Fractal Monger Update

First up many thanks to all of you who signed up to the free FractalMonger beta trial. This new version of FM is the result of over two years of painstaking research as well as countless hours of experimentation and internal testing. Then came the bug fixing, the messaging, the logging module… suffice to say I’ve had a pretty busy summer. I think the project has a lot of potential but will clearly require a lot more work before it’s ready for prime time. Here are a few updates on what has changed plus some thoughts as to where to take it going forward.

Bug Fixes

The 20-min alerts had a time related bug (showing the wrong solution time) which I think has been fixed. I’m still fiddling with the exact format and if you guys see anything screwy please let me know right away.

FM Settings

The current internal setting is a minimum ratio of 2.5 (up or down), which means that either the higher or lower closes need to outweigh the other by at least a ratio of 2.5. Note that this is different than a percentage basis. If you have let’s say 100 fractals and 28 resolved lower and 72 resolved higher than that percentage is 72%, which is a solid edge obviously. The ratio comes out to 2.57, which is near our current setting. Of course that is based on *historic* data and I most definitely expect it to drop. Currently my goal is a win rate of over 70% and there is a good chance that we’ll have to crank it up a little to a ratio of 2.75 or perhaps even 3. That’ll make FractalMonger a lot more quiet but obviously we want a good ratio between quantity and quality of predictions. Ha – that would be the ratio of the ratio 

Logging

As mentioned in my introduction, I have already implemented a logging mechanism for FM. The outcome of every fractal is being send to two Google spreadsheets (one for each symbol and one a summary one) in order to collect a laundry list of stats I plan to track over time. Most importantly of course is whether the prediction made was true or false. Unlike a trading system there isn’t a gray scale and the results are of ternary nature: 1 if the prediction was accurate, -1 if it was false, and 0 if the prediction was neither (i.e. resolution price was equal to to the base price). To my knowledge that much matches the practice you’ll find in binary option trading. Give me a week or two to produce a version for you guys that isn’t confusing. Of course if you don’t mind the leg work you can track the results on your end as well.

Format

As you probably have noticed the alerts have been slimmed down quite a bit. After some of the twitter alerts someone was messaging me back asking me silly questions about the ratio and that caused me to rethink how much information was really necessary. Clearly I’m not going to give away the secret sauce that drives the fractal parser and given that it’s pretty useless for you guys to get the fractal chart and all the other statistics. If such a service is really to be useful it needs to be a binary proposition: either we need to look up or down.

Twitter 

Speaking of twitter alerts – they are broken now and I don’t know why. In the past week I did a bit of testing and for some reason those tweets get rejected intermittently with a regular 401 error. I checked everything – the date setting on my machine, the credentials, the character count, the character format (URI encoding), etc. I even filed a support case with FB and they responded but thus far they’re slow on the take. In general I don’t care too much about Twitter delivery because I don’t think that it is the appropriate platform for future delivery. It would have been great for promo stuff but a sub service would be messy and full of challenges.

Alerts

I don’t think I’m too crazy about the email/jabber alerts either actually. First up there are boatload of them and they can be overwhelming, plus they can be annoying at night if you left your phone on. There is probably a way to consolidate several on each specific roll-over. That would require more coding which is not something I want to do right now as my stress/energy gauge is approaching the burn-out range. But I had another idea which I wanted to throw out there which is a simple webpage which would automatically be updated – imagine it to be like a control panel with all the symbols we’re watching. If ES for example is supposed to resolve higher in 2 hours then it would show that and the date/time. I have some rough idea how the user interface for that could work well, but of course the more sophisticated it is the more work for me. Clearly it’s not something I want to do this early in the stage. FractalMonger will have to prove itself first. If it looks solid after a minimum of 2 or 3 months down the line then I would certainly entertain the notion of implementing a special section of the site that shows a control panel, the logs, a quick intro and a tutorial etc. In any case – do you guys think that this would be a good idea or would you prefer alerts? Remember that said control panel could easily be converted into an online app as well.

Separate Site

Speaking of which – I reserved the fractalmonger.com domain the other day. This will eventually allow me to build a site exclusively around FM as I don’t want to pollute Evil Speculator which currently is separated into three branches: system trading, discretionary trading, and E-Mini swing trading. Of course a separate site will only happen if FM delivers consistently.

Binary Options

A fast growing target audience for FM would be binary option traders. Unlike regular retail trading (i.e. forex, futures, stocks/etfs, bonds, options, etc.) that space has been exploding over the past few years with Nadex in the U.S. alone seeing an increase in trading volume of 50% in the past year. Meanwhile forex in the U.S. is practically being smothered to death and not surprisingly Interactive Brokers announced that they will leave the U.S. retail forex market on September 1st (they also abandoned their forex business in Australia last year). The cheese is obviously moving and although it wasn’t planned that way FractalMonger may just have come at the right time. Because over on the binary options side Forex is enjoying a second renaissance. I took a look at Nadex the other day and it looks professional and liquid enough. It’s not the type of trading I personally enjoy very much to be honest but if FractalMonger proves itself it could turn out to be quite a profitable niche.

Work In Progress

If you haven’t signed up yet then now is the time – it’s free of course and I expect that it will remain so until we have firmly established that FM offers us a clear edge. Remember that Twitter is probably not going to be an option and until I implement a special page/URL for those alerts further down the line we’ll have to make due with either email or jabber. If you want both then please check out the jabber/xmpp instructions I posted. I recommend you devote a special Gmail filter to those alerts so that they don’t pollute your inbox. Or use an email address that you don’t check all the time and only look at during trading.

It’s early in the game and obviously it’s work in progress. As always I serve at the pleasure of this community and am open to any ideas or suggestions.