Full Review of the Time Series Forecast Indicator for Binary Options Trading
The Time Series Forecast Indicator is one of the most useful tools for binary options I have seen.
What Is the Time Series Forecast Indicators
What is the Time Series Forecast Indicator you are asking? Well my friend it may be the best binary options indicator I have ever seen. The TSF is a trend following indicator that focuses multiple linear regression models down to one point, predicting future prices into the near future. The indicator is like a moving average of linear regression utilizing the Least Squares Method to provide a “best fit” line over a set time period. Time series and time series forecasting is a model used to measure all types of data. The model has a unique difference from other types of analysis that makes it especially useful for predicting future values; it has natural temporal ordering. This means that the data points have a natural order, they occur one day after another successively in a uniform and measurable manner.
Because of its similarity to moving averages the TSF is also known as the Moving Linear Regression Indicator. This name may be more apt as the indicator is plotted just like a moving average. Each days data point is the end point of multiple linear regressions, plotted into the future. When plotted on a price chart the TSF forms a line that looks just like a very short term moving average. In order to create the TSF line a Least Squares linear regression series is calculated for each data point. Then the end point for each is plotted on the chart. The TSF is available with most charting packages as a standard tool.
How Do You Use the Time Series Indicator
First, download the indicator at the bottom of the page and install it to your MT4. The time series indicator is charted and read just like a moving average. Unlike a moving average, even an exponential one, the TSF formula is quite complex. Basically the TSF is a moving average so when prices are above the indicator the market is bullish and when prices are below the market is bearish. Because the TSF uses much shorter time periods than a typical moving average it hugs prices tighter. It is also possible to use the TSF in conjunction with an MA.
TSF signal’s are especially useful when confirmed in more than one time frame. When the market is bullish/bearish in one time frame trend following crossovers can be traded in a shorter time frame. The TSF can also be used to predict tops, bottoms and other potential areas of reversal because prices always return to the TSF when they have been trending above or below it. When a top or bottom is evident in one time frame there are often good short term signals in shorter time frames.
Why the Time Series Indicator Does Not Suck
This indicator does not suck and I want to make that very clear. This may be the best technical trend following indicator I have seen for binary options. Think about it, a moving average that takes into account multiple linear regression lines and combines them into one sweet moving average with a nod to stochastic theory? This is like combining all my favorite indicators into one tool. I am definitely going to be testing this little gem out in my demo accounts. Summing up the qualities of this indicator; it is trend following, it uses multiple time frames, it can be used in multiple time frames, predicts price movements and is more responsive than simple or even exponential moving averages.
Why the Time Series Indicator Sucks
At first I found this indicator hard to read and giving off vague signals. After a bit of research I determined that the settings were off. My charting package had the indicator set to a period of 5 with bars+ of 7. This created a wildly swinging line that the most savants of technical analysts would have a hard time deciphering. After changing my period to 9 bars (I left bars+ at the standard 7) the line was much smoother and much easier to read. Imagine Mr. Magoo without his glasses and then with them, that is how much difference this simple setting made. After that I was surprised at just how many good signals were jumping off the charts at me.
My Last Words on The Time Series Indicator
The Time Series Forecast is a good tool. It has a lot of use for binary options traders providing buy/sell signals as well as indications of market reversals. This tool is going in my toolbox. I will learn more about it and apply it to my trading. Looking at this chart of the EUR/JPY that the TSF has given 9 excellent trend following signals for this trade since the market bottom of August/September 2013. There are at least that many short term bear signals in that time also. When I narrow it down to a 15 day chart of hourly closings the number of excellent signals grows geometrically. The TSF is the best binary options trading tool I have seen.
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