In the field of finance, MIDAS (an acronym for Market Interpretation/Data Analysis System) is an approach to technical analysis started in 1995 by physicist and technical analyst Paul Levine, PhD, and later developed by Andrew Coles, PhD. , and David Hawkins in a series of articles and books MIDAS Technical Analysis: VWAP Approach to Trade and Investment in Current Markets. Recently, some important contributions to the project, including the new MIDAS curves and indicators, have been made by Bob English, many of them published in this book.
Paul Levine's early work at MIDAS and the newly developed MIDAS approach in books and publications by Coles, Hawkins, and English have been taught at the university level and are currently the subject of independent study devoted to academic publications. The same MIDAS technique has also been widely applied as part of private traders and hedge fund strategies. The MIDAS curve and indicators developed by Levine, Coles, Hawkins, and the UK have also been developed commercially by independent trading software companies for the Trader's Ninja trading platform, while individual curves and indicators have been formally coded by developers of a large number of trading platforms, including Metastock , TradeStation, and eSignal.
The new MIDAS curves and indicators are in line with the MIDAS objectives achieved in developing an independent approach to financial market analysis with unique standalone indicators available for each type of market environment while also offering information not available from other technical analysis systems.
Video MIDAS Technical Analysis
The MIDAS Approach to Technical Market Forecasting
The MIDAS approach to asset-price technical forecasting reduces up to five key principles relating to market price behavior.
Tenet (1)
Underpinning all random shallow asset price behavior is an order that can not be identified by most technical analysis approaches. This sequence - a supportive fractal hierarchy and a complex level of resistance - is a fundamental, intrinsic reality to the behavior of market prices. Price movements occur when the price tests the support or resistance and either breaks to new levels or fails in this process, where the asset price reverses or proceeds to test until damage occurs, eventually moving the price to new levels.
Tenet (2)
This fundamental sequence in the market - the interaction between support and resistance - is the co-interaction between accumulation and distribution.
Tenet (3)
The trading psychology behind accumulation and distribution can be quantitatively analyzed from raw price and volume data and reveal the mathematical symmetry between price support (accumulation) and price resistance (distribution). In other words, the same mathematical formula can be used to estimate future support levels as a resistance level.
Tenet (4)
For input to mathematical formulas, it is important to focus on the next price and volume data to a reversal in the trend and thus a major change in asset market sentiment. The analytics derived from prices such as moving averages do not emphasize these important changes and confuse different periods of basic market psychology, thus polluting new shifts in accumulation and distribution. Moving averages also ignore market volumes. Instead, the MIDAS algorithm finds the actual sequence underlying the asset price on the Volume-Weighted Average Price (VWAP) taken during the interval after a trend reversal.
Tenet (5)
Asset price support (accumulation) and resistance (distribution) are fractals, which means that the underlying order for the asset market price can be found on all degrees of the trend in the same setting. Initially this insight was applied by Paul Levine to daily and weekly charts, but Andrew Coles also then applied it to intraday timeframes, thus extending the MIDAS system for day trading apps.
Maps MIDAS Technical Analysis
Two Weaknesses with MIDAS Technical Analysis
There are two weaknesses in timing asset price movements in MIDAS technical analysis centering on the issue of price porosity and price suspension . The first refers to the shallower penetration of the MIDAS curve by the asset price. The latter refers to premature asset price changes before reaching the MIDAS curve. Levine fully admits the previous problem. The last problem was first identified by Coles.
Levine assumes that the problem of â € Å"elasticityâ € the price/asset curve is difficult because the MIDAS approach becomes "a simple approach to a more complex and less deterministic reality." However, with the development of the Gen-2 curve, Hawkins's study of long-term volume trends, and Coles's formulation of four volume-based trading rules for the MIDAS curve, the elasticity problem is now fully understood as a volume problem. Coles and Hawkins each put forward various techniques to overcome them.
MIDAS and VWAP (Volume-Weighted Average Price)
The basic VWAP formula is very little changed in the MIDAS approach, with the volume in the denominator of the MIDAS formula at the beginning of the indicator launch being constantly subtracted from the cumulative volume of the current price bar. The basic formula is as follows:
Where:
x i = cumulative volume of blades
x j = = cumulative price of blades
d ij = cumulative volume difference between the price bars i and j - x j
This same small volume amendment underlies all MIDAS indicators when created from the Gen-1 curve (see below).
Complete MIDAS curve repertoire
The MIDAS approach to the current technical analysis consists of five types (or generations) of the MIDAS curve, none of which has a conceptual over the other. Their apps are relative to market conditions, user-customized preferences, and the types of financial datasets being considered.
First First Generation (Gen-1) curved
Originally developed by Paul Levine, PhD, Gen-1 market volume process curve and launched from market inflection points at all trend levels. They reflect the MIDAS philosophy of market order and price movements. The first published study on the Gen-1 curve was applied on the intraday charts for day trades created by Coles.
Secondary Generation (Gen-2) Curves
Second Generation (Gen-2)Developed by David Hawkins and Andrew Coles, PhD, Gen-2 the curve processes artificial market volume as input and thus marks a very significant development in opening up technical analysis of MIDAS to the inexhaustible foreign exchange market as well as the futures market in open-flower processing ( not volume) in the Commodity Futures Trading Traders Commitment Report.
The Gen-2 curve also allows comparison with the Gen-1 curve and in particular the impact of the original market volume on long-term trends (when volumes can sometimes become distorted) and also over short-term data sets (when there is sometimes sufficient volume volatility large), such as in the rollover period of a futures contract).
The Gen-2 curve can also help avoid the two shortcomings of MIDAS discussed in section 1.2 above. Gen-2 curves for long-range data sets are susceptible to volumes of scale volumes developed by Hawkins. Coles developed the Gen-2 curve for the forex market and futures market, where it has developed three highly contextual curve subsets.
Third Generation (Gen-3) Curves
Developed by David Hawkins, the Gen-3 curve is methodologically different in terms of its unique launch point, the Gen-3 curve calibrates clearly to inflection points of less obvious market trends and, as such, often makes more accurate estimates while avoiding porosity issue.
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Fourth Generation (Gen-4) CurveDeveloped by Andrew Coles, PhD, the Gen-4 curve processes alternative forms of financial data beyond price and asset volumes, thereby widening the technical scope of MIDAS analysis.
Additional financial data sets include technical momentum analysis indicators such as MACD, volume indicators such as On-Balance Volume, economic data such as Baltic Dry Index, market volatility data such as VIX, market sentiment indicators such as Put/Call Ratio, induction curve analysis, market distribution data such as TED Spread, and Intermarket Relative Strength analysis. There are currently nine highly contextualized sub-curves developed by Coles.
Fifth Generation (Gen-5) Curve
Developed by Bob English, the MIDAS Average curve and Delta MIDAS curves were developed to analyze steeper asset price trends and longer term asset price trends respectively. The curve also resolves the problem of price porosity and price suspension due to rapidly changing volume conditions.
MIDAS Indicator Full Report
The current MIDAS technical analysis consists of eight indicators independently developed by Levine, Coles, and the United Kingdom. Many indicators can be made from the different generations of MIDAS curves discussed in the previous section.
Topfinder/Bottomfinder
Developed by Paul Levine, PhD, this indicator applies strictly to the acceleration of price trends , since the concept is defined in the MIDAS system. The unusual parabolic component of the formula creates a terminal property for an indicator on the price graph, making it quite unique among technical indicators. This indicator can also be made using the Gen-2 curve methodology, thus enabling its application to the forex and futures markets, as well as the Gen-4 methodology. The unusual parabolic components for the indicator are as follows:
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Where:
x i = cumulative volumes on the bar
y i = = the cumulative price in the bar
d ij = cumulative volume difference between bar i and j = xi - xj
D = "trend" volume = "duration" delivered by the user from an accelerated trend
MIDAS/AC Displacement Channel (formerly referred to by Coles Anchored Channel VWAP)
Developed by Andrew Coles, PhD, Channel was originally mentioned in the first publication on the Anchored VWAP Channel indicator, although Coles later changed its name to MIDAS Displacement Channel.
Indicators calculate, in trend-fitting methodologies, user-adjusted percentages that anchor indicators for key price trend reversal trends above or below the standard MIDAS support/resistance curve, thus forecasting highs and lows in an ongoing trend where prices are expected to retreat.
Coles developed an indicator to solve large gaps in the MIDAS analysis involving the market moving sideways. However, he has also noted that it works very efficiently in a trendy market. This indicator has been officially coded by developers of various trading platforms, including Metastock, Tradestation, eSignal, Ninja Trader, Wealth Lab, AmiBroker, Neuroshell Traders, AIQ Systems, TradersStudio, Wave59, Worden Brothers Stockfinder, Updata, Trade Navigator, Tickquest Neoticker, CMS Forex VT Trader, and Trade Decisions.
MIDAS Deviation Standard Band
The first application of the standard deviation to VWAP appears in the Tradestation forum, while the MIDAS technique launches or holds the curve of the trend change (see Tenet (4) above) first appeared on the trading platform of Ninja Trader and Investor R/T.. In 2009, Bob English also installed the band in the TradeStation indicator version. Andrew Coles created bands in Metastock in 2011 while also replacing the VWAP formula with the MIDAS formula.
Coles has warned against excessive use of this indicator while pointing out that its application is limited to a technical pattern known as Extending Formation or to sharp, angular prices moving out of low volatility conditions or as part of a zigzag price formation. This restriction was put forward to be based on the main weakness of the indicators to spread from asset prices too quickly and too much.
MIDAS/AC Band Normal Deviation
Developed by Andrew Coles, PhD, this indicator represents a significant improvement over the MIDAS Standard Deviation Bands thus far avoiding the problem of fanning fast and exaggerated with indicators. Consequently, it can be properly attached to the trend while its better mounting methodology also allows it to fit in with larger trend pullbcks. This indicator is designed to forecast the highest and lowest prices under normal asset price trend conditions.
MIDAS Price Level Quadrating AC
Developed by Andrew Coles, PhD, this indicator consists of five price levels (ie potential support and resistance areas) that automatically adapt to four variables:
- higher graphics periods (daily, weekly, monthly, etc.) to make the outer level of the indicator
- selected intraday period to create level in indicator
- the direction of intraday price trend
- the volume
The addition of a level in the indicator is directed to daily trading, otherwise indicators can be applied to any trend duration (daily, weekly, etc.) charts while providing key support and resistance levels for opening, high, low and closing of each price bar.
Developed by Andrew Coles, PhD, both indicators independently create a hybrid volume/momentum reading as a means to monitor the strength of price trends with respect to support and the role of MIDAS curve resistance. The OBV indicator itself is the key to Paul Levine's work with the MIDAS curve, although volume readings can be replaced with momentum readings in indicators such as MACD.
MIDAS/BE Curves Curves Oscillator
Developed by Bob English, the indicator calculates the percentage of the asset price deviation from the given MIDAS curve. Like other technical analysis oscillators, trendlines as well as horizontal support and resistance lines can be applied to the indicator, so additional inflection points may not be clear on the price chart alone. The indicator can be applied to any time period of the chart.
MIDAS/BE Reversing MIDAS
Developed by Bob English, the methodology underlying this indicator runs parallel to the methodology of retaining the MIDAS method (see Tenet (4) above), while an extension of the Active Limit concept (ie, VWAP detective pricing, or, more specifically, Float Active ) developed by Pascal Willain in the book Value in Time: Better Trading Through Effective Volume .
The reverse iteration indicator of the price bar provided when calculating VWAP (using the MIDAS formula) until VWAP is the same as the previous price bar (this will be equivalent to the initial anchoring point for the launch of Gen -1 MIDAS curve). The methodology then continues to repeat while isolating and recording other price bars that meet this same criterion at the same time by recording the extreme price perversion deviations from this VWAP. These extreme points are usually trending fatigue areas and help to set the number of key volumes processed by the indicator. The fractal aspect of MIDAS is translated into indicators into various levels of key volumes that can be visually identified on the graph, thereby alert to changes in trends of various sizes and thereby aid in market timing decisions. Indeed, English has suggested that up to three sample indicators can be plotted on the same graph to monitor VWAP changes at various levels. As long as the indicator identifies the extremity point in VWAP before the average rate of return can be expected also has the same element as the Colas' MIDAS Displacement Channel.
References
External links
- Official MIDAS Market Analysis Site
Source of the article : Wikipedia
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