Commercial Indicator Scams - how they do it

[SteveHopwood]

This is a post in the Symphonie EA thread by mbkennel and reinforced by squalou, two of the cleverest contributors here:

"Attached is a modified version (for visual use) where you can change a boolean parameter (UseInformationFromTheFuture from true to false) and see how it changes.

Spoiler: everything lags by a few bars and real life you'd get whipsawed in contrast to the pretty picture in the stock version.

The underlying methods use a bit of math which I recognize, it took somebody semi smart to program it in the first place. So I'm surprised there was such an elementary blunder.

How it works: It transforms the position of the current price to within hi-low bounds to -0.5 and 0.5 and then does an EMA in it. Then it takes a Fisher transformation, converting uniform into Gaussian distributions (which have central limit behavior) and then takes another EMA of that.

The provenance as a decompiled version makes me suspicious.

Here's what my spidey sense thinks happened. A real indicator with some modest value written by a mathey guy was intentionally modified by a very clever and unscrupulous commercial scammer at some point (don't think anybody here is involved).

Then it was sold as a system which lo-and-behold could even be backtested by the customer-victims with seemingly great results (in Empty4), and yet it was much more likely to fail in reality.

Later it got decompiled and pieces of code passed around not knowing the downside, and it washes up here.

I think the other indicators have some forward-snooping too. In my day job (machine learning software) the jargon for this !@#*! is "target leak".

The difference between a newbie and an oldbie in my business. Newbie invents new variable, trains model finds it's really good and predictive, goes to the top of the list of most contributing variables. He is proud and shows plots and numbers to his boss. Oldbie, e.g. his boss, looks at a great new variable which is really good and predictive and thinks, "Not again! What kind of new bug is crawling out of the woodwork?"
"

The post is here: http://www.stevehopwoodforex.com/phpBB3 ... 9246#p9246. It may be worthwhile paying a visit in case there is more information.

[astral77]

Reminds of the Synergy Volatility indicator by Mr Dean Malone. Just in case you are familiar with Synergy, this is a system designed by a very likable chap called DEAN MALONE. The basic version is free but for the advanced version you have to dish out $490 and for this money you get five indicators. One of them is called Synergy Volatility. I found a decompiled version of this indicator in FF, I liked it so much and needed to incorporate it in my trading. Basically if the volatility is going up then there is more likelihood of the move being sustained (either -ve or +ve). I kept looking in various sites for a simillar indicator which was not copy right protected. To my astonishment I found out that this indicator is an exact copy of JOHN BILLINGER`s %b indicator, which Mr Bollinger has kindly put in public domain free of charge. Mr Malone had changed the default period setting to 7 and then passed this as his own work! Very Very CHEEKY!!!

Kind regards