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Commodity and Futures - Physical commodity and financial futures markets.
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Posted by truth-b-told on December 11, 2006, 5:09 pm
Oh Ricky,
##### Is gerillio's questions/comments!!!!
Sincerely,
gerillio.
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1 From: Fdates2000 - view profile
Date: Sat, Mar 11 2000 12:00 am
Groups: misc.invest.futures
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=========================================
How to Take Advantage of Close Proximity Dates
=========================================
STANDARD DEVIATION ON REVERSAL DATES
When dealing with reversal dates in market analysis and trading, we
have
come to accept that a standard deviation of one price bar is to be
expected
in order to accurately locate the swing associated with the date. The
cycles
combined to form market patterns are the result of external forces,
some
identified and some not. These forces, which are also part in parcel
responsible for weather and tides in our oceans, do not stop cycling
when
the markets close.
Market pattern is the result of combining cycles of different
frequencies
and magnitudes. In electronics, we call this resulting pattern
Distortion.
##### You are NOT TRADING "ELECTRONICS!!!"
Assume that one cycle pattern tops at 11:49 pm Chicago Time. Assume
another
cycle tops a little later at 9:43pm Chicago time the next day. When
might
this top actually manifest itself on the price chart? This is hard to
tell,
as there are other factors to miniscule and time consuming to
determine,
such as 'which of the two cycles is the strongest?', or 'what other
cycles
combined may push or pull on this market pattern to alter it by one
single
price bar?'
Therefore, when using mathematical techniques to extract some of the
underlying cycles from past market price action to form a basis for
future
reversal dates, such as is currently done with the Fdates program, we
must
make allowance for cycles undetected that may alter the market pattern
by a
single price bar.
Some cycle analysts use a set of ranges rather than a single date to
represent when they believe these cycle turns will occur. For example,
one
newsletter on cycles will normally report a cycle turn in a format such
as
'3/15-17.' This is the same as using a single date of '3/16' with a
one-price bar standard deviation.
===============================
CLOSE DATES
Individual cycles alternate from top to bottom in evenly spaced time
frames.
Each top will occur in x number of increments, and each bottom will
occur in
x number of increments as well. It is the combining of these cycles
that
'distort' the evenly spaced patterns. This is actually a good thing for
those of us who trade. If the markets made tops and bottoms every x
number
of increments, everyone would quickly know what those increments were
and
there would no longer be a market.
##### LET'S READ THAT AGAIN....RAT says,"Individual cycles alternate
from top to bottom in evenly spaced time frames." Funny, this is NOT
what RAT said earlier in his "cycles and videos" that he recently
posted!!! RAT showed charts, with 2 consecutive top cycles, and 3
consecutive bottom cycles....Remember the "Red Dot charts that Ricky
posted?"
This distorting of the individual cycles creates a pattern that varies
incrementally between major and minor tops and bottoms. Because of
this, you
will get some minor tops and bottoms appearing very close to each
other,
than farther apart. Same goes with the major tops and bottoms.
When there are tops and bottoms due to occur in close proximity to each
other, this will result in reversal dates being close in proximity.
With a
standard deviation allowed of one price bar in isolating these cycle
turns,
you may at times have some overlap.
##### OVERLAP cycles... distortion...inverted....Is there any name that
you can apply, that would explain what you are trying to
coverup.....like DUFUS, or PEDDLER, or SCAM ARTIST, etc....
===============================
OVERLAP AND TRADING DAY COVERAGE
Suppose that a cycle reversal is due to occur on 3/14. Yet another is
due as
soon as 3/17. When you consider the ranges involved, these two dates
will
cover an entire week from 3/13 to 3/20.
Some mistakenly look at this as 'blanketing' the market. Those usually
viewing it this way are missing the whole point of cycles and using
dates to
isolate the reversal 'ranges' they fall in, but rather suspect that the
provider of the cycle dates is merely making sure he/she will always
have a
reversal within their dates turn range.
##### Let's read that again....RAT says, "....suspect that the
provider of the cycle dates is merely making sure he/she will always
have a
reversal within their dates turn range." Thanks Rick, I couldn't have
said it any better!!!
But this view is faulty. For example, if two dates are provided
indicating
the expectation of two reversals, then just having one reversal occur
within
the overlap of two dates still ends up with one failed date. Nothing
has
been gained by overlap or blanketing. Also, two reversals within the
days
covered by two dates would also have one failed date if both those
reversals
occurred only within the range of one of those reversal dates.
##### RAT Says," ....if two dates are provided indicating
the expectation of two reversals, then just having one reversal occur
within
the overlap of two dates still ends up with one failed date. Nothing
has
been gained by overlap or blanketing. Also, two reversals within the
days
covered by two dates would also have one failed date if both those
reversals
occurred only within the range of one of those reversal dates." Thanks
again Rick, I couldn't have said it any better!!!
The bottom line is, whether the dates are close together or not, if you
have
a reversal date expected to produce a cycle turn, one must occur within
each
of the reversal date ranges for that range to be valid.
================================
HOW TO TAKE ADVANTAGE OF CLOSE PROXIMITY DATES
Now that we have covered how the combining of different cycle patterns
produce the market patterns we see today, and also how this affects the
distances between minor and major tops and bottoms, we will now take a
look
at how this can be taken advantage of.
Cycles always alternate from top to bottom to top again. If we are
successful in isolating every cycle reversal due, then we can expect
one
cycle date that produces a top to give us a bottom on the next cycle
date.
Sometimes, however, due to techniques currently in use today to expose
market cycle patterns, we may miss a cycle turn along the way. The
result is
one cycle date producing a top or bottom, having a cycle top or bottom
form
without our having a date, and then the next cycle date producing the
same
as the last.
#####RAT says, "Cycles always alternate from top to bottom to top
again." So why does Rick's RED DOT chart, show 2 consecutive red dot
highs, and 3 consecutive red dot lows?
When you have two dates in close proximity, the probability of missing
a
cycle turn is greatly reduced. In fact, the odds are overwhelmingly
high
that if one cycle date produces a swing top, the next cycle date in
close
proximity will produce a swing bottom. This is one big advantage to
having
some of our cycle dates in close proximity to each other.
##### EXACTLY Rick, now you get it!!!! Let's repeat it again, RAT says,
"When you have two dates in close proximity, the probability of missing
a cycle turn is greatly reduced. In fact, the odds are overwhelmingly
high that if one cycle date produces a swing top, the next cycle date
in close
proximity will produce a swing bottom. This is one big advantage to
having
some of our cycle dates in close proximity to each other.
Understanding cycles is key to understanding the advantages they can
afford
the futures trader. When you are in posession of two cycle dates in
close
proximity to each other, and you have noted that the first one has
produced
a top or bottom, knowing that the odds are high that within the next
dates
range you should get the opposite is considered an 'edge'. We can use
all
the edge's we can get.
#### And how does one trade an "edge?"
Cycle dates, reversal dates, or whatever you chose to call them, should
never be used alone. They are just one additional indicator to use with
tools you have already found useful in analyzing the markets. I will
now
give you another example on how close proximity cycle turns can be
taken
advantage of.
=============================
THE TREND EXAMPLE
Assume that you have determined that the market trend is bullish by
whatever
tool or approach you use to determine this. Because it is always wise
to
trade in the direction of the trend for that extra edge, reversal/cycle
dates can help you increase that edge.
#### Is there any difference between an "edge," and an "extra edge?" Is
there a "regular edge," or an "inverted edge," or a "distorted edge?"
With a bullish trend, you will want to concern yourself with cycle
bottoms
for entry, cycle tops for stop-loss tightening or exiting.
If you happen to have two cycle dates coming up in close proximity to
each
other, whether their closeness covers a whole week or not is
irrelevant. The
key is to understand that a separate reversal is due to occur within
each
dates 'range'.
Suppose within the first cycle dates range a cycle top has formed. For
someone who is trading a bullish trend, you will then be on alert for
that
cycle bottom to form within the range of the next date close by. As
soon as
you see enough evidence of this by whatever parameter you choose to
use,
that knowledge of a cycle bottom due within such a small range can be
the
difference of entering a new bullish move up as early as possible with
minimal risk, and chasing a market that you were late in identifying a
new
run up.
Now look at the flip side. If the first close proximity date provided a
cycle bottom in a bull trend, the odds are high that the next date will
provide a cycle top. This may provide you with enough information to
wait on
entering long. To have a cycle high occur so quickly after a cycle
bottom
when you want to go long could be disastrous if you weren't expecting
it.
Having 5 future reversal/cycle dates coming up does not translate into
5
trades. If they are close enough to alternate from top to bottom, you
are
only going to look to enter those that would have you go with the
trend, and
the rest to help you tighten stops or exit a trade. Even those dates
forming
bottoms in an up trend may not necessarily signal an entry, especially
if
you are only interested in cycle bottoms that form higher than the last
cycle bottom, for example. It all comes down to the method and tools
you
choose to use.
##### Clear as MUD!!!!
===============================
CYCLE/REVERSAL DATES - A POWERFUL TOOL!
As we have already noted on market patterns, not all minor and major
reversals occur in close proximity. But when they do, this is not a
disadvantage but an advantage to the trader/analyst that understands
how
cycles work. Instead of the skeptical view that some have to think that
the
cycle analyst is trying to cover as many trading days as possible with
dates
so that a reversal has to occur within one of the dates, the valid view
is
that each date that is supplied will have to provide a real reversal
within
each dates separate 'range' for that date to be considered valid. Thus,
using 3 dates to cover 9 days better produce 3 reversals, and those
reversals better be spaced out to where each reversal occurs within
it's own
date range and not all within one or two of the 3 dates. Any date
without a
reversal is a bad call. To determine the accuracy of anyone's
cycle/reversal
dates requires isolating dates without reversals from dates with
reversals.
As long as you have around an 80% accuracy or greater in reversal
dates, you
can use them with other indicators to provide you with an edge.
##### But Ricky, if you already cover +80% of the cycle turn dates, you
have to have +80% accuracy.....is this the "edge" you are talking
about?
Also, each cycle date should not be spaced out evenly to the next and
next
date. Even spacing for several dates is not valid, in that this is not
characteristic of a distorted cycle pattern for which the market
patterns
form.
Rick J. Ratchford, CTA
CycleVantage Membership
http://fsoftpublishing.com
--
Cheers!
Rick J. Ratchford
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