FRAMA as a Baseline Indicator – Stonehill Foreign exchange

Frampton Comes Alive

Wandering minds rule.  It demonstrates that we are likely to assume out of the field.  After all, in the event you “squirrel” too typically, chances are you’ll lose observe of what you have been doing and that may open up a complete can of “wait, what”?  That being the case, each time we got here throughout this title, 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.  In reality, we’re on a distinct sort of roll, fearing one other particular instrument from a well-known man all of us admire and love.  The man I’m referring to is from our major man, John Ehlers.  It’s referred to as FRAMA, or Fractal Adaptive Transferring Common.

Fractally Scrumptious

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

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

A Completely different View

The unique shade 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 reasonably 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 perform.

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 worth 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

Every day Upkeep

Bear 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 among 4 choices.

1. Opening a commerce.
2. Closing a commerce
3. Sustaining a commerce; i.e.
   1. Transferring a cease loss stage.
   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 under 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 under so you know the way we shall be testing from this level ahead.

1. 1. Testing Time Body:   Every 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. Based mostly on the next standards for all examined pairs:
      1. Starting account steadiness — $100,000.
      2. Worth information is from a dwell account.
      3. Threat 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 stage.

  The Fundamental Occasion

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

First Issues First

Wanting on the metrics, we wish you to recollect a couple of issues.  First, the outcomes are over three years, not only one 12 months, so there may be significantly extra market “flex” which impacts the outcomes.  Second, this is just one a part of your algorithm.  Third, it is a baseline, which is “dealt with” in another way than a affirmation or quantity indicator.  That being the case, a commerce primarily based on a selected sign might 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…and so they can undoubtedly be a lot better than we publish.  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 without spending a dime.  Going ahead, we’ll be aware“ NEW ” subsequent to essentially the most just lately profiled indicator that will help you find it.  We don’t publish many baselines, so give this oddball a attempt to see the way it does for you by getting it HERE.   Additionally, make sure you subscribe to the Stonehill Foreign exchange YouTube channel for the technical evaluation movies.  Join the Superior NNFX Course HERE.

Our solely objective is to make you a greater dealer.

*Our printed testing outcomes are primarily based on cash administration methods employed by the NNFX system and depend upon various exterior elements, which can be completely different between people and their particular dealer situations.  No assure, buying and selling suggestions, or different market options are implied.  Your outcomes and subsequent buying and selling actions are solely your individual duty.

BTW — Any info communicated by Stonehill Foreign exchange Restricted is solely for instructional functions. The knowledge contained inside the programs and on the web site neither constitutes funding recommendation nor a basic suggestion on investments.  It isn’t supposed to be and shouldn’t be interpreted as funding recommendation or a basic suggestion on funding. Any one that locations trades, orders or makes different varieties of trades and investments and so forth. is accountable for their very own funding choices and does so at their very own danger. It is strongly recommended that any particular person taking funding choices consults with an unbiased monetary advisor. Stonehill Foreign exchange Restricted coaching programs and blogs are for instructional functions solely, not a monetary advisory service, and doesn’t give monetary recommendation or make basic suggestions on funding.