There is an interesting dicussion on the forexfactory forum, of a method to predict the current leg of the Zigzag indicator.

http://www.forexfactory.com/showthread.php?p=7095082#post7095082

They have incredible results. Maybe that could be a new trade strategy for Zorro?

Interesting.

I'm sure it's possible and would love to give it a go but haven't the coding or mathematical knowledge at this point in time unfortunately.

I was also notified by some people about that discussion of using fractal sequences for predicting ZZ turning points. I have even read some part of the thread, but I'm not sure what to think about it.

Pro:

- the author, gg53, got miraculous results with his system
- he seems to be a honest and serious person

Contra:

- no backtest - the miraculous results are just anecdotical
- apparently no one else could reproduce them so far
- the algorithm doesn't really make sense

I think a system that works for its author, but for no one else, is not really useful. If someone wants to try it nevertheless, I'll help. But even for an experienced programmer, scripting this algorithm would take at least a week.

And I haven't understood his first post where he starts with his sequences LOL

'short 4-string linear sub-sequences end on X'

Does he anywhere explain how he created this sub-sequences?


PS: Ah. I've found it:

If X(n) is a sequence, a linear subsequence is any subsequence of the form X(an+b) where a>0, b>= 0

FYI. Here is a more sensible offshoot from the original thread;

http://www.forexfactory.com/showthread.php?t=464948

Looks like this theory is gaining traction and may very well suit our beloved Zorro?

Unfortunately, it'll take someone much smarter than me to do anything with it here

I haven't followed much of the thread, but as far as I've understood, even after 6 months hard work no one could really reproduce or backtest this method. Nor makes it much sense from a theoretical or mathematical point of view.

Still, if it can ever be confirmed that the method really works, it can certainly be coded with Zorro and made available as a Z system.

To me, there are many reasons why this logic will never ever work. But the most direct and noteworthy reason is that the product of price change that we can see as graphs is a result of human behavior. Now what is the similarity of human behavior and the phenomenon of fractals in nature? Nothing. Human behavior is irrational while fractals are. Fractals can be mathematically justified and mapped out. Human behavior cannot be mathematically mapped out. It would take an infinitely complex system with infinity of variables. Trading algorithms are simple mathematical equations with constants.

In fact, the very mistake of undertaking this whole project of "prediction" of price movement - a "Holy Grail" is irrational human behavior.

That said,the only area that is worthy of research in trading is exactly the opposite. It is to study what shouldn't be there - the inefficiency of the markets and develop trading approaches accordingly. So instead of looking at fractals and asking what's next, we should be asking what is out of place? What should not be in this fractal?
...this just gave me an idea...

Related to complex models and fin. algorithms and the issue of simplification:
youtube.com/watch?v=ed2FWNWwE3I#t=12m04s

Thanks for the video Finstratech, I enjoyed it! I see there are many others related as well.

Hello !
I've Just joind this forum.
It's me you're talking about...
You can find the system details here (we moved from the original thread):
http://www.forexfactory.com/showthread.php?t=464948
...and it's not working just for me.

G.