Trading Insights

Trading Insights

3 Market Timing Strategies You Won't Find Online

Trading Insights
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Definition: The attempt to anticipate of predict the future movement and direction of a market, historically through the use of technically based indicators or fundamental economic data

I believe many traders, especially 'professorial' types believe the markets are always "efficient", meaning, it's relatively impossible to time any market. They believe that at any given point in time, the market is digesting all available information...and filters that information through buyers and sellers to find the "best price". There's startling evidence to the contrary though, especially in light of the evidence from traders who use market timing strategies successfully to accumulate better than market average profits year after year after year.

Jack Schwager in his book, "The new market Wizards" wrote this in regards to the 'efficient market theory':

"After interviewing some several dozen profitable successful traders, I have come to the conclusion that the markets are not random".

There are 3 market timing techniques that both relatively new traders as well as seasoned veteran market traders can employ to see an immediate increase in success when employing market timing strategies

 

Annual market timing cycles

When looking at market charts, especially daily charts, it's relatively easy to discover days that are "pivot days"...days where the market direction changes and the trend reverses anywhere between several days or longer. What most traders don't know, and what many trading companies don't teach, is that these days, year after year after year, produce reversals out into the next year. That is to say, if you scan back across the previous one or two years worth of pivots, and project those dates forward - you'll see that the past pivot dates of the prior 365, 730 days turn out to be the pivots for the upcoming year.

 

market timing strategies with daily bar data mining

 

 

In the above chart, you'll see what happens at the days from the prior year's movements and pivots. Note the percentage of times that the market turns on those dates the following year. This powerful technique is very rarely taught to beginning traders because of its relative ease of study and forward implementation. Many traders are overwhelmed by the rapid inflow of information from live tv feeds, as well as complex assortments of technical indicators - as opposed to discovering years later that it was simply "time" for the stock or index to go up, or reverse.

Many veteran traders ascribe these daily bar reversals to large institutional fund balancing...times of year when heavily traded portfolios involving these instruments are sold off to pay for dividends and subsequently liquidated. Whatever the theory behind it, these powerful daily market timing pivot strategies are relatively simple to study, and powerful - statistically speaking- when those dates are projected into the next year's market.

 

Intraday market timing strategies

Intraday performance of the major equity indices has an observable and cyclic/repetitive/rhythmic structure. Traders that have a few years of experience will tell you that they are waiting for a "10:00 reversal" or are looking to buy "weakness on the 2:15 dip". Are there time periods - statistically speaking, where the market is most likely to reverse - go up or down? A few years ago, Tradestation did some intraday studies with regards to times of market throughout the day and found some very interesting trends. While a certain degree of price movement will always be random, we'll see that there are biases - "self fulfilling prophecies" that can provide a statistically relevant edge with regards to market timing strategies intraday.

market timing strategies tradestation

 

 

In their paper, "Mapping the Intraday Price Movement in the S&P Index" , technicians constructed a relatively fine resolution (60 minute increments) study of positive (bullish) and negative (bearish) behavior. When we first look at this study, you'll note that there is a significantly large number of positive periods in the ten o'clock hour, as well as in the four o'clock hour. The majority of the returns from the ten o'clock session come from the pre-market session.

As we go back to 1987, 21 out of the 25 events had average gains that were positive for the four o'clock interval, or approximately 84%...far from a 'random' distribution. Moreover as we look closer, it appears that the market 'rests' in the eleven o'clock hour after it's initial morning run towards positive gains. Even closer examination shows that if stocks close higher on average into the three o'clock time period the probability of their moving even more upwards into the next hour is almost seventy percent. Again....far from average.

 

Incorporating data mining to uncover leading intraday turning times

Finally, there's an exponential surge in the equities and futures, as well as forex markets of algorithmic trading. Computers that are programmed to trade for the large funds and investment institutions. This phenomenon has breached the half way point, with over 60% of US and UK funds being traded electronically and programatically by these algorithms.

The idea of the markets being predictable is not a new one - and was first demonstrated as such by WD Gann back in the 1920's and 1930's. Gann theorized that the markets were projecting future movements in time, via the averages of the past movements of the instrument. Specifically, " by studying the past records of the averages of stocks you will determine for yourself that history does repeat, and that by knowing the past you can tell the future". The modern day equivalent of that technique involves data mining - a technique championed and funded as of this article by C.I.A. and leading hedge funds through a software company called "Palantir" whose "Prisim" software studies the market's complex timing patterns and feeds traders and algorithms the best times to trade as per the results of the data mining.

BackToTheFutureTrading.com produced a retail-trader friendly Ninjatrader indicator version (in our opinion) of this data mining software that studies the past records of the averages of any instrument between 1 minute and 240 minutes to discover the times the market has been moving up, or down - consistently - for how long and in what direction. Similar to the Tradestation study above, they've discovered that these sorted times discovered by the data mining software are accurate about 70% of the time out into the future of the market the next day. This allows traders to sit and wait at pre-determined times and wait for moves to form and take off, as opposed to the conventional technique of applying multiple lagging technical indicators to a chart and using that lagging information to base an idea for what the market will do next.

 

data mining market turning strategies

 

 

In this chart, you can see what the data mining software discovered could potentially happen the next day. In the bar chart on the right, you'll see what actually happened at those times the very next day, some 24+ hours later. Analysts theorize that the ability to study the markets this way and project turning times forward into the future (a data mining market timing strategy) only increases in efficiency as more algorithms are programmed to trade electronically.

To verify this is happening, traders can (using an excel sheet) use the same technique described above for daily bars go back and see what times over the past 2 weeks the market is acutally turning and trending at. After a few hours of study, any intraday trader will discover that there are certain times, on certain days, where the market has a 70%+ chance of going up or going down....defying academics who claim the market cannot be forecast.

One trader interviewed by Schwager in his book said this to those academics, "That's why their professors, and I'm making money trading".

However you want to address it, the market you trade is not random. We've uncovered these, and even more sophisticated techniques for uncovering "what the market will do next". The more we study these techniques, the more we're convinced that Schwager's traders were right...and deservedly profitable.

 

 

Ninjatrader Indicators

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Most people start out using the free Ninjatrader indicators that come with their platform, only to find that many of them are either too lagging, or too "simple" to use in any robust trading plan. In 2008, we decided that in order to compete with algorithmic traders, and professional institutions with trading computers, we would have to begin to separate ourselves from conventional Ninjatrader indicators, and popular Ninjatrader indicators vendors and begin developing our own tools that were based on things we were actually seeing happening in the markets.

One of the most important discoveries was the Flux Histogram tool in our Ninjatrader indicator arsenal, shown here:

This tool was designed to study the historical price bars of any instrument, between a 1 minute and a 240 minute time frame and search for recurring time based price movements in any market. We compared the leading results of this tool against other Ninjatrader indicators, and were surprised to see that the software was able to reveal trades that were coming - trades that hadn't happened yet - but had a high likelihood of happening based on their tendency to appear at certain times, on certain days. We discovered the shift that everyone in the trading communities had noticed - that the "humans" were no longer trading the large institutional accounts. Humans that used to used conventional style Ninjatrader indicators were now passing that authority over to trading computers loaded with powerful programs and algorithms. The institutional traders, the "humans", men and women that were previously using tools such as RSI, Fibonacci retracements, Stochastics, and other similar tools like those found in the standard Ninjatrader indicators list had shifted responsibility over to highly advanced and powerful trading computers with their own indicators - and their own rules - devoid of human emotion and error.

Nearly every tool designed by the developers at Backtothefuturetrading.com are Ninjatrader indicators that address the power of these trading computers, and use their "computer minds" against them. By analyzing the data left behind by these computers, the data available to every retail trader, it's our opinion that we're able to uncover patterns that are invisible to the human eye - patterns that stand out though dramatically to a computer's "eye". Our Ninjatrader indicators are based on thousands of bars of historical data bar analysis that reveal patterns that are "forecast" into the future. When we look at what happened at the times that were forecast days in advance, we have charts that look like this one: (click HERE to enlarge)

Ninjatrader Indicators Flux

We're excited that you found this site. If you're here, it means that you, like us and many thousands of retail traders have graduated from "training wheel" indicators that most people realize don't work over time, to a style of trading that requires you to analyze the market you trade "inside out". You've decided that you're not playing anymore, and have gotten serious about your trading plan and your profitability.

We want you to see how powerful Ninjatrader indicators can be - but you have to take the next step by wanting more information about these tools for yourself.  Take a moment to get that information by letting us know you're here and want to learn. We'll send you forecasts for the market you trade 2 days in advance, as well as our customized three part training series that will help you understand why most Ninjatrader indicators are harder to use than you think they should be....

Trading time cycles

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Trading time cycles can be challenging. Many of the time cycles that people look at when they are trading are based in very theoretical and murky waters. They end up in pretty subjective pools - either fibonacci or gann....wave theories...trading time cycles can be a very alluring but often times very ambiguous endeavor. It becomes a very subjective thing. When you find a guru in your pursuit of mastering these things, the guru only serves to frustrate you as they apply a constantly shifting set of rules when they are trading time cycles. It's never the same thing twice.

When trading time cycles with the Flux indicators, people can be faced with the same challenges. How to remove the subjectivity? How to make it less ambiguous...something that can be back tested, with signals that don't disappear and reappear, or the most carnal of trading time cycle indicator sins - repaint.

When we applied the Flux programs to the market data, we had a test for robustness. We wanted to see:

a. consistency across time frames

b. consistency across instruments

c. demonstrable statistics above the 60% barrier. Non-subjective statistics.

When you are trading time cycles with the Flux software, it's important to remember that. I forget, quite frequently, to check across a full range of time frames in the markets we study. I personally when watching markets have an aversion to going past 3,5 minute time frames. But see why that's a self harming characteristic in this example.

Look at how the Flux time cycles appear on a 5 minute chart in Gold Futures: (click here to enlarge)

Gold Futures, 5 min chart with Flux Time Cycle Markers

Do you see the consistency of the cycles as they appear on the candles? Each one of the marker times were known a week in advance. Their color. Which candle they would plot over or below. We want to see the confluence of signals near or close to actual market movements as a guide.

But now look at the same market, analyzed with the same tools, on a 240 minute time frame. A scaling factor of nearly 25.... Click here to enlarge:  http://screencast.com/t/V9aq3pBwgPwL+

Trading time cycles on Gold with Flux markers, 240M chart

 

That's what we want to see. These trading time cycles coming in on different time frames with the same consistency.

First, we have to pass the "eyeball" test. Are the forecast time cycles actually coming in at the highs and the lows that we were waiting for? From these charts, it would appear so.

Objectively though, does the evidence hold up? Or are we deluding ourselves like so many other traders to when they are trading time cycles?

In my next post, I want to show you the statistical evidence of the existence of these time cycles. It's pretty compelling - and we were excited, and nervous the first time we ran this strategy...

 

 

 

 

 

 

 

Time and price predictions

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Time and price prediction methods and techniques for trading the futures, forex, equities, and commodities markets are possible now using the full processing power of your trading computer. Time and price predictions, as a concept, have been discussed for the last 100 years, and were probably made most famous by the trader, WD Gann - whose study of the market "vibrations" led him to conclusively believe that both things were accurately predictable. Listen to his quotation from his Time Cycle Forecasting course,

"TIME is the most important factor in determining market movements and by studying the past records of the averages of individual stocks you will be able to prove for yourself that history does repeat and that by knowing the past you can tell the future. … There is a definite relation between TIME and PRICE..."

What most traders who are looking for time and price confluence in their trading don't realize, is that you don't have to study Gann for dozens of years to decipher his cryptic writings. Time and price predictions and confluence points are discoverable, with a haunting accuracy - through data mining algorithms programmed into Tradestation, NinjaTrader, and Metatrader.

See these time and price predictions on this Emini S&P Chart, and quickly determine where the time and price predictions "intersect"

Time and price predictions

time and price predictions aligned on the emini S&P

Do you see around 1403, where we are coming into the red lines, at the same exact moment we are getting a signal ?

The red lines, are Flux FPC lines, and tell us the "Price" of the time and price prediction component. It is a measurement of hundreds of pivots at that price, over an analysis of thousands of historical bars. But the good news is that this time and price prediction - is based entirely on the work of your computer, using your software's data mining algorithm. The other good news is that these levels are available to us, long before the market opens. You can use the time and price predictions- and anticipate them - vs. reacting to levels on the fly and in the market that may , or may not, be significant.

If you take one last look at that chart - do you see how you can define your risk, and your reward, at the time and price prediction point? Where they intersect, can you see yourself saying the following,

"The price should not go any farther than HERE"....

"The market should go down, NOW...and not continue upwards".

This prevents you from making bad subjective decisions in the moment - and encourages you to make the market "give you" the conditions you want - where the time and price predictions are aligned like planets, and the water is as safe as it's going to be to get in...

To get your free market forecasts, and see how this occurs in real time, visit our forecast page to see the histograms in advance, and attend one of our live training review seminars at the end of each week:

http://backtothefuturetrading.com/flux-webinar-histogram-forecasts/

Higher time frame confirmation for traders

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When trading higher time frames, traders often look for higher time frame confirmation to identify trend, and establish the dominant trade direction of the markets.

Many traders when studying the higher time frame, often use traditional lagging means of analysis on the higher time frame itself, using a multitude of older techniques. These higher time frame techniques can include trend line identification, position of the market above or below a major moving average, volume coming into or going out from the market, or tests of market support or resistance at the higher time frame.

What's interesting to note, when analyzing the higher time frame with the Flux data mining software, is how these lagging, and older means of identifying trend are often times too late, or much later into the trend turn than is desirable for traders. You have to wait for the turn, to confirm the turn, and on a higher time frame that usually means the trade is long into profitable territory - and traders begin chasing the trend and increasing risk.

Take a look at this chart:

Emini S&P Higher Time Frame analysis

Analyzing the higher time frames of the Emin S&P

Every marker on this chart - every dot - has nothing to do with price action on the screen at the time.

Each dot represents a time, that the Flux software from Back To The Future Trading identified a week before that price bar - as a high probability trend time. The software was telling you -

"Hey, I've analyzed several thousand bars of data, and determined the following times coming up in the future as likely candidates for repetitions of these major runs".

How often do these events repeat? How often are the times relevant, in the future?

Look at the chart for yourself. This 60 minute Emini S&P chart is clearly a higher time frame than most traders that day trade look at. But we clearly see on this higher time frame that the overwhelming majority of the Flux times were actual trend births, and trend deaths. Knowing these exact times put you in the very beginning of the trend, the majority of the time.

With statistics and probability on our side, it would then be possible to identify trend on the higher time frame BEFORE THE TREND BEGINS, and enter small positions early - or take all of the signals that come on the lower time frame, in the direction of the anticipated higher time frame trend.

For more information, and to receive forecasts for multiple markets in advance and attend our weekly webinars, CLICK HERE.

Predictive indicator development

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Predictive indicator development traditionally hinges on the idea that a real time market analysis can be made with a real time indicator like a Shaff Trend indicator, or something from the Ehlers series of indicators that have a built in cycle component. However, the markets in the last 2-3 years had fundamentally shifted from a human centric trading model to a machine driven trading model, and predictive indicator development has done little to adapt to the "trend", no pun intended.

A predictive indicator that relies on historical data - however close in the past, has fundamentally missed the definition of "predictive" in the truest sense of using data that has just happened, to interpolate what may happen in the next "x" number of bars. Many of the indicators that use this technique have actually reverted to a "repainting" structure, such as this indicator below on a popular FX site:

predictive indicator

After purchasing the indicator you see that play out in real time, and realize that it's impossible to back test any strategy.  Most predictive indicator developers find that anything with a lagging component is prone to exceedingly high ratios of late signals, or false signals, in response to and by nature of the fact that they are calculating based on X bars of past in market data. However smoothed or added, predictive indicator developers need to step back and reassess in light of the massive computer trading environment that exists today.

The better solution, when considering predictive indicator development, is hinted at in this excerpt from Businessweek.com:

But as with all Wall Street feeding frenzies, there are dangers. Some critics say that when less experienced hedge- or mutual-fund traders use the software they've bought from Wall Street, they inadvertently expose their trades. How? Canny traders, mainly those who trade on behalf of big banks and brokerages with the firms' capital, may be able to identify patterns of algorithms as they get executed. "Algorithms can be very predictable," says Steve Brain, head of algorithmic trading at Instinet (INGP ), the New York City-based institutional broker.

Did you catch that? To be truly predictive, one needs study and identify patterns left behind by the algorithms of the larger institutions and brokerages. When we apply this technique to a market and study the statistically relevant patterns of the actual algorithms, look at what happens when we sit and watch the times that the algorithms are most likely to move, and judge the performance of this predictive indicator for yourself:

predictive indicator 2

This predictive indicator technique yields considerably more confident results, as we are studying the market itself and watching for patterns that indicate where and when the trading computers are most likely to fire off their trades. Knowing these times, and prices, gives the smaller trader an opportunity to be in the order flow when these algorithms fire their orders off. Using a predictive indicator that measures "what just happened" with any type of a lagging component puts the user at a severe disadvantage.

Time Cycle Indicators

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I liken predictive time cycle indicators to the example of a mailman, or a postman, near my house.

Time cycle indicators as they exist in the world today - in the lagging sense of the words, would have you measure for cycles in the following way.

They would have you listen for the mail truck with a half way decent microphone. It would compare the background noise of your neighborhood to approaching vehicle's engine noises. It would compare the sound coming through the microphone to the known sound of your postman's engine. As it got closer, it could make clearer determinations about the source of the noise. Ideally, the best measurement could be made when the truck was closest to you - or right at your house or property. This is a very rudimentary way to compare modern time cycle indicators and how they use lagging averages and look backs to determine if there is a cycle present, or not. In the end though, you must wait for the comparisons and averages to get really close to the actual event. Only after the mail is delivered, or after the move has occurred on your charts can you say, "yes, the time cycle indicators worked, or didn't work".

We approach time cycle indicators from a completely different perspective. We look at the postman from a purely statistical standpoint. A time cycle indicator should approach the problem from the same angle, and you'll see the results of the difference in the diagram below.

What if we sat inside our homes, with a highly accurate and dependable clock. What if we waited until the postman had come to a full stop at the front of our house, and logged the exact time that the mailbox was opened, and our letters deposited? After a few weeks, we might have a data set that looked like the following:

 

T1: 11:02

T2: 11:08

T3: 11:01

T4: 11:06

T5: 10:58

T6: 10:55

T7: 11:02

T8: 11:08

T9: 11:05

T10: 11:07

We could do any one of a number of things with this data - especially in the light of our time cycle indicators question. It's not hard to see, that there is a clear behavioral pattern - or cycle - taking place here. It would be foolish, for someone to go outside and wait for their mail at 8:00, for example. Or, when an important letter was needed, to wait until 2pm to go outside and check the mail. There is clearly an optimal time to base our activity on, in the context of the statistical data of our "postman" time cycle indicator.

A hand drawn chart might resemble something like this:

 

You can begin to see the statistical significance of the cluster. There is a window we SHOULD be watching for the event to occur, based on observable real world events, or behaviors.

If we do the same thing with trading data - in particular applying these techniques to  market based time cycle indicators we see charts that begin to emerge like this one:

 

time cycle indicator

Flux time cycle indicator with histograms

 

Low and behold, we see cycles that emerge statistically in the data. "Mail deliveries" where the market is buying, and selling, with repeated regularity in the market that we are watching. In this case, we're not measuring real time and guessing if something could be a cycle or not. It would be akin to our example above, and "listening" for engine noises that sounded like the Jeep we were waiting for that had the mail in in every day. Maybe the noise wasn't a Jeep. Maybe it was a Ford, or a Gremlin, for that matter with a modified exhaust. Listening for these time cycle indicators with lagging indicators like MACD produces false results that completely ignore the premise of the experiment. There are TIME BASED CYCLES that exist in the market. If that's the case, than we should see repetition of behaviors at those times, across a statistically significant period of events, or a large enough data set to be convinced. Moreover, if we use this strategy with a forward looking or predictive set of time cycle indicators, than we should see the result we're expecting occurring at those times, a statistically significant number of times (ie more than half).

If we apply that hurdle to our forward looking time cycle indicators, and place markers at those times we are expecting the market to trend up, or down, here is what we start to see:

time cycle indicators

Flux time cycle indicator with markers

In this example, much like our "red dot" chart, we see what happens to the trend around the times that we are waiting for trend reversals. Not based on an internal market shift, but based on times that were known before the market opened.  Overall, across a wide range of markets and time frames we find this phenomenon occurring using Flux time cycle indicators that establish behavior patterns before the market opens, and sees those trend and momentum moves play out 60-70 percent of the time after the fact.

There are choices when looking to use time cycle indicators in your trading setups. You can use traditional lagging methods that more or less guess at what is happening, or tell you what "just happened", or, we can use the power of our computer's processors to examine thousands of events in an statistical analysis that reveals events that recur with enough frequency so as to alert us to higher probability trading setups and directions.

Time cycle trading

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When we first started time cycle trading, there was a phase of unbelief. When we looked at the time cycles generated by the Flux software that depicted the internal behavioral cycles of the markets, we began to really think that we were tumbling down some rabbit hole with no bottom. All of our suspicions about time cycle trading were confirmed by the forecasts and the time cycles provided days and hours in advance of the market actually opening. We started to see that these time cycles were indicative of a market that was no so much random - as it was choreographed and filled with business procedures and routines that occurred with regularity and like clockwork - less mysterious than the random "magical" world we were led to believe existed. Time cycle trading got a whole lot more interesting when we allowed ourselves to believe there was more to the market than random "efficiency".

I took the time today to compare what we're doing with our software to the techniques other vendors are attempting to teach and proliferate in the market. This one chart was of particular interest to me. People interested in time cycle trading that came across this photo probably reacted the same way I did:

time cycle trading

In this diagram, the expert is attempting to show how his software can help you discern trades using Gann's teachings of "squares". This is a direct quote from the website:

"...Because the next 2 days is Saturday and Sunday, so I tried to start the square from these two days and find some vibration on 30, 45, and 67.5 (2/3) days. We can reasonably assume a 90 days high if the price is approaching the 90 days from low."

I've read through the page now a few times, and I always ask myself the same question. If someone trading time cycles came across this site, would they be able to determine for themselves what was being taught, and then how to apply it methodically and objectively real time in the markets? How would someone trading time cycles approach an entry or an exit - and would ten people following the same teachings all arrive at the same conclusions? How firm are the rules of interpretation with someone trading time cycles using this Gann technique? Listen to the next quote...

"I try to find out whether a chart is vibrate under the square of 90 by starting from all the recent highs and lows and visually spot matching turning points (vibrations) in the 8 divisions, especially in the 30th day, 45 day and 60day. 90 days is also 3 months, sometimes this could be the period of an counter trend out od a major trend..."

Trading time cycles had to be easier than a technique developed by a man 100 years ago...a man with no access to computers or online resources, no?

The next webpage in the list of people I came across when searching for "trading time cycles" was a company selling a book about Hurst techniques. In particular, JM Hurst - a man we had come across often in the pursuit of the ultimate time cycle trading techniques. What did they have to offer - surely it would be better than our Gann friend:

"The most surprising thing about our adaptation of Hurst's displaced moving average technique is that you don't have to spend any time doing tedious cycle analysis. Just click on a few bar highs or lows in the training software to get an idea of what periodicity is driving the trend and determine the best displaced moving average set with your eyeballs in the chart window. This becomes second nature after a few tries."

Just click on a few bar highs or lows to get an "idea".  "With your eyeballs in the chart window"? Huh?

For $35.00 and a book later, I could learn the secrets though. No worries. Trading time cycles would be easy once I wrote a check. Ok...

Finally, I came across this in pursuit of comparative trading time cycles tools:

"...Plotted below these cycles is the speed of a third planet.  A planet's speed reaches its extremes at perihelion and aphelion, the two points closest and furthest away from the sun. CycleTimer allows you to plot below your chart any combination of planets speeds added together or subtracted." Also, the ellipses were drawn in by hand, after the fact - showing how these were contained with the software's powerful "ellipse" techniques.

So, planetary motion....hand drawn ellipses....these were the tools being offered to traders looking for assistance trading time cycles?

It's no wonder we have such a hard time convincing people that there's an easier way. That these cycles actually exist, in a statistically meaningful way...

Look at one of our charts:

 

trading time cycles

 

In our charts, it's fairly simple. There are red dots indicating a trading time cycle to the downside is coming. A trading time cycle that historically recurs at this exact time. Same for green dots. If you see green markers, than you are being alerted to the fact if you are trading time cycles that now - right here - right on this candle - is when you are expecting the market to go up. Time cycle trading can be simpler than you've been led to believe.

If you haven't already done so - register for one of our weekly webinars where we give the forecast times out days before the seminar - and review what actually happened after the fact to determine if these results are statistically significant.  Compare for yourself - if you're looking to learn more about time cycle trading - which one of the methodologies is easier to follow and apply methodically.

Find your trading style

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The older I get , the more I believe that learning how to trade the markets is one of the deepest processes of self discovery that a person can take on. This is of course provided that the person is highly motivated to understanding the art of trading and has satisfactory introspection and flexibility to learn understand develop and grow.

In the timeline of trying to learn to be a good trader, I think that you are going to have to discover and develop your own personal approach and style. By the word "style" don't think I am saying something weird like "a trader who trades what they see". I think this is a pretty hollow description, and not much better than saying your life's motto is "trying to be a good guy and do the correct thing". It has to be more specific than that. Here's what I mean.

When you sit down and look at yourself as a trader, you can evaluate the following when determining your trading style:

First, the quantity. How many positions or markets are you planning on trading simultaneously? One? Three? Dozens?

Second, what is the basis of the trade. What are you using to make a decision about your positions? Is it a counter trend approach - a trending approach? Are you incorporating support and resistance? Divergence? What is the basis of your trading style?

Third, what type of trading frequency are you going to use in your trading style? Are you planning on entering and exiting positions 1,2, or 12 or 100 times a day?

Fourth, when understanding your trading style you should evaluate if you have a bias. I believe that most people I've come across have a buyers bias - they are bulls - despite the fact that they say they are neutral. I know now after many years that I am a bearish bias person. My trading style incorporates that bias and makes trading less stressful for me as a result.

Finally - what security will you trade? Do you like the e-minis? Stocks? Blue Chips or Penny? Do you like the Forex market movement - if so, which pairs? What about commodities like oil, gold, or wheat? Maybe binary options? Have you looked at all of these for a time to determine which markets you feel most comfortable in? Your trading style has a lot to do with what markets you're trading.

Understanding your trading style, and giving yourself permission to have this dialog with yourself and ask these questions at all, is a critical function of success. It's better to ask them now, than have to loop around after a blown account or two and realize that you should have determined this beforehand.

Cycle Indicator evolution

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Cycle indicators have been notoriously lagging in the past, in the sense that they are attempting to measure something that is happening in the market real time. Most cycle indicators are not much different than an RSI for example, which is looking at market conditions as they are unfolding - measuring the average of some internal market value and displaying that value as some type of a moving average cross.

Once such indicators is the Schaff Trend Cycle Indicator that uses slow stochastics and the MACD, as wel as a cycle component to factor currency cycle trends. The indicator is purportedly faster than the cycle indicators that lack a cycle component and rely more on slower moving average cross type components. An example of the STC cycle indicator here shows how the STC cycle indicator generates its buy signal when the signal line turns up from 25 to indicate a long or turns down from 75 to indicate a short:

While this indicator can be called "forward looking" as a cycle indicator there is still the element of waiting for current market conditions to unfold to generate a signal. The down side of this type of a cycle indicator is that it still generates apprehension in the moment. A trader is reconciling what they see with this signal and always wondering if the cycle indicator, in this case the STC cycle indicator is correctly interpreting the market conditions or not, especially in volatility.

The designer of the Flux cycle indicator took this into consideration when he originally theorized that dominant market cycles could be measured from historical data and project forward. Like any other business in the world, the institutional trading conglomerates couldn't operate randomly - and had to have some sort of internal time based guidelines for when large trades were to be placed, and when large profits or losses were to be taken. This concept has elevated the idea of a cycle indicator to an entirely new level.

When the Flux cycle indicator was originally turned on, the designer was looking for graphical representations of cycles in the cycle indicator, as represented by peaks of histograms that showed up clearly as part of a sinusoidal (roller coaster looking) pattern. Here's an example of what is returned from the Flux cycle indicator:

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In this case the user is not waiting for a line to cross so much as they are waiting hours in advance for a specific minute of the market to close, with the time of that minute known specifically days before the market opens. In essence, the cycle indicator is saying...."there is a very strong possibility that the market will sell off at 10:24, as it has done previously wiht statistical significance". This internal behavioral cycle is captured with data mining algorithms and displayed graphically for the trader to visualize the markets dominant behavioral cycles in advance of any line crossing - no matter how good the "cycle component" of the cycle indicator is.

The best way to visualize this is to register for one of the BTTFT online seminars, or fill out the BTTFT personal consultation form to watch the cycle indicators playing out in real time. One of the great advantages of these cycle indicators is that the company can post forecasts days before the online seminars, and then review the outputs of the cycle indicator after the fact and verify the potential robustness of the signals after the fact. This is something very few if any other cycle indicator developers can lay claim to, and can be a very powerful convincing factor for many traders.