Trading system design concept

The Advex trading system was developed based on several years independent research, started from 1997, through the concept that the market reversal points (tops and bottoms) are related by the mathematical and physical principles and that there are no single market top or bottom cannot be explained by that principles. Simply stated, if the system is input the time and prices of the historical tops and bottoms of any market, it can utilize the above principles to predict future turning points (price extremes) with mathematical accuracy. 

 

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FORECASTING FUNCTIONS OF THE TRADING SYSTEM 

 

 

Dynamic nature of price targets

Rather than forecasting a stationary price target point the system computes its dynamics through space and time as closely as possible. In other words the system converts the non-linear random market actions into the linear straight lines that model the price target positions through time.

 

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Forecasting lines

The trading forecasts made by the system are resulted in horizontal or angled lines (rays) that appear on charts as the max / min profit target forecasting lines and the max / min drawdown forecasting lines that model the price targets positions through time. In most cases each forecasting line (profit target and drawdown) has the same forecasting power; the system just determines the priority of the trade direction.

 

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Typical price movement within the forecasting area

The reason of giving the maximum and minimum price targets and drawdown forecasting lines is that the "classical" price movement within the forecasting area is modeled by the system as presented in the figure below.  In reality the price movement can naturally vary.

 

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Inclination angle of forecasting lines

The inclination angle of the forecasting lines can vary with every forecast made by the System.

 

 

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Accuracy of Forecast

In most cases the price moves to the points that make isolated highs or lows.

 

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Completely fulfilled forecast 

 

A forecast is considered to be completely fulfilled if the price hits a TargetMax forecasting line. 

 

 

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Partially fulfilled forecast

 

A forecast is considered to be partially fulfilled if the market has only reached a TargetMin forecasting line. It can happen in the next cases:

 

 

A. The price makes a considerable reversal movement by reaching the TargetMin forecasting line. It can often signal about a change in overall trend direction.

 

 

 

 

 

Fairly often the system can identify the likelihood of a change in price movement at the exact moment it begins and generates a new forecast of the opposite direction.

 

 

 

B. The market will later move to the TargeMax forecasting line, but a new forecast of the same direction is generated:

 

 

 

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SIGNALING FUNCTIONS OF THE TRADING SYSTEM

 

 

 

 

Simultaneousness of forecasts and entry signal generation

The forecasting lines and the trade entry signal are generated by the system all at once and then are never changed. Thus a trader initially has a complete idea about the trade exit points and drawdown targets. 

 

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Forecast fulfillment point - exit signal generation

An operator delivers an exit signal to the client once the market hits either the TargetMin OR the TargetMax forecasting line. IN MOST CASES an exit signal is delivered at the TargetMin forecast fulfillment point. 

 

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To learn how to trade the forecasts, please visit a "How to trade STF" page.

 

 

 

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