Jim,
Thanks for the reply and references. When I began
this game I studied just about all the cycle methods available including Hurst
and Delta. I doubt that there is a cycle book of note that is not in my
library. I concluded that there was just to much variability in the
accuracy of the trend change forecasts from cycles to give me an acceptable
trading methodology. Now, I admit this is a personal thing - I just cannot
stand drawdown and waiting to be in a profit position as is required when
trading with cycles.
But there was something else about cycles - they
told me nothing about the why of market moves and I wanted something that was
more science than art.To believe that markets moved according to planetary
positions or some physical number periods just was not
acceptable.
It was not until I began to study chaos theory
and the psychology of traders that I developed a methodology that satisfied my
curiosity as to why markets reverse and to give me an indication of reversal
that was close enough to trade with. I set as my goal a +/- one period
accuracy on reversals and a 70% to 80% reliability on the trading signals ,
performance which I have documented over the last ten years.
Now this is not to say that I don't believe that
cycles exist - I certainly do. They just do not satisfy my criteria for a
trading methodology. Others may be able to use then successfully.
Now regarding the discussion of the importance of
volume. I also have no found no reliable way to use volume as a trading tool.
However I do use measures of tic direction to give me readings on the
sentiment of the market and changes in sentiment leading to price
reversals. I use these every day.
Jim White
----- 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