Overview Index Pages 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 {17} 18 19 20 21 22 23 24 Offer
CYCLE
IDENTIFICATION WILL GREATLY IMPROVE YOUR TRADING
Understanding several basic concepts in cycle analysis and timing
will help you determine trend, and to buy bottoms and sell tops
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One
of the keys to trading with cycles is an understanding of the interplay
of cycles within cycles. Almost all trading cycles in all time frames have
a one-half trading cycle as seen in the illustration below. A 20-day (bar)
trading cycle has within it two 10-day (bar) cycles. One 10-day cycle begins
as the 20-day cycle begins and typically bottoms halfway into the 20-day
cycle. As the first 10-day cycle ends, the second 10-day cycle begins and
it ends as the 20-day cycle bottoms. Therefore, a 20-day trading cycle always
begins, and ends with a 10-day cycle |
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The
Mechanical Buy and Sell Signals work well for identifying cycle tops and
bottoms and generating trading signals, but utilizing a knowledge of the
half-cycle can improve the accuracy of trading cycle bottom selection and
confidence in your trades. Using the 10-bar one-half cycle, accuracy of
cycle identification can often be increased by 10% - 15%. |
Awareness
of the one-half cycles makes it easier to identify and trade the 20-day
trading cycle. Once you identify the low of the first 10-day cycle, you
know the next 10-day cycle bottom will be the low of the 20-day cycle
as well. Important to know because the accuracy of identifying 10-day
cycles with the Bressert Double Stochastic averages better than 80% in
all time frames, all markets. The accuracy of identifying the 20-bar trading
cycle averages about 70%, and awareness of the 10-bar cycle can increase
the accuracy of buying bottoms and selling tops of the trading cycle. |
