Very interesting similarity between the ES1! and YM1!I was recently watching a video in the ideas section of trading view and I notice this person speculates that the price will drop lower in the Dow Jones. Interestingly enough, this also lines up quite well in my charts. It's important to notice that many differences exist between these two tickers. The fluctuations of the CBOT_MINI:YM1! and the CME_MINI:ES1! are quite different. I had to adjust the n data previous points in the short term mean return indicator to 20 as well as set the sensitivity to 2. This way the chart was not overcrowded and easier to read. As well as larger short term MA and distribution was needed.
I'll take advantage of this difference to explain what happens when the parameters in the indicator change. There are two factors to the sensitivity of the indicator. One is the number of previous days considered (parameter n). The higher this value is, the less sensitive the indicator is, therefore it's better at detecting longer term trends. This is the reason why I include 2 in the indicator. One to see the short term trend and one for the long term trend. This in addition to knowing where we are in the distribution help me for a hypothesis of what is most likely to happen next.
One key factor of my strategy when trading is to never go short unless you are absolutely sure you are correct, always look for discounts and take profits. It's better to buy at discounted prices than trying to catch both waves of the market. You already know the market did one wave, what do you think will happen next? Of course, the next wave! I personally trade with no stop loss to not materialize erroneous entries and look to buy even more as prices continue to drop and are at attractive levels. Unless there is a clear possible break of market structure like it's visible here, as the 200MA has been used in the past as strong points of support and resistance. If this structure is broken, then it's quite possible that price will trend even lower, so this trade does require a stop loss.
When I was more of an intermediate and unprofitable trader, I relied a lot on two indicators, which did give me the ability to make somewhat accurate predictions. Since tradingview has kept increasing the restrictions on free accounts, I had to choose between two of my favorite indicators. The RSI and the MACD. I chose to keep the MACD as it's visible on previous trades. Mean Returns offers the value of these two indicators into one, plus tests out a new hypothesis that I've been testing so far with great success.
The basic premise of this indicator is to chart the market cycles in terms of average returns generated in the n periods before and the current one. Additionally, it creates the supposition that the market has inertia and therefore is likely to continue doing what it's already doing (aka: the trend is your friend)
I hope the original posters of the video @AdvancedPlays gets to see this and find it to be of value.
Always remember there are no certainties in the markets, only probabilities
