Trading Insights

Trading Insights

Time Cycle Indicators Do It Again

Trading Insights
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Check out this chart from today's emini S&P (August 8th, 2011)

 

time cycle indicator for ninjatrader tradestation

time cycle indicator for day traders

 

Once again, I'm amazed at how just waiting for the right time - the repetition of the correct behavior pattern, produces such volatile movements in the anticipated trading direction. I'm also amazed how overlooked time cycle indicators are, especially when you consider that time cycle indicators help with a multitude of psychological issues that plague traders in every market and time frame. Getting into a trade too early - getting out of a trade too late. Not holding trading profits long enough, or moving stops and giving a trade room to breathe. And then the paralyzing trades where traders can't do anything but sit and stare at the screen.

Time cycle indicators like the Flux address these issues by focusing a traders attention on a specific time - forcing them to look at specific behaviors at those trading times. The time cycle will either present itself - and it's conditions (reversal behaviors, for example) or it won't. If it's repeating - you'll see the conditions repeat at that time and have the confidence to take the trade. If it's not repeating - you won't see any of the conditions of your setup and the trade should be walked away from until the next time cycle indicator time.  It's that simple. And the simple act of walking away from your desk when the cycle is over, is immensely therapeutic. You can't make a bad decision if you're not near a mouse to execute a trade.

Time cycles have redefined the way we look for trades. Are they cosmic forces that just move people magically to do things at certain times? Or are the markets - and the institutions that move the markets - bound by routines and behaviors like any other business?

Or is it a combination of the two?