Love Connection AI Development Story Episode 9 — How to measure being late fairly (compare with ATR, not pips)
In the previous episode (Episode 8), Enmusubi AI lined up three yen crosses side by side and discussedthe one that was late in coming. So how do we measure that “lateness” in numbers? Actually, simplycomparing in pips (price movement) is unfair. This time, the idea is to align the yardstick withATR (volatility)— a humble but important adjustment.
USDJPY, GBPJPY, and EURJPY inherently havedifferent typical price movements. The pound-yen pair moves a lot, producing large pips in a day. Meanwhile, USDJPY and EURJPY are relatively calmer.
If you simply compare “how many pips it fell,” you’ll often see GBPJPY as the most late,even though the reality might be that the more volatile one just moved as usual. This isn’t a fair comparison.
What we use isATR(a measure of how much the currency typically moves). Instead of raw pips,we convert to how many ATR units the move corresponds to.
This allows both the highly volatile and the calmer currencies to be compared on the same footing. It’s like looking at height growth not in centimeters, but in multiples of that person’s normal growth range.Normalizing by each currency’s standardmakes it fair.
Raw pips: “GBPJPY fell 80, USDJPY fell 40” → GBPJPY seems late?
ATR-based: “GBPJPY fell as usual, USDJPY fell twice its usual amount” →the truly late one is USDJPY.
※The diagram illustrates Enmusubi AI’s concept of “comparing fairly with ATR.”
Place three currencies on the standardized yardstick via ATR, andselect the most fallen one. This reduces the bias that highly volatile currencies are more often chosen simply because they moved as usual. Hence, the idea that “late = will catch up eventually” works more naturally. This modest adjustment is foundational for late-buy strategies, and fairness here is essential.
One thing I always say: even if you can fairly pick the lateness with ATR,a broad and long-term appreciation of the yen would cause all three to fall together. No matter how clever the yardstick is, the design’s weakness—trading only buys and no stops—won’t disappear. Therefore, alwaysuse surplus funds. This is something I’ll repeat as needed.
- When comparing raw pips, the more active currencies (like GBPJPY) always look late, which is unfair
- Standardize with ATR (typical movement), and measure by how many ATR units it fell
- Fair comparisons enable you to select the genuinely late one, and the mean-reversion concept works more naturally
- However, even with standardized yardsticks, the three will all fall in broad, long-term yen-strength phases—so always use surplus funds
※This article is for information provision and not investment solicitation. The operating results shown are past performance and do not guarantee future profits. FX/CFD trading involves risk. Please make investment decisions at your own responsibility.