Trading with Hurst Enveloppes


#1

we will see how to build Enveloppes

using such a chart you can get many useful informations

this chart is in 5 minutes. Duration is 5 trading days.

The above chart shows that with 3 Enveloppes of 32, 128 and 256 Time Units (whatever Time unit you use from 1 minute to 1 month, quarter etc) you can describe the fluctuation of a financial support.

The aim of an Enveloppe is to show the Contact Points (the touching or Crossing) of the price movement with the Enveloppe Borders.

These Contact Points allow you to draw Valid Trend Lines of the same Degree / Order.

The depth of each Enveloppe shows you the maximum move you can statistically hope within an Enveloppe. From that you can calculate the accordingprobabilistic Risk reward ratio even if you enter lately.

You also see and evaluate (more or less ) the Underlying Trend

The Enveloppes allow you to visualize Waves of the same Degree / Order and then Cycles because 1 Cycle = 2 Waves.


#2

Thanks for this Alain. I hardly ever use the channel envelopes in ST, perhaps I should more.


#3

David I do not think you can use this system with ST. As far as I know you cannot use 3 Enveloppes at the same time and modify the Time Parameter and the depth of the Enveloppe which is calculated according to a “Gann Octave”


#4

Yer, no Gann stuff but certainly as many envelopes as there are cycles in the phasing.


#5

1 minute chart I am trading in the DAX atm…


#6

I do not agree with the Phasing Cycle Ideology. This is the reason why discussions between "hurstonians’ is very similar to those of “elliotticians”.

IMHO it is more useful to SIMPLIFY the system and only show the DOMINANT (visualized in the price action ) CYCLE in the time frame you use - here 5 days

Human mind cannot master more than 4 parameters at the same time (3 is best)


#7

I do whatever pays my bills mate and this works pretty well :smiley:


#8

In 1 minute too ( 1 day)

with this system you have 9 SRC (Support and Resistance Curves)

  • 3 Centered Moving Averages
  • 6 Upper and Lower Enveloppes borders or limits

#9

Very nice, keep posting those charts Alain :slight_smile:


#10

David I will do it !


#11

samples of the same system used on a very Long Term basis


#12

I want to do what works, I with you all the way!! Tired of chasing stuff that doesn’t work.


#13

thank you Bob for your comment


#14

Hi Alain, I’ve always found your envelope work very interesting, thank you for posting this.
In ST the channels are built so that 98% of the shorter channel fits in to the longer channel (which as far as I remember is what Hurst originally recommended in the Profit Magic book) … and that results in the channels quickly becoming very wide, and much less useful.
I notice that your channels are much narrower, and was wondering what method you use for determining the depth of the channel?
There is also a three-line envelope in your top chart that seems displaced from price (the lines have little circles on them). Is that also an envelope, or something different?


#15

In ST the channels are built so that 98% of the shorter channel fits in to the longer channel (which as far as I remember is what Hurst originally recommended in the Profit Magic book) … and that results in the channels quickly becoming very wide, and much less useful.

Hi David thank you for your appreciation.

As far as I remember Hurst never wrote such a thing in profit Magic. He stayed very general and gave only directions.

To build an Enveloppe Hurst used at least for his customers/readers a band of paper or of textile !
IMHO the reason is that at the time in 1970 Hurst had not the technical possibility to do otherwise.

Anyway it sure that in 1970 his readers had not this possibility.

As far I can remember it is Brian Millard which build Channels so that 95 or 98 % of the price points were included in the shortest Enveloppes.

Millard produced and sold 2 different software programs who had these capacities - one of them is Microvest the other one Sigma something


#16

I notice that your channels are much narrower, and was wondering what method you use for determining the depth of the channel?

My Channels are build using 3 Centered Moving Averages whose period are 32, 128 and 256 Time Units.

I will explain later why these time parameters.

To build an Enveloppe you have 2 possibilities.

Either you use a fixed-width parameter or a proportional one as for example Bollinger Bands (in standard deviation , you can also use %)

Hurst uses only a fixed-width parameter. Millard 20 years later uses also a fixed-width parameter. Both never clarify WHY they use fixed-width parameters.


#17

I use Gann inspired “Octave” (Vibration) Methodology since 1998. I discovered Hurst only in 2006.

So when it was necessary to build Enveloppes using a fixed-width parameter, I obviously and immediately used the Gann “Octave” whose efficiency I have tested since years.

To be short here I will now explain in this message how to calculate the Octave and his subdivisions.

Once the Octave determined (the Vibration to which the price fluctuations of the financial support are the most sensitive) it is very easy to build the 3 Enveloppes System.

a) to build the Centered Moving Average 256 Time Unit you add and substract the Octave value to create the upper and lower boundaries

b) to build the Centered Moving Average 128 Time Unit you add and substract 1/2 Octave value to create the upper and lower boundaries

c) to build the Centered Moving Average 32 Time Unit you add and substract 1/4 Octave value to create the upper and lower boundaries


#18

Thank you Alain, that is very useful. You are absolutely right that is was Brian Millard’s book that proposed the 95%-98% for the vertical range. How could I forget! I read Millard’s books on my way to Hurst … I guess it’s age affecting my memory!
I will explore the Gann octave approach. I have often thought that the channels in ST need to be revamped …


#19

What is the “Gann Octave approach” ? to use the expression of David.

Originally and basically The Gann Octave approach is the division by 8 of an interval.

A Time Interval with a Vertical Line - another VTL - Vertical Time Line
A Price Interval with an Horizontal Line
A Diagonal Line which describes Speed and Acceleration

That what you can see on a Gann “Square” on a Graph “à la Gann”

That is what I call Gann version 1.0.

In that case you measure the price interval between a Low and a Top and you divide the result by 8.
You can draw these Horizontal Lines on whatever graph you use.

If you really want to use the Gann Method you need to take into account the TIME FACTOR.
Your Time parameters have to be a multiple of 8 to build the Gann Square.

Gann wrote that TIME is the most important parameter because for him whem TIME and PRICE meet, it is where there is a high probabilty for change, for Directional Change.

Gann uses the expression “squares” ; Time and Price are “squaring” (balanced ) when they meet on the famous 45° "Angle°.

The famous “45° Angle” is liberaly used with plain stupidity by most (IMHO) ! Price and Time make a “Square” ONLY if you tell them to draw such a square.

Your computer screen is not a square, but a quadrilater. If you use a Protractor the so-called 45° angle is a 22.5° angle !

The correct description is a (1x1) Angle = 1 Time Unit x 1 Price Unit. This Diagonal Line is ALSO a Moving Average.

Gann used more the term “Moving Average” when Moving Averages became popular at the beginning of the 50’s.

Gann used mainly the expression 45° Angle to describe the (1x1) Angle because it is more visually descriptive AND because Gann and his followers used at the time, paper, ruler and pencils to build a graph looking as a Square. But Gann very often underlined the fact that it was a 1 Price Unit x 1 Time Unit Angle.

Even now the “degraded” version of the 45° Angle you see in numerous software packagesis useful to compare and analyze Speed and Acceleration of a financial support on such a graph.

But this way you structurally can not determine WHEN Price and Time “squares” ie when and where a high probality of a Directional Change could occur.


#20

if you compare this 2 graphs you notice that the progression of Price from 1992 to 2016 ( 24 years = 8 x 3 years ) is Parabolic.

Above the 2 graphs shows you the graphical representation of the now famous Fibonacci serie between 0 and 10 and 0 and 100

Both are parabolic.

The division by 8 of an interval between a Low and a Top allows you to use the correct scale of a price progression and to mimic the “vibration” at work for the concerned financial support.

The division of Price by 8 is a SCALING TOOL and a BAROMETER , an approximation (robust, but not bad would have said Hurst) of the Fibonacci progression