This video expands on the trend trading article I wrote for Trading Pub “The Tried, True and Tested Over Time Technique for Minimizing Risk While Maximizing Reward.”

By the way, this strategy works for day trading, swing trading and investing. It also works for trading the stock markets, futures (including E-minis) and the Forex markets.

In the article I shared that while I normally use the 50 period simple moving average for the intermediate-term trend, you can also use the 200 simple moving average for day trading or swing trading the long-term trend, thus providing you an even better reward-to-risk ratio.

To every upside, there’s a downside, and the challenge with using a long-term moving average is that entries and exits aren’t always as easy to identify accurately.

This video picks up where the article left off, showing how I use some other tools along with the 200 SMA (simple moving average) for more precise entries.

 

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Buying stocks, forex or futures during high volatility market cycles may lead to the opposite result of what you’re looking for. Stock market research indicates that the best time to buy stocks may be before a stock market trend, when you have rolling stocks, channeling stocks or other contraction price patterns.

So today we continue with our series on market cycles by covering expansion/contraction cycles.

As usual, the “retail” trader usually times these cycles perfectly wrong!

Learn about these market cycles and how to time them like a professional trader.

Although I use a stock market reference here (and the chart is one of the stock market) everything in the video can be applied to Forex, futures and commodities as well.

Enjoy the video and please post your comments/feedback below.

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A stock, Forex or futures chart only has 2 dimensions. Most traders and investors focus only only one: price. But along the bottom of every chart is another dimension: TIME. That axis is fully 50% of any chart’s equation and it measures market cycles.

Stock market cycles (as well as those of Forex, commodities, futures or any other market) are absolutely critical for those trading the markets because they provide the critical element of TIMING when to enter a trade.

A floor trader at the CME once told me that retailers (his word for amateur traders) are usually right, but at the wrong time.

W.D. Gann proposed that time was more important than price.

And yet as I talk to traders around the world, very few of them know anything about market cycles.

One of the most common laments I hear from amateur traders is that they took a position, quickly got stopped out, and then the market turned right around and went soaring in the direction of their original trade!

This happens because they don’t know how to TIME their trade.

When most people think of cycles, they think of up and down oscillations. And that is certainly one type of cycle. Even in a trend, the market moves up and down during its larger directional move.

However there are other types of cycles as well:

  • Contraction/expansion (cycles in volatility).
  • Order/chaos (cycles between high probability setups and low probability setups).
  • Fast/slow (cycles in how fast the market moves).
  • Coupling/uncoupling of sectors, industries and various market pairings.
  • Seasonal and calendar cycles that tend to occur around the same time of year.

… and there are probably many more.

Learning about these various types of cycles can give you a tremendous edge in trading because most traders don’t give them any attention. It can be your advantage that may turn you from an average day trader, swing trader or investor, into a profitable one.

The topic of cycles is a big one, so I decided to simply begin with this introductory article and then let you decide where we go from here.

Are you interested in learning more about these cycles? If so, put your requests (specifically which type of cycles you’d like to learn more about) in the comments section below and I’ll be happy to create blog posts/free videos in the future that cover those areas of most interest to you (majority wins!).

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This stock market has a lot of people pretty scared.

  • Is the current bear market unusual?
  • Are stocks doing something they’ve never done before?
  • How does the current stock market nose dive compare with bear markets of the past?

A little historical stock market research can reveal some very enlightening answers.

Will it give you comfort or make you more afraid?

Watch the video and decide for yourself, and then feel free to leave your comments below.

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