What is new about, a HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] THEORY] surel this this is !ust a tra"itional s##etri$al s##etri$al trian%le a lon%stan"in% te$hni$al analsis set u&'
When loo(in% at what has been &resente" as e)a#&les, #an o* the e)a#&les lai" out will be e)a$tl that, Tra"itional Te$hni$al Analsis +##etri$al Trian%les The (e ele#ent ele#ent here is the a&&roa$h a&&roa$h to the set u& an" how it is han"le", HUNT VOLATILITY FUNNEL THEORY loo(s at the set u& "i-erentl Also whilst all HUNT VOLATILITY FUNNEL THEORY [HVF THEORY].s /uali* as tra"itionall "e0ne" trian%les 1#ostl s##etri$al s##etri$al ones2, all s##etri$al trian%les are not HUNT VOLATILITY FUNNEL.s [HVF.s] +o to re&eat The Hunt Volatilit Volatilit Funnel set u& is a subset o* trian%les as "e0ne" b tra"itional te$hni$al analsis +o let us $lari* the "i-eren$e between the two Firstl Firstl there is a broa" $hur$h on "e0nin% an" e)&loitin% 3+##etri$al Trian%les. in ter#s o* tra"itional te$hni$al analsis, with so#e 4ariations, &arti$ularl on tar%etin% The (e *eatures *eatures that "e0ne tra"itional tra"itional te$hni$al analsis re4ol4e re4ol4e aroun" the *ollowin%5
6 Tren" line theor is (e (e an" all trian%les trian%les are essentiall boun" b two tren" lines 1Note5 As$en"in% Trian%les ha4e a 7at resistan$e le4el an" 8es$en"in% Trian%les ha4e a 7at su&&ort le4el, but #ost o* our e)a#&les are s##etri$al, or an%le" 3tren". lines, a&art *ro# hori9ontal, to so#e "e%ree2 : As tren" tren" line theor is (e, a #ini#u# o* : &oints are are re/uire" re/uire" to establish the tren" line, with ; or #ore bein% &re*erable &re*erable ; The tren" tren" lines ha4e ha4e &re"o#ina &re"o#inan$e n$e in establish establishin%, in%, the a#&litu"e *or tar%etin%, an" the &oint *ro# whi$h this a#&litu"e is to be &ro!e$te" *ro#, na#el the brea( o* the tren" line +ee the $hart below as an e)a#&le
+##etri$al Trian%le Trian%le as analse" b tra"itional te$hni$al analsis
< The tren" tren" line tou$h tou$h &oints ha4e ha4e no s&e$i0$ s&e$i0$ $riteria $riteria to /uali* /uali* the#, a&art *ro# bein% ali%ne" with the tren" line "rawn This is #entione" in res&e$t to its rele4an$e to the &ri$e beha4ior in the &attern itsel* = this it is #eant, *or e)a#&le, two &oints on the lower base tren" line $an o$$ur $on$urrentl $on$urrentl without a re/uire#ent re/uire#ent *or a re$i&ro$al re$i&ro$al #o4e to the to& tren" t ren" line [As seen abo4e with the two le*t lower &ri$e &oint $onta$ts] In the e)a#&le abo4e, the tren" en4iron#ent &rior to the set u& is not e)&li$itl re*erre" re*erre" to in ter#s o* e)&e$te" out$o#e, the tren" &rior to the &attern is u&war" an" the 0rst &oint ta(en on the &attern is at &oint 3=. an" is on the lower tren" line There are are in$onsisten$ies in te$hni$al a&&roa$h a&&roa$h to tar%et tar%et a#&litu"e, it a&&ears a 4ariation o* a#&litu"e $al$ulations *or a s##etri$al trian%le e)ists The #ost $o##on $o##on is that re&resente" re&resente" in the =la$( =la$( "otte" line *ro# the 0rst hi%h &oint "own to the tren" line [>hart below?
+##etri$al Trian%le tar%et a#&litu"e 4ariations
Howe4er, alternati4es alternati 4es ha4e also been seen, su$h as Tar%etin% a#&litu"es run *ro# when the &ri$e a$tion 0rst $rosses in between the tren" lines An a#&litu"e is run *ro# this $rossin% o4er the lower tren" line to the u&&er tren" line whether there is &ri$e a$tion en%a%e" at this u&&er &ri$e le4el or not 1@ur&le a#&litu"e arrow on the le*t2 Another alternati4e is the 0rst ti#e the &ri$e beha4ior ha4in% $rosse" o4er between the tren" lines 0rst intera$ts with sa the botto# tren" line In this instan$e the a#&litu"e is e)ten"e" *ro# the 0rst tren" tou$h &oint 4erti$all a$ross to the other tren" line, in this e)a#&le the to& tren" All these "eri4e" a#&litu"es are later &ro!e$te" u& *ro# the brea( o* the to& tren" line, at the &oint this o$$urs, in this e)a#&le the &oint in the &ur&le bo)
The Hunt Volatilit Volatilit Funnels Funnels uni/ueness In #an was it is #ore how we ele$t to loo( at the set u& that is "i-erent rather than the &arti$ular &ri$e beha4ior o* the &attern itsel* For this reason Hunt Volatilit Funnel Theor has ta(en the sa#e &ri$e a$tion an" set u& an" $ontraste" how the #abe 4iewe" b Te$hni$al Analsis an" throu%h Hunt Volatilit Funnel Theor
Tra"itional Tra"itional te$hni$al analsis analsis loo(s at the s##etri$al s##etri$al trian%le set u& abo4e an" as the na#e su%%ests the &ri$e a$tion is 4iewe" throu%h the a&erture o* tren" analsis, na#el that there are two $o#&etin% tren"s see(in% to #ani*est an" the &re"o#inant &re"o#inant one will see the other tren" bro(en bro(en with #o#entu# = 4iewin% this &arti$ular set u& throu%h the #in"set o* tren" lines, tren" lines an" their li#itations "i$tate the #anner in whi$h the set u& is tra"e" Na#el5 6 An an%le" an%le" line "i$tates "i$tates when when a brea( brea( has o$$urr o$$urre" e" : Whilst Whilst +to& losses losses are are rarel rarel "is$usse "is$usse" " in this set u&, u&, it is assu#e" that the sto& is &la$e" !ust outsi"e the o&&osite tren" line 4erti$all below 1abo4e2 the &oint o* brea( an" an " entr ent r The &roble#s &roble#s with this a&&roa$h a&&roa$h are5 •
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An an%le" line is %i4en &re$e"en$e o4er a &ri$e le4el, a &ri$e le4el is that whi$h &eo&le an" #ar(et &arti$i&ants rea$t to +o b "e0nition a hori9ontal &ri$e le4el line is subor"inate" b a line re&resentin% re&resentin% 4arious &ri$e &oints at "i-erent ti#e *ra#es As it is not (now when the brea( #a o$$ur the a$tual &ri$e *or the brea( is not (nown, this rules out the use o* &en"in% or"ers at the brea( le4el, as these $annot be (now till a*ter the *a$t = "e0nition *ro# the &oint abo4e, the tra"er a$tuall has to be &resent, obser4in% an" in a &osition to enter a tra"e at #ar(et as an" when the brea( o$$urs As these brea(s are su""en an" hi%h #o#entu# at the &oint o* brea(, ie 3i#&ulsi4e., tra"e 0lls #abe &oor an" sli&&a%e #a o$$ur or e4en entr *ailure till the tra"e has #o4e" too *ar, an" the tra"er is le*t won"erin% whether to $hase the tra"e Not an i"eal &osition to be Loss sto&s $ant be "eter#ine" till the brea( o$$urs, as the sto& &la$e#ent is 4erti$all below the entr 1u&si"e brea(2 !ust below the lower tren" line The sa#e a&&lies *or tar%et tar%et $al$ulation as this this is "e&en"ent on brea( le4el *or the &ro!e$tion to be &la$e" at the ri%ht &oint on the "es$en"in% tren" line i4en all these tra"e relate" si#ultaneous &ressures, tra"e si9in% an" Ris(5 Rewar" Rewar" assess#ents ha4e little ti#e to be "one a&&ro&riatel
Here is so#e o* the &oints where the a&&roa$h to 4iewin% the sa#e set u& throu%h the ees o* Hunt Volatil Volatilit it Theor an" The Hunt Volatilit Volatilit Funnel Funnel "i-ers *ro# *ro# the 4er broa" broa" "e0nition that e)ist *or a +##etri$al Trian%le We will also hi%hli%ht the inherent bene0ts therein
6 @rior @rior tren" tren" is an e)&li$it e)&li$it $onsi"ere $onsi"ere" " ele#ent ele#ent +et u&s e#anatin% *ro# a $ho&& 7at #ar(et are re!e$te" an" $annot be HUNT VOLATILITY FUNNEL THEORY [HVF THEORY].s 1or In4erte" HUNT VOLATILITY FUNNEL THEORY [HVF THEORY].s, where "own tren"s e)ist e)ist &rior to the set u&s2, in short a $lear re$ent tren" nee"s to be i"enti0able5 a Fro# this this continuation is e)&e$te" in #ost instan$es b The set u& &atter &attern n $o##en$es $o##en$es onl, onl, when when the tren" tren" has its 3e)haustion &oint., [whether a low or hi%h &oint] $ In7e$tion In7e$tion &oints &oints are are onl ta(en ta(en *ro# *ro# a*ter a*ter this 0rst 0rst e)haustion &oint 1H6BRL62 " A*ter A*ter the e)haus e)haustion tion hi%h 1or 1or low C H6BRL62, H6BRL62, the *urthest *urthest e)hausti4e sell o- &oint in this e)a#&le, on what woul" nor#all be the o&&osin% 3tren" line. in the tra"itional te$hni$al analsis assess#ent The HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor 4iew&oint is #ore *o$use" on 4iewin% the e)tent o* $ountertren" rela&se a*ter the tren" bein% o4ere)ten"e" o4ere)ten"e" This "istan$e between H6 D RL6, be$o#es the &ri#ar tar%et a#&litu"e 1A@62 an" is "i$tate" entirel b the e)tre#ities e)tre#ities o* the &ri$e a$tion in its initial e)haustion, subse/uent &ullba$( to its 0nal natural su&&ort le4el e The tra"ition tra"itional al a&&roa$h a&&roa$h *or te$hni te$hni$al $al analsts, analsts, o* o* a tren" line &ri$e le4el without $orroboration $orroboration o* a&&ro&riate &ri$e a$tion at this le4el, is $onsi"ere"
irrele4ant in HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] THEORY] theor theor * In HUNT HUNT VOLA VOLATILIT TILITY Y FUNNEL FUNNEL THEOR THEORY Y [HVF THEOR THEORY] Theor all (e in7e)ion &oints an" an" #easure#ents #easure#ents are are su&&orte" b &ri$e a$tion % Ea$h in7e)io in7e)ion n &oint #ust #ust o$$ur alter alternatel natel a*ter a*ter a swin% low an" subse/uent hi%h, we sele$t the ne)t hi%hest hi%h &ost the low 1RL62, with ea$h hi%h 1RH:2 bein% lower than its &re"e$essor &re"e$essor 1H62 an" ea$h subse/uent low bein% hi%her than its &re4ious low low +ettin% u& the +/uee9e h Hunt Volatilit Volatilit Funnel Funnel Theor, Theor, &la$es *ar %reater %reater 4alue 4alue an" e#&hasis on the, ob4ious Volatilit Volatilit re"u$tion, in the set u& rather than $o#&etin% tren" lines a&&roa$h The Volatilit a&&roa$h &ro4i"es *ar #ore bene0ts, that the Tra"itional Tra"itional A&&roa$h A&&roa$h *ore%oes, su$h su$h as5 i Or"ers Or"ers $an $an be &la$e" &la$e" at 0)e" 0)e" le4els, le4els, where where the 4olatilit is now "ee#e" e)&ansionar, rather than the tra"e bein% &er&etuall #onitore" #onitore" an" entr le4els a"!ustin% the lon%er the tra"e in$ubates be*ore brea(in% ii @er#itti @er#ittin% n% 3+et 3+et an" For%e For%et. t. tra"in% tra"in% with with the the *ull tra"e i"ea bein% e)&resse" in a"4an$e with a (nown &otential Ris( to Rewar" Rewar" Ratio &rior to brea( iii En%a%in% En%a%in% the the #ar(et #ar(et at the the rare rare #o#ent #o#ent in &ri$e a$tion where the &ossibilit o* *ar ti%hter sto&s, will not be $ounter&ro"u$ti4e $ounter&ro"u$ti4e i4 i4 The &otenti &otential al to $a&tur $a&ture e an e)&los e)&losi4e i4e #o4e, #o4e, ta(in% ta(in% our tra"e well awa *ro# entr le4els earl in its li*e 4 ui$( $losure $losure i* ina$$ur ina$$urate ate with with a ti%ht sto&, lea"in% to low ti#e in tra"e *or losers an" lon%er ti#e in tra"e *or winners 4i Far lar%er lar%er Ris( Ris( to Rewar Rewar" " Ratios Ratios *or *or the abo4e abo4e reasons 4ii Far #ore #ore e#otiona e#otionall ll $o#*ort $o#*ortable able tra"in tra"in% % as a result, #eanin% %reater tra"er $o#&lian$e to the strate% 4iii An e)$el e)$ellent lent strate strate% % *or O&tion O&tion tra"in% tra"in% too, too, with with 4olatilit a""in% to o&tion 4alue as well as the un"erlin% #ar(et 8elta #o4e i We see( ; altern alternatin% atin% hi%hs an" lows lows 1see the #a%i$ #a%i$ o* o* the nu#ber ; se$tion in a later sub#ission2 ! The Tra"itional Tra"itional Entr is ta(en ta(en at the RH; or RL; RL; in bearBin4erte" HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] THEORY] set u&s, this si%nals si%nals &ri$e a$tion has be%un be%un its e)&ansionar &ri$e beha4ior &ost a &erio" o* low 4olatilit &ri$e a$tion or 3Funnelin%.
( In e)$ellent e)$ellent &reCbr &reCbrea( ea( $o#&lian$e $o#&lian$e,, Earl entries entries #a be ta(en, a$$or"in% to HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor.s #ore a"4an$e" &rin$i&les not $o4ere" here, that 4astl in$rease Rewar" to Ris( l ulti&le ulti&le Ti#e Ti#e Fra#e Fra#e Anals Analsis is utili9in% utili9in% HUNT HUNT VOLA VOLATILIT TILITY Y FUNNEL THEORY [HVF THEORY] Theor.s ;G6 a&&roa$h &ro4i"es *urther o&&ortunit beon" the s$o&e o* this "is$ussion [Further HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Tools e)ist to ensure "ire$tional a$$ura$ o* the brea( e)ist, an" are beon" this "is$ussion, *or #ore "etails re*er to the wwwthear(et+ni&er$o# wwwthear(et+ni&er$o# or or e#ail Tra"erThear(et+ni&er$o#], +horter Ti#e*ra#e set u&s on lower ti#e*ra#es (nown as &ri#ers #a also 3#ulti&l. &otential returns None o* these hu%e 3ulti&lier. %i*ts are $a&ture" b tra"itional te$hni$al analsis Ris( to Rewar"s o* 65<; ha4e been obtaine" an" re%ularl "ouble "i%it RI+ TO REWAR8 RATIO ha4e been ta(en usin% !ust so#e o* these a"4an$e" *eatures o* HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor, be$ause o* the *o$us *o$us on Volatilit Volatilit +u&&ression, +u&&ression, an" ulti Ti#e Fra#e analsis @attern View C U+8+8 [H<]
Tri%%er Tri%%er Ti#e Ti#e Fra#e Fra#e View View C U+8+8 [;J] [;J] We ta(e the sli%htl earlier entr o* the &ri#er &attern, with &art o* our unit o* loss allowable, the Loss +to& be$o#es the *ar 3Ti%hter @ri#er. RL; *or a ulti&lier return return all the wa to the a$ro &atterns lar%er Tar%et as the &ri#er.s brea( has tri%%ere" the lar%er &atterns RH; *or
# Also hi%h &robabilit &robabilit o* out$o#e tra"es, tra"es, but with unattra$ti4e Ris( to Rewar" Ratios $an be sntheti$all enhan$e" into Hi%hl Rewar"in% tra"es utili9in% the a"4an$e" *eatures o* HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor Theor +ee EURNO
EURNO In the to& le*t $orner o* the $hart we assess the RI+ TO REWAR8 RATIO as 6; in its stru$ture "es&ite it "is&lain% 4er hi%h &robabilit o* out$o#e $hara$teristi$s, this Rewar" Rewar" is not s&e$ial
Howe4er, earlier entries that were sort at a t a (e roun" le4els o* &re4ious su&&ort at KMJJ, with an initial Loss to& below RL: [KJ;6] an" subse/uentl at RL; [K:M a&&ro)i#atel a&&ro)i#atel :;M &i&s *ro# initial earl entries at KMJJ] as &ri$e a$tion asserte" awa, allowe" *or o&ti#i9e" RI+ TO REWAR8 RATIO As the Tar%et re#aine" !ust throu%h throu%h the JJJ le4els [so#e :MJJ &i&s awa *or a 656J RI+ TO REWAR8 RATIO]
The hi%h $on4i$tion o* out$o#e out$o#e brou%ht about about b the i#&ulsi4e u&si"e #o4es, with *allin% we"%e slow &ullba$(s, an" $lear near ter# &rior u&si"e tren", %a4e $on0"en$e *or the earl entr strate% An initial 656,; has been o&ti#i9e" lea"in% to a RI+ TO REWAR8 RATIO 656J, there is little basis *or a$hie4in% this utili9in% Tra"itional Te$hni$al Te$hni$al Analsis Trian%le Trian%le Theor Theor = retainin% the the 4alue o* hori9ontal @ri$e &oint le4els, HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor allows *or or"er &la$e#ent D &re tra"e rewar" e4aluation D o&ti#i9ation = *o$usin% on two 3tren". lines "es$en"in% D as$en"in% to an a&e), the tra"itional a&&roa$h sets a #o4in% tar%et *or whi$h a tra"e &lan $annot be stati$all 0)e" or assesse" The (e is the 4olatilit s/uee9e, not the $ontra"i$tin% $ontra"i$tin% 3tren". lines lines The tren" was establishe" &rior to the the $ontinuation &attern, &attern, on balan$e o* &robabilities, es&e$iall i* the setu& is bein% $orre$tl analse" Further HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Tools Tools e)ist to ensure ensure "ire$tional "ire$tional a$$ura$ o* the brea( brea( e)ist, an" are are beon" this "is$ussion, *or #ore #ore "etails re*er to the wwwthear(et+ni&er$o# or wwwthear(et+ni&er$o# or e#ail T e#ail Tra"erThear( ra"erThear(et+ni&er et+ni&er$o# $o#
There is a lot #ore #ore to HUNT HUNT VOLATILITY VOLATILITY FUNNEL FUNNEL THEORY THEORY [HVF THEORY] THEORY] Theor than $an be e)&resse" e)&resse" here, I ho&e ho&e that this short sno&sis o* the how HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] THEORY] Theor $onsi"ers $onsi"ers the abo4e set u& a%ainst a%ainst Tra"itional Tra"itional
Te$hni$al Te$hni$al Analsis %oes so#ewa so#ewa to e)&lainin% e)&lainin% the "i-eren$e "i-eren$e in a&&roa$h
Than( ou *or our Attention Attention an" Ha&& Tra"in% Tra"in%
Fran$is Hunt HUNT VOLATILITY FUNNEL THEORY [HVF THEORY] Theor Ori%inator Foun"er o* The ar(et +ni&er 8ire$tor o* @hoeni) Total Tra"er Trans*or#ation Tra"e Tra"e ana%er o* the Fire =ir" HUNT VOLATILITY VOLATILITY FUNNEL FUNNEL THEORY THEORY [HVF THEORY] Fun"
