Personal Finance

ProfitMaxTrading.com · Guest

====================
Being One Bar Off
====================

For every good word found on these newsgroups there will be one in
opposition. Some may be valid and some are not. One of the biggest attention
getters for me is when I post about a cycle turn and my critics come out of
the woodwork to dissect and find fault. Imagine how far they would go using
all that energy to actually learn about cycles.

To fully visualize the real issue here, you need to be familiar with TIME
FRAMES. The markets are not viewed from any single time frame, but rather,
from various time frames.

For example, you may use charts that are 1, 5, 10, 15, 30, or 60 minutes.
That means on a 1 minute price chart each price bar represents only 1
minute. On a 15 minute chart, each bar represents 15 minutes, and so on.

If you were to isolate a decent market pivot (swing/pivot bottom or top) on
a 1 minute chart but were off by one price bar, would you find that such
timing to be excessively off? Of course not. And on a 5 minute chart? Not at
all. 10, 15, 30, 60? Nope. It is ALL RELEVANT to the time frame, is it not?

Nobody can consistently nail the exact day with 90% or greater accuracy that
I've been witness to. If you hit say 50% on the exact price bar and the
other 30-40% is just a single price bar off, that is darn good! But some
persist to argue that it is not.

The biggest and most ignorant argument that continues to come up is that of
randomly picking turn dates. It is argued that you can reach into hat and
pull out a date and it will have an 80% chance of being within a day of a
pivot top or bottom. Although completely missing the point, that statement
is true. If you are going to only pull out one date.

Here is an example of what I'm talking about:

Suppose that we had a crystal ball and KNEW that next month will have
exactly 7 market tops and bottoms. Then of course we would KNOW to pull out
only 7 dates from the hat, right? But even if we KNEW that there will be 7
turns, what if the 7 dates you pull out all fall within the first two weeks
of the month leaving the other half unaccounted for? Obviously KNOWING that
there will be 7 market turns next month did not help using the RANDOM
approach so often argued by some to be as good as real cycle analysis.

But then in reality, those who think RANDOM dates are just as realiable DO
NOT KNOW IN ADVANCE whether next month will have 7 turns or 17 turns! Since
a decision will have to be made beforehand on how many random dates to pull
out of the hat, even that decision will be random. If they decide to pick
out 12 dates and there ends up only 7 market turns, even if 7 of those 12
were within a day of the 7 turns would not make it 100% accurate. There are
5 random dates that were pulled out in excess and are thus considered
failures! How can you have confidence in using random dates knowing how they
were arrived at and that more or less turns will occur than what was picked
from the hat, and that does not include where those pulled out dates fall to
begin with within the month.

The problem these critics have is that they are completely ignorant about
the fact that market patterns are the result of cycles. Even the critics
subscribe to their canned oscillators like Stochastics, MACD and other
similar that obviously are CYCLIC indicators. These indicators EXPOSE the
cyclic nature of the markets. The key is to have them 'tuned' in correctly
to get the best picture of what is going on and likely to occur next. But
they usually fail to pinpoint the very price bar for a top or bottom.

Cycles do not necessarily have to replace any indicator. They work nicely
WITH some indicators as additional confirmation. It is IMPORTANT to mention,
however, that when I say 'cycles' I am NOT referring to FIXED CYCLES that
has been touted by some over the years. These 'fixed' cycle techniques,
where you try and spot a market making turns every 10 days or 30 days and
then look for it to do this again 10 or 30 days from the last turn. Usually
what happens is that once you find the fixed cycle interval it 'disappears'!

To get a better understanding of why this happens it helps to learn what
actually forms the patterns we see on a price chart. J. Hurst, well known
for his work on cycles, has provided an excellent answer to this question in
his books and courses. In short, what we see on a price chart is not one
cycle but the summation of several different cycles. When you combine cycles
of different time-widths (also known as cycles-per-second or Frequencies),
you get something that does not look like any one component cycle. The
pattern is representative of ALL the cycles combined and thus has a
'distorted' appearance.

Since each cycle of the composite has a different frequency, they will not
all top or bottom at the same time. Instead, some will support each other
moving upwards to various degrees while some will oppose (be moving down) in
varying degrees. Therefore, they tend to add or subtract from each other in
varying degrees depending on where along the time axis we note them. The
resultant pattern of additions and subtractions will plot on the price chart
as a bullish, bearish or sideways move, and the degree of their push will
vary as well.

By isolating these points in time (along the x-axis) utilizing cycle
extraction techniques, we can determine with a high degree of accuracy the
points in time when to expect a market turn, allowing a margin of error of
just one price bar on any given time frame. Naturally the weekly time frame
is greater than the daily time frame, so when isolating a weekly cycle turn
you are not only allowing a margin of one weekly price bar, but you are also
isolating a more significant market top or bottom than one on a daily chart.
So again, it is ALL RELEVANT to time.

The beauty of true cycle (extraction) analysis is that you do not have to
guess how many turns in any given period. The calculations are designed to
determine the likely number of turns based on actual price data (and not
some draw of a hat) and then produce a turn within a single price bar for
any given time frame the cycles are extracted from with a high degree of
accuracy, not over-producing or under-producing as if by guessing as this
would factor into the accuracy rate.

Arguing that the same can be accomplished with random dates as with true
cycle analysis is ignoring all the facts. The real proof of the pudding is
to see for yourself just how accurate cycle forecasting really is and how it
can greatly improve any trader's timing.

--
Cheers!

Rick J. Ratchford
ProfitMax Trading Inc.
http://www.profitmaxtrading.com

"The KEY to Precision Timing!"

UMT · Guest

Folks,

The old 'plus/minus one day/week' is a old con that goes way back in
the history of stock/futures vendor scams.

Ratboy was ridiculed for this several years ago and went to making his
'cycle calls' on the exact day like he should be able to do if there
was anything to his 'method.' Well, that don't work, so let's try and
convince potential newbie customers that plus/minus one day/week is
legitimate!!

Here is a VENDOR that constantly talks about 'trading with precision'
yet needs plus/minus one day/week leeway???? LMFAO!! Boy, that is
precision allright.

Do yourself a favor: just try and trade this crap! You'll find if you
follow this BS long enough that things change rapidly depending on what
the market actually does. Bad calls become good ones, etc.

Do yourself another favor: Do a search for Ratchford on this very
forum and then make up your mind.

Here's another saying that's oft repeated by said VENDOR: Know the
Market Turns of Tommorow ---- Today! Plus/minus one day/week!!!!!
Ha, ha, ha, ha....

Too much.

UMT

	Personal Finance Forum Index -> Market Trends	All times are GMT
Page 1 of 1