The Market in the Light of… Spectral Analysis

Market Leader informed

 Our magazine already covered the subject of spectral analysis in the Forex (Issues Nos. 7-9). Our readers showed an interest in this truly promising approach to technical analysis. Today we are speaking to Head of the Spectral Analysis Department for FOREX and Currency Indexes Vadim Zhunko.

ML: When did you develop your Trading System?

VZh: Hard to say off the top of my head. The trading system is under constant improvement. One can even say it isn’t one system. These are several systems that can be used both together and separately. I can also say that I have been treating market movements like signals in radio engineering ever since I started learning technical analysis. This happened in 2005.

ML: Please tell us more about your TS.

VZh:Let’s not speak about a specific TS. You can have a whole variety of them built in spectral analysis.

I’d rather tell you of the main approach to analysis. I proceed from two premises:

1. There is a limited number of currency pairs in the Forex. There are 176 currency symbols together with metals and special drawing rights in the world. They can generate only 30,800 pairs, i.e. the system is closed. All secrets of pair movement are hidden inside the system.

2. Any complex curve can be broken down into simple harmonic components. This approach is described as SPECTRAL ANALYSIS and is used in all fields of science and engineering. It would be stupid not to use it for market research.

ML:When was the Department opened?

VZh: The Department was opened quite recently. In October last year (2009). I didn’t feel like opening it all. It takes heaps of time. But I believe I owe a lot to the Academy and chairing the Department is an adequate contribution to common cause.

 

ML:What is studying at your Department like?

VZh: Study is a bit different from what is typical of other departments. Newcomers have to be aware that they are tied to specific software. Some find this inconvenient. Some – for reasons of freedom, some – price.

First the student has an interview with me. Then they learn spectral analysis from literature they can find in the internet or from books if they are new to this subject. Later, if they find this approach acceptable they pay for the first two months and get the AIASM complex with minimum features. Usually two months is enough to master the package and analyze the market independently. After the two months the student has a choice – to continue or drop out.

Essentially, study involves building your own TS rather than learning a specific existing TS. What we offer here is a plant for production of fishing rods rather than the fish or even the fishing rod. The learning process is based on independent study of the market using the AIASM package.

Of course, the developers of the package, other students and I provide assistance, discuss our ideas, communicate…

Over 100 people got familiarized with the AIASM project over its lifetime. I called them testers before the department was set up. It was a small closed group of 15 people or less. There’s turnover. Some leave, new people come. There are also people who’ve stayed with us since the beginning. Personally, I’m not interested in wide propagation of these trading technologies. I find the club-based approach to learning most suitable.

Reviews and forecasts are not published on a regular basis now. Publications mainly come out if there are some interesting situations or global changes in the market.

ML:Do you monitor the results of your students?

VZh:I’m a bit uncomfortable calling them my students. These are people very close to me. We’ve kept in touch for a few years already. Of course, I’m interested in other things, not trading alone.

My criterion of successful trading – absence of losing trades. One Moldova-based tester demonstrated a result of 85% profitable trades. Though this isn’t the most important indicator. One can ruin their account even when the number of wins is close to 100% by breaking MM rules. But I don’t teach that. The approach to trading in markets should be based on hard work, not gamble, if the person is aimed at consistently positive results. It is boring routine work.

 

 

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