As you know, people from generation to generation make the same mistakes, and traders are no exception. Books on technical analysis that feature smiling “successful” traders on their covers argue that history repeats itself, causing many newcomers walk in a circle, trying to predict the future price behavior by using nonworking methods.

Predictive Forex indicators are one the most popular searches in trader communities and search engines, so we will review both working and obviously lossmaking options. We’ll start with the latter in order to draw attention to something that is not worthy of the time spent.

Predicting Forex indicators XprofuterOverlay and CTG-Structure-X

We’ll make a bold assumption, and it is unlikely that we are mistaken, but these indicators are tested by every other beginner. The reason for such popularity is simple: these indicators used to be paid one, but the market has put everything in its place and devalued them, but threads and topics on the forums remained.

So, XprofuterOverlay is built on one of the most ridiculous theoretical assumptions that the market is symmetrical. The reference period from the current moment is set in the settings, after which the history is transferred to the future in an inversed manner. An example of such a forecast is presented below:

A, B, and C points are the extremes on the history, and / A, / B, / C are the same, but inverted and projected for the future. Surprisingly, many do not notice this fact and begin trading which leads to losses. Moreover, the simulated chart is not tied to a reference point, but slides along with the price.

Predictive Forex indicators of CTG-Structure class are certainly more interesting and even have a foundation for the creation of truly high-quality models, but in the current form they are no better than the previous one. Let’s review one of the latest versions of the predictor, which has some important parameters in the settings (the others are better to be left by default):

  • Xdist – the number of bars to be simulated;
  • r1 – minimum threshold in bars, starting with which the formation of the past will be taken into account;
  • Bars1 – historical period where the algorithm searches structures.

Once the structures are found on the history, the CTG-Structure-X models a prediction for each of them and shows their average value on a chart in the form of bars. Advantages of this approach are obvious: less noise, while the disadvantages are already evident in the process and are expressed in redrawing after one of the models is no longer relevant. Example of the working window of the EUR/USD pair is presented below:

Predictive Forex indicators based on standard indicators

The mistake of the authors of the above algorithms lies in trying to calculate the exact rate in the future based on past values, which is impossible by definition. If CTG-Structure-X estimated the probability of the trend direction based on past models, rather than drew the anticipated dynamics, it would be very valuable help, but thus far it is at odds with the nature of the market.

It should be noted that working predictive Forex indicators don’t exist at the moment, otherwise the market would simply cease to exist, but there are anticipatory indicators that can predict a reversal of the trend with a high probability – they can be found even in a standard set, in particular the CCI.

There is one important fact – very few people know about the potential and hidden possibilities of this indicator, but we will reveal a little secret. In order to get the anticipatory signals, you must use several rounds of calculation, which would result in something like a divergence built considering the dynamics of the indicator rather than on the subjective interpretation of extremes. To understand the principle, let’s pay attention to the figure below:

Note that the values in the second round are not redrawn and allow to define the reversal earlier than the accurate commodity channel index. Of course, such a technique should be used in combination of filters and only after evaluating the expectation of the system.

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