Simple Way To Predict Market Turning Points

A Simple Way To Predict Market Turning Points (and impress your friends) – originally written by Bob Pelletier (President of CSI – CSIdata.com

This brief report is designed to advise those who may have an interest in systems, methods, or services which predict market turning points far into the future. If you have been solicited by any firm that does this, you may gain some important insight into this area by reading on. Whether you plan to purchase such a service, system or secret is your personal choice. CSI has no preference for one commercially available procedure over another. We simply wish to point out facts that may be helpful.

If I were to tell you to “Pick any date in the future, for any commodity, and I will show you the next turning point that will occur relative to that date.” You might think I’m crazy, or strongly doubt my claim. The truth is, that anyone can do this within an accuracy of, say, three days about 70% of the time, or within four days 80 to 90 per cent of the time.

The secret depends upon how one defines “turning points”. Suppose we define intermediate market swings or turning points to occur about 25 times per year, or twice per month. Since there are about 250 trading days per year, this allows for one turning point per 10 days. With a dart and a calendar into the future, the dart will hit some seven day time interval (the day hit plus or minus three days) each time it is thrown. If turning points occur, on the average, once every 10 days, then there is a 70% chance my dart will include a turning point within three days.

Additionally, if I knew that last week there was a definite low, my next turning point will be a peak. I’m not interested in 1997; I may not live that long. I can only make money if I can bet on the next immediate turning point for various cycle lengths.

There is not enough room in this Newsletter to show how market turning points can be predicted with more reliability, but it is possible to provide an unbiased estimate of the next peak and the next trough for each given predominate cycle period. Using a method which treats peaks independent of troughs can produce a non-regular period between peaks and troughs (a more realistic behavior) for future market cycles.

Before spending your hard-earned funds on any system, be careful to discover what you can do under purely chance conditions without it.

For more information about commodity futures trading, CSI market data or trading systems. please visit Webtrading.com or click-on the picture below…

101-years ago a Trader Showed His Greatness

The best stocks and commodities trader of all-time was without a doubt Mr. W.D. Gann, who certainly had the most interesting and mystical trading method too. This was reported about Mr Gann by the Ticker Magazine more than 100-years ago in the year 1909. During the summer of 1909 Willima D. Gann predicted the September Wheat contract trading on the Chicago Board of Trade would sell at a price of $1.20. This meant t it must touch $1.20 price before the end of the month of September. At 12:00 Chicago time, on September 30th (the last day) Sept Wheat futures was selling under $1.08, and it looked as though Gann;s prediction would not be fulfilled.

Mr. Gann said, ‘If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what the price is now, it must go there.’ It’s now history September Wheat surprised the whole country by selling at exactly $1.20 and no higher in the very last hour of trading, with its closing price being exactly $1.20”

So much for what Mr. Gann has said and done as evidenced by himself and others. Now as to what demonstrations have taken place before our representative: During the month of October, 1909, in 25 trading days, W.D. Gann made in the presence of our representative 286 trades in various stocks, on both the long and short side of the market. 264 of these transactions resulted in profits, with just 22 losses.

The capital with which he operated was doubled ten times, so that at the end of the month he had one thousand percent of his original margin. In our presence Mr. Gann sold US Steel common short at 94-7/8, saying it would not go to 95. It did not. On a drive which occurred during the week ending October 29, Mr. Gann bought Steel common at 86-1/4, saying it would not go to 86. The lowest it sold was 86-1/3.

We have seen him give in one day sixteen successive orders in the same stock, eight of which turned out to be at either the top or the bottom eighth of that particular swing. The above we can positively verify. Such performances as these, coupled with the foregoing, are probably unparalleled in the history of the Street.

James R. Koene said, “The man who is right six times out of ten will make a fortune.” He is a trader who, without any attempt to make a showing, for he did not know the results were to be published, established a record of over ninety-two percent profitable trades. Mr. Gann has refused to disclose his method at any price, but to those scientifically inclined he has unquestionably added to the stock of Wall Street knowledge and pointed out infinite trading and investment possibilities.

The complete William D. Gann article and other Gann articles are located here

Time Duration Secrets to Profitable Day Trading

According to our extensive hands-on futures market research, most successful day-trades last about 7-minutes. That assumes the trader is using a reasonable profit objective and exiting the trade as his profit target is hit.

Most losing day trades last approximately 45-minutes on average, when the trader finally exits out of the losing trade. That’s because the trader relies on hope once he sees the trade losing money. The trader hangs-on to the losing trade position relying on hope the market will change trend and turn in his favor. However, eventually the equity loss becomes too large which finally forces the trader to exit the trade and take a big loss rather than possibly lose even more money by hanging on even longer.

Are you wondering how this little known information can help you trade the markets profitably? The short answer is at the end of 7-minutes in the trade you might consider getting out regardless of the fact your profit target was not hit or you have a loss at that time, keeping in mind the more past 7-minutes it goes the less likely the trade will be a winner.

Insights For Search Predicts Real Estate Collapse

In the past we have posted several times about how financial market traders can use relatively simple chart patterns involving higher-swing-lows and lower-swing-highs to successfully trade the stocks & commodities markets, options market and with other investing.

I was doing research on this powerful trading concept this morning and was thinking the incredible real estate market decline could be a good example of how well it can work. Therefore, I went to Google’s “Insights For Search” and searched for “MLS Listing” which is a widely used real estate term by home buyers and sellers.

This is the explanation of how Insights For Search works from Google: “Google Insights for Search analyzes a portion of world-wide Google web-searches from all Google domains to compute how many searches have been done for the terms you’ve entered, relative to the total number of searches done on Google over time. You can choose to see data for select Google properties, including Web search, Images, Product search, and News search.”

The Google Chart displays the most perfect long-term examples I have ever seen visually depicting the great power of swing highs and swing lows. Starting in 2004 the chart shows a series of 8 important swing highs and 6 major swing-lows. Of particular importance is the Dec 06 swing low which broke the old support level established Dec 05 by that major 2005 swing low. Once that old support level was broken in Dec 06 it conformed a major real estate bear market. The market is believed to be the most severely depressed real estate market of all-time, especially in areas of the U.S. such as Arizona, Nevada, California and Florida.

If you were buying/selling real estate the chart clearly shows starting in the year 2005 you should have been selling (not buying) real estate based on the important July 2005 swing-low (which you knew about at the end of August 05, and was confirmed Nov of 2005 which was the month the previous major swing-low was confirmed. The next series of 4 major lower-swing-highs which were in mid-2006, mid-2007, and early-2008 and 2009 confirmed the bear market was ongoing and getting even stronger.

The strong nationwide real estate decline started in late summer of 2005 in several Sunbelt states at the end of Aug 05 (at least according to my knowledge and statistics). However, it got underway a little later in other areas of the nation and the media often reports the bear market started during the year 2006. In my opinion this chart is one of the most picture book perfect and accurate examples of how powerful swing-highs an swing-lows can be. It is something you should always look at and take into strong consideration while trading the markets or investing.

Trading Method for Trading Stocks & Commodities

If there is one single trading technique which can best lead to profitable trading of stocks and commodities it would probably be the concept of using swing highs and swing lows, which is based on relatively simple chart patterns.

The swing high and swing low trading method is based on the observation if you look at a chart of any market you can easily see a down-market consists more of a series of lower swing highs and an up-market is mostly a series of higher swing lows (which swings are also known by the trading term pivot-points).

A swing-high is a high day (or price bar) with lower bars both in front and behind the high bar, thus forming a swing-high. This swing-high must also be under the prior swing-high which results in a lower swing high.

A swing-low is low day (or price bar) with higher bars both in front and behind the low bar), thus forming a swing-low. This swing-low must also be above the previous swing-low, which becomes a higher swing-low.

Buying or selling swing-lows and swing highs are used by many successful traders. This concept has been used by them for a very long time. Simply buying higher lows and selling lower highs by themselves can improve your overall trading results, especially when combined with other sound trading principles, including use of powerful drawdown minimizer logic stop-loss techniques.

Time Duration Trading Secrets & Statistical Validity

Secrets of time durations of profitable & losing day-trades

Most successful daytrades last approximately 7-minutes. That typial trade duration assumes the trader is using a reasonable profit objective and exiting the trade as his profit objectivegets hit.

Most losing day trades last about 45-minutes. That’s because the trader relies on hope once he sees the trade looking like a failure. So he hangs on to the losing trade hoping it will turn, finally the loss becomes too big forcing him to exit the trade after being in the trade for a much longer time than originally anticipated, mostly due to relying on hope.

How many trades are needed for good statistical validity?

Lots of stocks and commodities traders ask how reliable their track-record may be as far as statistical validity goes. They may see some statistics on seasonal trades showing a market was mostly uptrending from April to June during 12 of the last 14 years, for example. The same traders may have experience with their own trading system showing 8 of 9 winners following say a 5-unit moving average crossing over a 9-unit moving average.

None of those scenarios are valid from a statistical validity standpoint. That’s because according to mathematical experts and statisticians a minimum of 30 occurrences are needed for good statistical validity. Please keep this in mind when evaluating a trading system or trader metholodology. Anything less than 30 samples will not be statistically accurate.

The Truth About Trading – Traders Article #1

There are many reasons why successfull commodities futures trading is so tough. Unfortunately, the majority of futures traders lose money … there are a lot of reasons for it. That’s the Bad News. However, the Good News is providing you can get in the small Winner’s Circle you too can achieve profitable trading. Then you may reap the rewards with the money lost by the many losing traders flowing to you and richly rewarding you for being a winning trader!

Since there are far fewer winning traders than losing ones, by being in the winning minority, you will be in a position to receive much greater profits than normally possible! This is especially true what with the great leverage involved with commodities trading, options trading and trading stocks on margin.

Read all about the major reasons so many commodity futures, stock market and options traders lose money (so you can avoid these problems). After reading this Special Report "The Truth About Trading and Trading Systems" Special Report, you may visit other areas of CTCN’s website and our links trading related links for more specific trading knowledge covering all aspects of commodity futures, stocks and options trading for traders & investors.

This Special Report was originally written by the Editor of Commodity Traders Club News a number of years ago. These common trading problems are just as evident (perhaps more so) going into the New Millennium as they were in the early 1990′s when this Report was originally written. The main difference in the report after over a decade of time is the fact the prices used as examples may be different. Actually, the eal price levels themselves make little if any difference to the validity of the discussion.

Also, originally Daily Bars were used for time-frame examples, as applied to daily bar charts. Since then daytrading is much more popular with commodity futures, stock market and options traders. Therefore, we have changed the word "Days" to the term "Bars," as in Bar-Charts. The Time Frames can by identified as inter-day (daily) bars, or intra-day tick-bars, like 1-min., 5-min., 30-min bars (bar-charts), etc. It really makes little, if any difference, as the concepts and theories are basically the same.

One reason for losing in the markets is the commodity futures, stocks or options trader is not really sure which time-frame or trend he is trading, or he is not matching his target objective price level to the time frames’ expected movement. Perhaps the trader wants to capture a move which he expects to take about 4-bars (or 4-days).

However, the volatility increases so the 4-bar (day) trend is actually over in 2 bars and he does not realize it and stays with the trade 2-bars too long. Thus, he gives up all or most of his profit, because he expected the move to last longer.

The opposite can occur … this happens when the volatility is low and after just 4 bars he gets tired of waiting for the expected move and exits the trade early, perhaps at a loss or small profit. Suddenly, over the next 2 bars the trend and move he anticipated happens; too late, as he is already out of the trade.

Of course, the 4-bar example above also occurs with traders expecting 2-bar moves which may occur in 1-bar, or vice versa. Also, 6-bar moves which end-up occurring over perhaps 8 or 9 bars, or vice versa, etc., and various intra-day time periods.

Another common occurrence, is the trader not using a specific stop-loss order. Thus, a small loss ends up as a big loss. For example, a trader believes a stop (loss) of $400 is reasonable, based on either technical analysis or on money-management rules. However, perhaps due to discipline problems the trader has, it’s not actually used.

Once out $400.00, he relies on HOPE the market will go back in his direction, and he fails to execute the planned exit point. Frequently, the market fails to move back in a profitable position and the trader is finally forced out of market with perhaps a huge $2,000 loss, instead of the maximum $400 loss anticipated.

Note: More often than not, it seems once the trader who over-stayed the position finally decides to get out, the market frequently reverses the exact day (or next day) he got out! That seems to be an uncanny and almost unwritten law!

The stop-loss order is used, but the stop is not sufficiently precise. More frequently than you can imagine, the stop is hit by just a very small margin. For example, the market may be at 54.60 and a long position stop is placed to sell at 52.50. The market goes down to 52.47 and then reverses back to beyond 54.60 very quickly after stop was barely hit.

Sometimes the stop price of 52.50 may end up being the EXACT low price for that swing . . . very frustrating and upsetting when this occurs! Why does this happen so often? Because many times the stop-loss price level happens to be a support area based on a trend line, gann angle, old bottom or old top formation, fibonacci numbers, a chart price gap, or just simply an obvious natural stop-loss area, such as a whole or even number.

Thus many other traders use the same logic to place stops at or near the same level. The market gets drawn to that area because that’s where orders are sitting that the market (and Floor Traders) wants to get filled. Because of those orders resting in that obvious place, the market price actually moves to that area, almost like magic or magnetic attraction.

Failure to actually place a stop-loss order with your broker (unless you are always closely following the market using real-time intra-day data, when you are in an open trade) will result in the great likelihood of you losing all or most of your money (eventually) due to one or a couple huge losses caused by the price continuing to drop after going thru your stop-loss price. Sooner or later (probably sooner) it’s almost certain to happen, if you don’t use and place stop-loss orders to you.

There is an exception for daytraders who employ real time market quotes and are closely watching their real-time quotes and price charts continuously. Sometimes a daytrader may achieve better overall trading success by using so called mental stops vs. actually placing the stop-loss orders with his/her commodity broker. More on that later.

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