private investigator. If behavior patterns repeat with enough frequency to form a pattern, it displays on your screen with total clarity. If the pattern is developing, or eroding, it displays as “chop” on your screen and shows no clear direction or pattern.

These patterns and cycles are dynamic, meaning they change over time. This fact prevents smaller traders from ever discovering their existence. An individual simply cannot analyze ten thousand data bars by hand, week after week after week. So the cycles remain hidden from view, and the markets continue to appear “random”. In reality, each trading day has it’s own unique “fingerprint”, that will only exist that way, for that 24 hour period.

As a result, most traders enter an emotional state of paranoia. Broker after broker report that most traders cut their winners short – and give their losing trades a much longer leash. Similarly, most traders rely completely on lagging indicators and fail to employ any predictive or cyclic analysis in their trading, putting them at an extreme disadvantage.

When traders use lagging indicators, they are always just behind the market movers. Anxiety develops quickly, as the next 3 seconds could bring fortune or ruin. Every bar is a potential trade. Every bar is potentially a missed opportunity. Most of the traders that we talk to this way have all but "burnt out", sitting in their office chairs 8,10, 15 or more hours a day wondering if the next bar will be the signal. Inevitably, they perform psychological suicide to make the pain stop, and usually end up blowing out their accounts.

Traders that employ predictive tools trade more confidently, and allow winning trades go to targets based on observed cycles and behaviors. They simply EXPECT their trades to work. This one difference could be the difference between a profitable account, and a blown up account. There's a difference between "expecting" something to happen, and "hoping" something will happen. I can't think of a dirtier or more destructive word than "hope" in trading. It's an account killer.

In our webinars, we reveal that human beings as a whole, follow extremely predictable routines throughout their weeks.

Moreover we show that human behavior as a whole can be predicted and traded profitably in the markets. In his comprehensive book “Trading Systems and Methods”, Perry Kaufman makes this point very clearly. He states that many of the great traders, like W.D. Gann were able to forecast market movements days and weeks in advance. In Gann’s case, his cycle forecasts were reportedly 85%+ accurate. In his book, Kaufman states,

“….There are some approaches to trading that are DIRECTLY DEPENDENT ON HUMAN BEHAVIOR, and cannot be represented by mathematical techniques”

If a man like W.D. Gann, with no computers, a piece of paper, and some pens can be 85% + accurate in his predictive forecasts, there has to be something going on beyond “random” in the markets.

In fact, we see from Gann's later writings, that of everything he had studied in his carreer, he had one piece of advice for all who would come after him in the pursuit of trading profits:

"TIME is the most important factor in determining market movements and by studying the past records of the averages or individual stocks you will be able to prove for yourself that history does repeat and that by KNOWING THE PAST YOU CAN TELL THE FUTURE. … There is a definite relation between TIME and PRICE. … Now, by a study of the TIME PERIODS and TIME CYCLES you will learn why tops and bottoms are found at certain TIMES and why Resistance Levels are so strong at certain TIMES and bottoms and tops hold around them. …"

100 years after Gann, we first turned on the Flux tools looking for time cycles in the markets that we traded. We expected to see 1 of 2 things once the data mining was complete....either cycles, or chaos. Proof that the markets had distinct turning point times, or proof once and for all that the markets were random, and we had no way to anticipate what was coming next. Here's what came back when the data mining algorithms were done:

See the hills and valleys? See how some times of the day are expected to trend upwards, and others are expected to be choppy?

See how some times of day have clear peaks to them...obvious reversal times?

This is what Gann dreamed about, before the age of computers and personal PC's. This is what I believe he was doing in his head, with pencil and paper.

Something very few if any humans today could even hope to accomplish.

 

In his book, “The New Market Wizards”, Jack Schwager interviews dozens of the world’s modern “super traders”, and concluded at the end of his studies,

“…my experience with the interviews conducted for this book and it’s predecessor leaves me with little doubt that the random walk theory is wrong…”

If one man can “decode” the patterns and cycles in the markets, it essentially proves that the markets are not random, and with the right analysis tools, are decipherable.

If you'd like to know more about how this unique tool set accomplishes that very thing, put your email address below to access our online training area and all your questions will be answered.