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