FRAMA as a Baseline Indicator – Stonehill Foreign exchange

Frampton Comes Alive

Wandering minds rule.  It demonstrates that we are inclined to assume out of the field.  In fact, should you “squirrel” too typically, you could lose monitor of what you had been doing and that may open up an entire can of “wait, what”?  That being the case, each time we got here throughout this identify, we instantly considered this man.

On a Roll

Nevertheless, I doubt there’s a lot of a correlation between a 70s rocker and buying and selling.  Actually, we’re on a special sort of roll, fearing one other particular device from a well-known man all of us admire and love.  The man I’m referring to is from our fundamental man, John Ehlers.  It’s known as FRAMA, or Fractal Adaptive Transferring Common.

Fractally Scrumptious

FRAMA was first mentioned by Mr. Ehlers in his 2001 e book named, “Rocket Science for Merchants” which in itself is a reasonably cool title.  The premise of the FRAMA contains the next properties;

• It makes use of an EMA (Exponential Transferring Common) calculation with a dynamically adjusted smoothing issue.
• The smoothing issue relies on the fractal dimensions of the value sequence (previous costs).
• Reacts shortly to developments and slows down throughout consolidation.

A Completely different View

The unique colour is a darkish blue line so naturally, we brightened up with a cheery lemon yellow.

A particular departure from the “regular” wanting baseline, we are able to see that the default values can create a line that hugs worth fairly shut in some areas.  However we’ll roll with it for our illustrative functions.

Math for Braniacs

FRAMAt =  At  X Pricet + (1 – At) X FRAMA(t-1)

The place:

FRAMAt = Present worth of FRAMA

Pricet = Present Worth

FRAMA(t-1) = Earlier Worth of FRAMA

At (exponential smoothing issue) = EXP[-4.6 X (Dt – 1)]

The place:

Dt = Present fractal dimension;

EXP = Mathematical exponent operate.

However as Director Clint Eastwood says on the conclusion of a film scene…”that’s sufficient of that.”

Settings

This indicator solely has two settings, and we use each of them.

PeriodFRAMA:  The variety of intervals used within the inner calculations.  The default worth is 10.

PriceType:  The value information set on which the calculations are carried out.  The default setting is 0.

1:  Shut

2:  Open

3:  Excessive

4:  Low (default)

5:  Typical

6:  Weighted

Each day Upkeep

Keep in mind, when you’re able to carry out every day upkeep in your trades over the last 20–half-hour of the buying and selling day (1700 New York time), you’ll be offered with one in every of 4 choices.

1. Opening a commerce.
2. Closing a commerce
3. Sustaining a commerce; i.e.
   1. Transferring a cease loss degree.
   2. Exiting a commerce.
4. Taking a move (nothing to do).

How We Use It

Lengthy: When worth crosses above the sign line.

Brief:  When worth crosses beneath the sign line.

Alerts to Stay By

Within the spirit of demonstrating one thing helpful, we’ll simply double the interval to twenty (from 10) to higher illustrate the indicators.  

Discover that when worth loses volatility and begins to flatten out, the indicator reacts accordingly and stays shut to cost motion.  That is the magic at work by telling you that there isn’t any pattern.  For testing, we’ll be utilizing the default settings to see how the indicator does in it’s “pure” state earlier than optimizing.

Indicator Testing:  A New Look — Please Learn

After receiving worldwide correspondence over time and cautious consideration, VP, and we right here at Stonehill Foreign exchange determined to modified our testing protocol.  Please learn by way of the knowledge beneath so you know the way we will probably be testing from this level ahead.

1. 1. Testing Time Body:   Each day.
   2. Testing span: Three (3) years.
   3. Worth information:  OPEN of interval.
   4. Outcomes:  NNFX commerce methodology (not the “fast” indicator testing methodology initially described in VP’s podcast from 2018).
   5. Primarily based on the next standards for all examined pairs:
      1. Starting account steadiness — $100,000.
      2. Worth information is from a dwell account.
      3. Danger profile — 2%.
      4. Leverage:  20:1.
      5. Two “half” trades per sign.
   6. Cease Loss/Take Revenue ranges are per NNFX:
      1. EUR/USD:  SL = ATR x 1.50

• BTC/USD:  SL = ATR x 1.25

• XAU/USD:  SL = ATR x 1.25
  1. SPX500:     SL = ATR x 1.50
  1. Continuation trades:  Not included.
  2. Reported metrics:
     1. Alerts:  Whole (lengthy/quick).
     2. Win/Loss %:  Excluding “chalk” trades.***
     3. ROI%:  Per NNFX.
  3. Benchmark outcomes:  Default settings.
  4. Primary tweaks will counsel outcomes, which attempt to keep away from “curve becoming” or “over becoming”.  You’ll be able to learn extra about this within the Leman Pattern indicator weblog HERE.

  
  *** Chalk trades are these trades the place an exit (reverse sign) was given prior to cost reaching both the take revenue or cease loss degree.

  The Principal Occasion

  Beneath are the outcomes from our up to date testing protocol.

First Issues First

Trying on the metrics, we would like you to recollect a number of issues.  First, the outcomes are over three years, not only one 12 months, so there’s significantly extra market “flex” which impacts the outcomes.  Second, this is just one a part of your algorithm.  Third, this can be a baseline, which is “dealt with” otherwise than a affirmation or quantity indicator.  That being the case, a commerce primarily based on a specific sign may have resulted in various levels of success or failure as a result of we don’t typically use baselines as exit indicators.

Translation

Don’t base your expectation solely on the numbers we current.  Particular person outcomes can and can fluctuate…they usually can undoubtedly be significantly better than we put up.  We’re simply bringing you indicators that aren’t a part of the mainstream crowd.

Sources

This indicator may be discovered within the Stonehill Foreign exchange library at no cost.  Going ahead, we’ll word“ NEW ” subsequent to essentially the most not too long ago profiled indicator that can assist you find it.  We don’t put up many baselines, so give this oddball a try to see the way it does for you by getting it HERE.   Additionally, remember to subscribe to the Stonehill Foreign exchange YouTube channel for the technical evaluation movies.  Join the Superior NNFX Course HERE.

Our solely aim is to make you a greater dealer.

*Our printed testing outcomes are primarily based on cash administration methods employed by the NNFX system and rely upon various exterior components, which can be totally different between people and their particular dealer circumstances.  No assure, buying and selling suggestions, or different market strategies are implied.  Your outcomes and subsequent buying and selling actions are solely your personal accountability.

BTW — Any info communicated by Stonehill Foreign exchange Restricted is solely for academic functions. The data contained throughout the programs and on the web site neither constitutes funding recommendation nor a basic advice on investments.  It isn’t meant to be and shouldn’t be interpreted as funding recommendation or a basic advice on funding. Any one that locations trades, orders or makes different forms of trades and investments and many others. is accountable for their very own funding selections and does so at their very own threat. It’s endorsed that any particular person taking funding selections consults with an unbiased monetary advisor. Stonehill Foreign exchange Restricted coaching programs and blogs are for academic functions solely, not a monetary advisory service, and doesn’t give monetary recommendation or make basic suggestions on funding.