There are a lot of things to consider when using
cycles. The two books referenced are excellent. Note the time frames
used in their analysis of time frames. Also look into Hurst's projection
of price using offset moving averages.
The main thing with cycles is that they are not
working in the same direction at the same time. There are cycles and 1/2
cycles and 1/2 cycles of 1/2 cycles and on and on. So one cycle may be up
while another is down either extending or compressing the length of a
cycle. There are static cycles and Fib cycles. Each is affected by
longer and shorter cycles. On one set of cycles on the daily chart I have
a low coming in on 1/'25 and on another set of cycles I have a low coming in on
2/5. Then are lunar cycles explained in Wells Wilder's book the Delta
effect.
I don't feel that cycles are the end all in trading
but I use them as an indicator because it is the only one that is not dependant
upon the manipulation of price data which all of the other indicators
do.
tradingone.wordpress.com
Just one mans opinion.
Ira
----- Original Message -----
Sent: Tuesday, January 19, 2010 7:40
AM
Subject: [RT] cycles
Hello Jim!
I would cycle analysis is more of an art than a science; I
think
even those who follow them would often wonder if they are there -
at
least at times. However, I might agree with you on the
'static'
comment, as the cycles that I track always have an average
variance
of plus or minus 20% in either direction.
A similar notion
could be applied to Elliott-wave; it is more of an
art than a science - but
there are some who are very adept with it.
As far as statistical validity,
I would doubt you would find any hard
evidence of that in any trading
method (other than something slightly
above-average). if there were
something that worked 100% of the time,
then please let us all know as we
would like to use it :-)
as for methodology, I am going to reference
Hurst's 'Profit Magic',
along with Raymond Merriman's book 'Cycles and
Patterns in the market'.
these two are a good starting point for those
interested in cycles. take
what you find useful, discard the rest - and
then add that to what you
come up with yourself. it is certainly an
evolutionary process.
where is Clyde Lee when you need him?
:-)
thanks for the message
Jim