The project of a new trend indicator for super-efficient forecasting

How it all started

Initially, our idea was to find the best trend indicator. And then continue to monitor developments and novelties in order to always use the best and therefore profitable tool. To solve these problems, we have launched a rating project for the best trend indicators (RBTI).

While working on this project, we discovered some patterns in the formulas of trend indicators. These patterns from test to test definitely led to a serious deterioration in the final result. After seeing the whole picture, it became obvious that the best trend indicator cannot have such elements in its calculations. It looks like a grand discovery in the field of forecasting stock prices.

The problems of variability turned out to be not as terrible as they seem at first glance. The most devastating problem turned out to be the problem of overfitting (the inability to show effectiveness on new, non-learning data). And in all the indicators that are most susceptible to this negative factor, we found one clear element.

Attempts to choose the dominant size of the time cycle always lead to overfitting and not being able to work profitably on future real quotes. It's trite, but even "Larry Williams" has repeatedly stated: "Using time cycles to predict future stock prices will certainly lead you to the poorhouse." Modern physics is generally close to the idea that time does not exist and it is just a human abstraction caused by the inability to see the fourth dimension.

After discussing all the facts, the TrendRiders team had no choice but to immediately start developing their own trend indicator based on a completely new principle.

Goals, principles, limitations

1 The best trend indicator should take the first place in the RBTI rating.

2) If a tool with a high RBTI rating appears, then we need to do our best to understand and adopt more profitable ideas and improve our indicator.

3) The best trend indicator should be modifiable and scalable. The best trend indicator should not be rigid and should change easily if more effective concepts or solutions become available.

4) The best trend indicator should not be afraid of competition, but should look for it. All promising trend indicators should receive an RBTI rating and be able to compare with our indicator.

5) Limit the configurable parameters to 8 pieces.

6) Additional analysis capabilities should be added to the indicator in order to interpret eigenvalues for scalping, pattern search or other strategies.

7) Mandatory availability of built-in settings for the main financial instruments. At the same time, full variability and the possibility of flexible configuration must be preserved.

8) The indicator should be easily and quickly integrated into automatic trading systems and Expert Advisors.

9) Fast code that allows you to quickly select parameters or train AI.

Name and appearance

The name of the indicator is of secondary importance. It is necessary to identify the primacy among such tools and avoid overlaps with existing tools. In the end, we settled on the laconic "Ace Trend".

The main requirement for appearance is simplicity. It is also important to avoid cluttering up the main price chart. Therefore, the indicator should be built in a separate window, have a minimal information load on trend interpretation and be easy to read. The color scheme is chosen in such a way as to ensure clarity of perception: green will signal an uptrend, red — a downward trend. The indicator settings allow the user to adapt it to their preferences. All additional functions must be completely disabled.

Additional functionality

1. Numbered patterns to identify key points within a trend

Numbered patterns are specific combinations of price movements that help identify important points within a trend, such as corrections, continuations, or reversals. They allow traders to more accurately analyze market dynamics and make informed decisions about entering or exiting positions. In Ace Trend, numbered patterns will be automatically recognized and displayed on the chart, which will simplify the analysis process and help traders react faster to market changes.

2. Zig-zag, based on the trends of the indicator

Zig-zag is a technical analysis tool that helps visualize major trends and price fluctuations, ignoring minor movements. In Ace Trend, the zig-zag will be based on the trends identified by the indicator, which will allow you to more clearly see the key turning points and the direction of price movement. This will help traders better understand the structure of the market and determine the optimal points for opening and closing trades.

3. Levels of the most probable profit and trend reversal points, linked to the built-in settings and tested on the trading history

The levels of the most probable profit are the price levels at which it is most likely possible to close a deal with profit. Trend reversal points are the moments when the trend changes its direction. In Ace Trend, these levels and points will be calculated based on the built-in indicator settings and tested on historical trading data. This will allow traders to identify potential entry and exit points in advance, as well as more accurately predict possible trend reversals, which will increase the effectiveness of trading decisions.

Conclusions

While working on a project to find the best trend indicator, the TrendRiders team identified key problems with existing tools, such as overfitting and dependence on time cycles. This led to the decision to develop our own "Ace Trend" indicator based on new principles and approaches.

The main goals and principles of the Ace Trend development include striving for leadership in the RBTI rating, flexibility and scalability, as well as the ability to adapt to new concepts and solutions. The indicator should be easy to use, easily integrated into trading systems, and provide additional analysis capabilities for various strategies.

Ace Trend promises to be a powerful tool for traders looking for a reliable and effective way to predict trends. Its simplicity, flexibility and innovative approach to development make it a promising solution for those who seek to improve their trading results.

Developing the best trend indicator