Pope Binary Presents
This Crazy Effective SystemExplained Plus the Backtest Results
Introduction Good morning you fine ladies and gentlemen! Much like anyone else, I got into Binary Options for one sole purpose- to obtain an additional stream of cash. Over the course of the past year, I have been experimenting with various indicators/strategies to obtain a “perfect system.” Sadly, I soon discovered that such a system does not exist. However, various strategies and indicators perform better than others, and through my own back-testing I can tell you right now that this is the best system I have ever tested (in terms of “blindly following” the indicators). indicators). With that being said, it is not a perfect system. You can’t just “willy nilly” place random tra des when the indicators line up; there still has to be thought and proper risk management behind every trade. However,
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if you’re interested in learning how this indicator -filled -filled screen works, continue reading and I will try my best to break break it down for you. Full credit goes to user BillyKay at BinaryOptionsEdge. BinaryOption sEdge. This is his system, and I am simply riding on the wave that his hard work produced. Much love to him.
Contents Why it Works
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How to Use it
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Identifying Strong Trends -
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Examples -
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How to Install it -
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Backtesting (Under Construction)
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if you’re interested in learning how this indicator -filled -filled screen works, continue reading and I will try my best to break break it down for you. Full credit goes to user BillyKay at BinaryOptionsEdge. BinaryOption sEdge. This is his system, and I am simply riding on the wave that his hard work produced. Much love to him.
Contents Why it Works
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3
How to Use it
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8
Identifying Strong Trends -
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10
Examples -
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How to Install it -
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Backtesting (Under Construction)
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Why it Works Alright guys, here is where I break down what indicators are used and why this system is so effective. If you’re only interested in the results and how to use it, feel free to skip this section. Imagine that you’re a completely new trader, and all you want is to make your first successful trade. What would be the best way to do it? Reversal strategies, candlestick patterns, trend-trading, support/resistance reactions, or breakout candles? Well, to put it simply, this system uses all the above strategies, and then some. So let’s begin by understanding the individual indicators and then we can examine how they work
together. With any solid strategy, you need a way to identify the trend. To address this problem, the system uses moving averages- but not standard IMAs. Instead it uses these things called Exponential Moving Averages, which are better suited for shorter term trades (like Binary Options). The system uses the 50-
period EMA (to establish establish the long-term long-term trend), the 34-period EMA (to establish establish the the medium-term medium-term trend), trend), and then an EMA fan ranging from 3-14 periods. Essentially, if all the EMA lines are below the 50-period EMA, then a trend is bearish, and vise versa for a bullish trend.
Ok, so now that we have the trend established, what else do we need? Well, for starters, let’s try and identify where the market has been overbought or oversold. By finding these locations, we can predict pullbacks and/or reversals. reversals. To accomplish accomplish this, the system uses fractal indicators . Without hurting your brain too much, much, a fractal fractal indicator is just an algorithm running to determine the “higher highs” and the
“lower lows.” It is important to note that a fractal indicator is always moving; that is, if a trend is breaking to newer highs, then obviously the fractal will continue to move with the trend until the trend halts. If the fractal indicator stops moving, then that means a new high/low has been established for the trend, and a pullback/reversal can be expected shortly after. In the picture below, you can see the fractals circled in white. In this system, the “new highs” are indicated by a yellow circle and the “new lows” are indicated by a green circle.
So now that we have the trend established and the overbought/oversold areas identified, how do we know when to enter trades? We can see that in the picture above, the fractals are doing their jobs; the market generally reverses after the fractals form. But how long after the fractals do we wait before opening a position? To solve this, a 4 EMA close x 4 EMA open is used (for the purpose of this report, we will refer to this indicator as the 4x4). Whenever a moving average is applied to chart, it is either calculated based on the “open” of candles or the “close” of the candles. The “open” of candles better indicates the previous trend, whereas the “close” of candles better indicates the current trend. So, if we took two separate EMA lines, one based on the “open” and the other based on the “close”, and they both predicted the same thing, then surely the current short term trend co uld be predicted, right? That’s exactly what this system does, and
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rather than adding more lines to the chart, the system makes the instances in which both EMA’s line up appear as diamonds. (by the way, the reason it is called a 4x4 rather than a 200x200 is because the EMAs are calculated based off the past 4 candles/periods). Green diamonds mean place a call option, and red diamonds mean place a put option.
As we can see, the diamonds alone are fairly unreliable. I’ll get into this later, but basically t he diamonds are your “entry points” when the conditions are right. When combined with the other indicators, the 4x4
is an extremely reliable indicator. Alright, we almost have a working system. However, there is one extremely important detail we are leaving out- support/resistance levels. Traditionally, to identify these levels, a trader would have to record each and every zone that the market contested. Luckily for us, through the magic of the internet, there is a program that will automatically identify these zones for you (Google support/resistance/psychological zones if you don't know what these terms mean). The system highlights psychological zones using a color scheme- the darker the zone, the more contested the zone is. The solid yellow/blue lines are round numbers, meaning that the market will most likely be contested at these values. The picture below shows how crazy the charts can get- sometimes there are dozens of support/resistance levels in the current market range.
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Ok guys, we only need to take one more thing into account- momentum. Rather than using a traditional momentum indicator, this system uses a Commodity Channel Index (Woodie version) . This is the thing that appears on the bottom of the screen, and it is extremely important when using this system . I’ll try my best to break it down for you, but the best teacher for this indicator is experience. The CCI is composed of three main parts: the bars, the blue line, and the middle ticks. The bars have four potential colors- gray, yellow, red, and green. The bars measure the DEPTH of the current momentum. Green bars mean the current trend is bullish, and red bars mean the current trend is bearish. The larger and thicker the bars appear, the stronger the current trend. Simple, right? Here’s where things get tricky. Gray bars signify that the current market has momentum OPPOSITE the current trend, but a new trend hasn’t formed yet. Gray bars generally signify that a pullback is happening, or a future trend is about to break out. Yellow bars signify that a new trend has started, opposite the current trend. It is important to note that if this indicator could truly spot every trend switch, we all would be millionaires. Just because a yellow bar forms, don’t bet the house that the market is changing dire ctions. In the picture below, we can see several instances where gray bars form in a strong trending market.
The second main component to the CCI are the middle “ticks.” Notice how there is a middle line to the CCI, one that often has a color opposite the bar colors. Whereas the bars measure the depth (strength) of the market’s momentum, the middle line represents the market’s “in the moment” momentum. The bars determine the trend, and the middle line determines the little fluctuations within the trend. For example, in the picture above there are several instances in which there are green bars, but the middle line is red. Notice how shortly after these red ticks form on the middle line, a pullback happened. This is because the bars signify the trend, and the middle line signifies momentum .
The last major component, and quite frankly the one that I don’t understand completely, is the blue line on the CCI. I’m going to be straight forward with you guys: I have absolutely no idea what this blue line is based off of. Neither do I care. The only thing that matters is that I know how to read it and use it. And here are the only two things you need to know about it: 1. When the blue line crosses the zero line (the middle line with the ticks) it is a HUGE deal 2. If the bars ever break outside the blue line, the market is overbought/oversold In the example section, I’ll help explain why the blue line crossing the zero value is such a huge deal. Essentially, it just means that a market is experiencing turmoil, and a future pullback/reversal is soon to come. Oh yeah... one last thing. Here is an extremely important definition, make sure to incorporate it into your trading if you use this system. A flayed EMA fan is crucial for any countertrend trading you participate
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in, so make sure to watch out for it. I personally do not countertrend trade with this system, but recognizing this pattern lets me know that a reversal is soon to come. Flayed EMA Fan: When the EMA fan becomes extremely spread apart. This means that the market
averages are in extreme controversy, so a potential pullback/reversal can be expected. (see pictures below)
Notice how after each EMA fan that is spread apart, there is generally a pullback/reversal. This is extremely useful for countertrend trading. And that, my friends, is the entirety of this crazy-looking system.
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How to Actually Use it Here’s the fun part- putting all the indicators together. I’m going to try and make this as simple as possible, if you have any advanced questions feel free to ask me at
[email protected]. 1. As with any system, wait for a strong trend to break out. Trading in a crappy market is like trying to sleep with your eyes open. It just doesn’t work. 2. TRADE WITH THE TREND. This is for your benefit. If you’re looking for a countertrend system, go elsewhere. This is not the strategy for you. 3. Wait for a “higher high” or a “lower low” to form. These will be represen ted by the yellow/green circles, or by bounces off of the EMA 50 (see the Example section). 4. Wait for an entry point (represented by diamonds) to form that agrees with the direction of the market. Meaning, if the market is bearish, wait for a red diamond. If the market is bullish, wait for a green diamond. 5. Make sure the CCI Woodie (the thing at the bottom of the screen) agrees with your impending trade. If the momentum is extremely bullish, then obviously don’t place a put option. Check to see if the CCI crossed the zero value. 6. Try and confirm with various other factors. Look for support/resistance levels, candlestick patterns, flayed EMA fan, etc. Remember, raw price action is the best indicator; don’t try and “force” trades if the market conditions don’t look profitable. 7. Place a trade at the start of the next period. Allow yourself 3+ periods before the next expiration. Note that the shorter the time frame, the better; EMAs perform best on smaller intervals. And that’s it! While it may seem complicated now, you will eventually get the hang of it - the trades literally come to you. Below, I have provided a bunch of examples with commentary explaining the system. Remember, trading WITH the trend will provide the best results. Enjoy, and best of luck!
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Identifying Strong Trends As I’ve stressed several times throughout this report, the most important part of using this system is waiting for a strong trend to break out. I will tell you right now, the hardest part of this system is being patient. Most experts agree that the market only “trends” about 30% of the time. This means that 70% of
the time you should be doing absolutely nothing. Let that sink in. So how do we define a strong trend? That is, how do we know when one is forming? To put is simply, a strong trend occurs when higher highs or lower lows are consistently being formed . As we all know,
a trending market never just “spikes” and then goes flat; there are a series of pullbacks, reversals, and continuations in any given trend. Below, I have provided a “ professional” sketch of what a strong trend look like:
The circled values represent the “higher highs” that a trader should always look for. It is important to note that if a “lower high” forms, the trend may be approaching an end:
Simple enough, right? Now let’s apply this theory to the charts. Below, I am going to provide examples of various markets, and attempt to explain whether or not the trend is considered “strong.” Remember, just because the Moving Averages are red/green, it doesn’t mean the markets are in a trend.
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Before I tell you the answer, I want you to ask yourself whether or not this is a strong market. There is a clear direction to the market- it is initially bullish and then turns bearish. There are minor pullbacks and reversals, followed by strong continuations. The CCI has strong bars in it, meaning there is a lot of depth behind each respective trend. Now for the answer: this is considered an extremely weak market. To be fair, I haven’t told you everything you need to know. Whenever you are looking at a chart, and see excessive amounts of diamonds forming, this means that the trend is considered extremely weak. The reasoning behind this
is simple: If the system tells you to place a call option in one period, and then the very next period tells you to place a put option, then the system is clearly not functioning properly. Furthermore, the “trends” shown in this picture are very short term, and filled with extremely diverse candle sizes. The best types of trends are the ones that are slow and steady- no random spikes, no large wicks, no unexplained r eversals. If you can’t see where the market is going to be an hour from now, then don’t trade. Lastly, in the bottom left corner of the screen we see blue text that tells us about future news releases. On this chart, a news release just occurred 20 minutes prior to the time of the screenshot. It is always best to avoid news releases- unless a strong trend breaks out. Otherwise, the “trends” during news releases are just spikes; spikes that will cause you to lose a lot of money.
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This is what I would consider a true trend. In this chart, notice how the bearish trend continued for over three hours- it passed the test of time. Also notice how after each bullish surge, the market eventually continued in the direction of the trend. If I don’t say crazy enough already, I also judge a trend on how “pretty” it looks. A strong trend has a “pretty” 45-degree angle, a “pretty” EMA fan (the fan looks as if you ran a comb through it), and a “pretty” CCI (the CCI is balanced between red and green momentum, with the bars all being red). Furthermore, there isn’t a whole lot of diamonds forming. Here is another example of a “pretty” trend:
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Examples Example 1:
Ok guys, for this first example I simply want to highlight the fractal + diamond combination. As explained in previous sections, this pattern is considered a strong entry signal. The fractal represents an overbought/oversold zone, and the diamond is your “signal” to place a trad e at the start of the next period. The vertical lines represent the period in which the option would be placed. Initially, when I first started using this system, I was caught up in trading off of this pattern alone. Blindly using this pattern will yield a win percentage of about 67% (1075 sample size). This estimate is based off the assumption that the trade had the open and expiration occurring on the candle immediately after the diamond. However, there is a whole lot more to this system than just the fractal + diamond combination. The big money comes through holding on to your positions for longer periods of time.
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Example 2:
Now it’s time to put everything together. Buckle in, there’s a lot I need to cover. These two trades just happened “live”- I paused the typing of this report to place these two trades. First things first: Is there a strong trend? Absolutely. In the section prior to this one, I said that I look for “pretty” trends. This trend is absolutely beautiful. It’s slow and steady, with mino r pullbacks. There are no wicks or spiked candles; I can see where the market is going. The EMA fan looks like you ran a comb through it, and there are relatively few amounts of diamonds forming. Market condition is prime. The second thing- and perhaps the most important- is the reaction on the CCI (the histogram on the bottom of the graph). Notice how there is a series of large, green bars that are relatively large. This confirms that the market is in a strong, bullish trend. The next major thing to notice is that the middle ticks are mostly green (the middle line on the CCI)- this confirms that the current momentum is upwards. Lastly, and this is the most important part on the CCI, the blue line on the CCI crosses zero:
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Whenever this blue line crosses the zero value, the market is considered to be in a state of correction/pullback. Furthermore, when the CCI is in the “pullback” zone, check to make sure there are only gray bars forming. If there are any “colored” bars, thi s means that there is a significant presence from the opposing force.
If you see this happen in a strong, trending market, watch for a “reversal of the reversal”; watch for a continuation signal in the market. Luckily for us, we have a way to identify these continuation signals: the diamonds! In summary, these two trades were taken for the following reasons: 1. There was a strong, trending market. The market was behaving normally, and I could see where it was going. 2. A pullback was happening. I could tell you this from the candlesticks alone. 3. The CCI crossed the zero value, without any depth to the bearish side. 4. A diamond formed as a continuation signal, in the direction of the current trend. This pattern repeats itself over and over and over and over and over again. There is no secret here. However, this system will most likely cause you to lose money when you first start. Why? Because you won’t wait for the right opportunities. Patience is the friend of the rich.
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Example 3:
Here are three more potential trades using this system. Once again, the first thing we need to identify is whether or not a strong trend is established. Check. Next, we look for a pullback. All three trades meet this requirement. Check. Next, we look for the CCI to cross the middle line; all three trades meet this requirement. Then why did the third trade fail, whereas the first two won? The answer is simple: in the third trade, there was a weak candlestick pattern, and the CCI had green bars. The CCI also displayed a yellow bar- this signifies that a potential new trend is starting. The CCI middle line was also green for roughly 12 periods prior to the formation of the red diamond, meaning that the current momentum of the market had been bullish for an extensive period of time. Additionally, the market broke above the EMA 50- this is a strong signal that a trend is fading. If nothing else, the candlestick pattern alone should have indicated that the impending trend was a poor trade. If it looks like a bad trade, with custom indicators or not, then it most likely is going to end up with bad results. Price action is the best indicator known to man.
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Example 4:
The next important lesson I need to teach you guys is as follows: This system works extremely well with the engulfing candlestick pattern. The first trade highlights this lesson perfectly- the market
skyrocketed upwards after the green diamond formed. I do not have a win percentage for this pattern yet (I don’t have a large enough sample size to draw a firm conclusion), bu t based off of personal observation I can tell you that this pattern wins a significantly larger portion of the time compared to other setups. The second portion of this example is used to highlight a fading trend. There were several giveaways that it was no longer safe to place a bullish option in this market. For one, the market broke the EMA 50- a strong trend should never break the EMA 50. Secondly, the CCI predicted that a new trend was forming; a yellow bar formed, followed by a series of red bars. Also, there were no longer any green bars forming on the CCI. The lack of green bars indicates that the bullish trend had no depth. Thirdly, the middle line of the CCI had been red for an extensive amount of time. This means that the momentum had not been bullish for a very long period of time. Whenever you see these signals, stop trading immediately. Trying to salvage a fading trend is never a good idea. Just wait for a cleaner trend to form, there will always be a better time to trade.
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Example 5:
The first trade in this example is a textbook trade. A strong trend was established, and the CCI crossed zero without any depth to the bearish side. A green diamond formed on a strong candlestick pattern (pin candle followed by a confirmation candle), and the momentum had been extremely bullish prior to the pullback. Furthermore, look closely at the picture and you will see a black box that the pin candle bounced out of. This black box represents a psychological level/support zone. Clean trade. The second half of this picture I want you guys to examine closely. Two diamonds formed, after the CCI crossed zero. The trend was strong, and the market just bounced off of a support line (the blue line). Which of these two trades would you have taken? Let’s examine bot h diamond setups. The first green diamond, according to the system, appears as a clean trade. However, this shows perfectly why you can’t “automate” this system - the raw price action looks terrible. When have you ever seen this candlestick pattern traded by professionals? The answer is never, because it isn’t a pattern. (see picture below)
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I had no clue what the market wanted to do after this pattern formed. Therefore, don’t touch this trade. For the second diamond, the answer is simple: The first diamond failed, so don’t touch the next green diamond. The trend is fading. If you can’t understand what is happening, then don’t trade at all.
“My losses have taught me that I must not begin to advance until I am sure I shall not have to retreat. But if I cannot advance I do
move at all.” –Jesse
Livermore
not
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Example 6:
At this point in the report, I am just going to try and brainwash you with the cleanest trades possible. Like I’ve said several times over, this system is remarkably simple. The trick is you just have to be patient. Oh yeah, and I think I forgot to mention… All these examples are taken off of the 1 minute charts. This means that there are dozens of potential trades each day, if you have the focus and discipline to wait for them. Keep that in mind whenever you are about to place a mediocre trade. For this trade, everything lined up perfectly. A strong bullish trend was established, and a pullback happened. The CCI crossed the zero value line, and only gray bars were forming on the CCI. A strong candlestick pattern formed (doji + continuation engulfing candle), after the price bounced off of the EMA 50. A green diamond formed after a fractal (the fractal is the green circle; it represents a “lower low”). The momentum of the market had been extremely bullish prior to the pullback. Beautiful trade.
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Example 7:
More clean trades. I feel as if I’m repeating myself - but I need to drill the point home. First Trade: Clean bullish market with very few diamonds forming. The CCI crossed the zero line, and then bounced upwards when the diamond formed; no depth to the bearish side. There was also a candlestick pattern (the upside-down pin). Before the pullback, there was a series of large green bars and strong bullish momentum. A green diamond formed- take the trade. Second Trade: Clean bullish market with few diamonds forming. The CCI crossed the zero line, and bounced upwards after the market tested the EMA 34. A strong candlestick pattern formed (inverted hammer with a bullish confirmation candle) and an engulfing bullish candle formed. Only gray bars formed on the CCI to the bearish side- there was no depth to the bearish sentiment. A green diamond formed- take the trade. By this point, I hope you get the gist of the system. In the Skype gro up chat, I try and upload any “live” examples that I see- if you have any questions, feel free to ask me there.
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How to Get This System Alright ladies and gentlemen, if you’re willing to try this system, here’s how you can obtain it. And yes, it’s completely free. 1. Download MetaTrader 4 or Metatrader 5. For Mac users, I would recommend MetaTrader 4 from https://www.xm.com/metatrader-mac 2. Open up a free demo account for Metatrader. This is required to login to the platform. Once the program is installed, launch the program and login with your new account. CHANGE THE DEFAULT SERVER. The default demo server is buggy as hell- change it to one of the other demo servers. 3. Here is where things get tricky. Go to http://www.binaryoptionsedge.com/topic/3885-patience-discipline-focus-trading-system-aboveaverage-returns/ and scroll down until you see download files (by the way, this is the original source for this system). There are 14 custom indicators you will need to download, and a custom template as well. In total, you need to download 15 items. 4. Install these indicators, along with the template, into the program files of MetaTrader. There are dozens of YouTube videos on how to do this- simply YouTube search “MetaTrader Custom Indicators Install”. 5. If everything went to plan, relaunch MetaTrader and apply the new indicators to a chart. From there, you should have it There are lots of steps involved with this process; it took me roughly three hours to figure this out on my own. If you have any questions feel free to contact me directly at
[email protected]
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The Pain-in-the-Ass Backtesting These tests need to be updated. I am in the process of backtesting the “real” way to use this system; in the beginning, I was obsessed with the fractal + diamond combination. Once I have a large enough sample size, I will update this section.
Alright guys here’s where I put the system to the test. Below are the results from hundreds of trades, along with different variations of the system. Hopefully, from this you will be able to see the impressive win percentage this system has. For every test that followed, I employed the following rules: 1. Every trade was ITM. I chose a strike price that was above/below the close of the previous candle, in my favor 2. Using my theory about fractal-diamond proximity (see Example 6), I only placed trades if the diamond formed 2+ candles away from the fractal 3. I was basing the system off of expiration values. Meaning, I didn’t take into account the fact that you could close positions early Based off these basic rules, I tested many different variations of the indicators. The following tests, as well as their win percentages, are shown below. For specific information on each test, scroll down. The results of each test are as follows: Test 1: 71% Win Rate Test 2: 77.6% Win Rate Test 3: 75% Win Rate Test 4: 67% Win Rate (Overall System) Test 5: 78% Win Rate
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Test 1 Alright, so the first thing I wanted to test was the raw results of the system. That is, if I blindly followed this system, what would the overall win percentage be? The rules are as follows (combined with my general rules): 1. Regardless of any conditions at all, if a fractal formed with a confirmation diamond 2+ candles away, I would test if the following candle expired in the money 2. If a fractal formed, and a diamond appeared within 1 candle, then that fractal was forfeit. Meaning, I would not place any trades based off that fractal 3. All trades taken on the 5 minute charts, using only major currency pairs 4. No indicators/market conditions/bias affected these results. This is raw, naked testing of this system. The following picture highlights the trades I was looking for:
The following picture highlights trades I wouldn’t take:
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Test 1 Results Results of Raw System (300 Sample Size): 87 losses 213 wins 71% Win Rate
So, without taking into any consideration anything besides the diamond + fractal combination, you could expect to win roughly 70% of your trades. For Nadex trades, any ITM contract you purchased below $70 on a Bid and above $30 for a Put you could expect to make money. For other Binary Options brokers, any payout above 45% would yield you profits in the long run.
Below are the actual Excel Charts of my results from this test (just to show I’m not pulling these numbers out of my ass haha): https://1drv.ms/x/s!Ai1w6Y4I97Cog3FMDVNku19pymeh
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Test 2 Ok, so now that I had general idea of the overall win percentage of the system, I was looking for ways to refine the system. So for this test, I used the same rules as the first test, but only traded in markets that looked profitable. In other words, I only traded in markets where a clear trend was established. The rules for this test are as follows: 1. I would only place a trade if a fractal formed with a confirmation diamond at least 2+ candles away 2. If a diamond formed within 1 candle of the respected fractal, then the trade was forfeit 3. All trades taken on the 5 minute charts, using only major currency pairs 4. Would only trade in strong, trending markets. Would trade WITH THE TREND ONLY ( no counter trend/reversal patterns) The following picture highlights a strong market:
The following picture highlights a weak market:
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Test 2 Results Results of Test 2 (103 Sample Size): 80 Wins 23 Losses 77.6% Win Percentage
As we can see, trading with the trend greatly improves your odds of winning. However, something I want to point out is the fact that the sample size is MUCH smaller- waiting for a clear trend to be established takes more patience. For Nadex traders, any contract purchased below $76 on a Bid or above $24 on a Put would yield profit if you follow this system. For other Binary Options brokers, any payout greater than 30% would yield a profit.
Once again, here is the actual Excel Spreadsheet: https://1drv.ms/x/s!Ai1w6Y4I97Cog3Tut-e0pfbCCivP
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Test 3 For this next test, I wanted to actually use the CCI Woodie. Up until this point, I had been completely ignoring it. I reverted back to the original setup; I would only enter on the fractal + diamond combination, but this time I would only enter a trade if the CCI Woodie agreed with my current prediction. The rules are as follows: 1. I would only enter trades if a fractal formed, followed by a confirmation diamond that formed 2+ candles away 2. If a diamond formed within 1 candle of a fractal, that fractal was forfeit for trading 3. I would trade only major currencies on 5 minute charts 4. The CCI Woodie had to agree with my the direction of the trade 5. If the market broke outside the CCI’s momentum line, then I wouldn’t place a trade 6. I did not take into account market trend, or anything else The following picture highlights the market breaking outside the CCI momentum line:
For this test, defining whether or not the CCI agreed with the system was rather tricky. So I kept the scenario as simple as possible: if the color in the middle line of the CCI Woodie agreed with my prediction, I would enter the trade.
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Test 3 Results Test 3 Results (100 Sample Size): 75 Wins 25 Losses 75% Win Percentage
If you traded with the fractal + diamond combination, combined with the CCI Woodie, you could expect to win 75% of your trades. For Nadex traders, any contract purchased below $74 on a Bid and above $26 on a Put would yield profits. For other Binary Options brokers, any payout above 35% would yield profits.
Excel Spreadsheet: https://1drv.ms/x/s!Ai1w6Y4I97Cog3ahwvuG8P0ZrwAe
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Test 4 Ok guys, this is where I began to question my diamond-fractal proximity theory (see Example 6). For this test, I wanted to determine the best distance between a fractal and a diamond. The Rules are as follows: 1. I would not take into account any factors except for the fractal + diamond 2. I would trade only on 5 minute charts with major currency pairs 3. The specific fractal+diamond distance had to be exact
Test 4 Results Test 4 Results (1000+ Sample Size):
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If the fractal+diamond occurred on the same candlestick, you could expect a raw win percentage of 67% (201 Wins/99 Losses)
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If the fractal+diamond occurred one candlestick apart, you could expect a raw win percentage of 63.7% (191 Wins/109 Losses)
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If the fractal+diamond occurred two candlesticks apart, you could expect a raw win percentage of 71% (213 Wins/83 Losses)
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If the fractal+diamond occured exactly 3 candlesticks apart, you could expect a raw win percentage of 68% (119 Wins/56 Losses)
So, the numbers just confirm my initial thesis: the larger the distance between the fractal and the diamond, the more successful the pattern is. Combining every trial, meaning if I added all the wins and losses together regardless of fractal/diamond proximity, the following win percentage could be expected: 67% This is the bare naked win percentage of the system, taking into account only the fractal + diamond pattern
https://1drv.ms/x/s!Ai1w6Y4I97Cog3gk_pO9Q6Q5jrmt
