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Shorten Your Risk Exposure Time With Market Timing
One ofthe most difficult tasks that traders have is determining the right amount ofrisk exposure when entering a trade. Since every trade should be accompanied bya protective stop-loss order, the question always comes down to "how muchroom should I allow the market to move against me before getting stoppedout?"
Sometraders rely on previous support and resistance levels as a place to put theirstops. However, often these areas are gunned for because floor traders knowthat there are plenty of orders waiting there for the taking.
Sometraders will draw lines below or above sloping trends and use that as astop-loss reference, often expecting the market to continue with that pattern.But then, how many times do we see that pattern get violated right when wediscover it is there?
Otherswill use some percentage value, either based on some fixed profit expectationor a percentage of available funds, to determine their initial stop-loss.
Thereare many different approaches to picking a stop-loss. My personal preferenceand what I believe to be the best approach most times is to use the expectedand confirmed swing price.
Whatdo I mean by 'expected and confirmed' swing price?
As of2019, it has been 30 years that I have focused on the science and mathematicsof market behavior. More specifically, forecasting market swings (aka turns) inadvance. This approach requires a firm understanding of several methods offorecasting, including the popular and well-exposed techniques involvingFibonacci and Gann ratios, to name just two. There are so many more!
Bylearning and applying various market timing techniques that are designed toexpose the underlying cyclic behavior of the markets, the trader can then usethis information to 'shorten the risk exposure' of any given trade.
Hereis how this works.
Supposeby way of using some proven method of determining high-probability market turnsyou arrive at the expectation that a swing bottom is highly likely to occur inthe next day or two (at the very latest). Your method is usually 80% or betterin accuracy, so you do not have to concern yourself with whether it will be ontime (say tomorrow), or one day late (the following day).
Thereason for this is that, since you already know with a high degree of certaintyof the probability for the swing bottom, you simply place your 'buy stop' orderfor entry to go long just above the high price of the day you expect the swingto occur. If the order is triggered, you immediately place your stop-loss justbelow the low of that same bar because it just 'confirmed' as a swing bottom.Your initial risk exposure is the range of that swing bottom price bar. Theprobability that it will hold and not get you knocked out with a loss is very highbecause you knew with high-probability that the swing bottom was going to occuron that day to begin with.
Nowsuppose that the swing bottom is going to be one bar late as earlier stated aspossible. In that case, your buy-stop was not triggered and you can do the sameroutine the next day for the one-day late bar. Same rules apply.
Thereal trick, once you are in your trade, will be on managing the trade andadjusting your stop-loss as your position moves deeper and deeper into profitterritory. That is a whole different subject for a whole different article. Butfor the subject at hand, finding the right time and price to put on yourinitial stop-loss order where it is not too small or too large is not only alsoimportant, but it can save you a lot of money, keep you in more trades, andkeep you out of trades you later are glad about.
So inorder to have these advantages, to begin with, learn how to forecast marketturns or find a reliable source for this information.
2019年8月30日下午三点收盘后焦炭主力合约J2001分析结果供30日晚上或9月2日白天参考。
Price iscurrently in the SECOND 4 day cycle, of the SECOND 8 day cycle, of the SECOND17 day cycle, of the FIRST 34 day cycle, of the 67 day cycle.
FormalPhasing Analysis (normal analysis: synchronised troughs) reveals that thedominant cycle has a wavelength of 34.8d, or 35 bars. This is assumed to be the40d nominal wave, which implies that all waves will be approximately the same(3% variance) as nominal. This cycle is overdue for a TROUGH (and a minornest-of-lows). The underlying trend to this cycle is currently slightly DOWN,likely accelerating. Recent fulfilled projections confirm the trend is DOWN,but indicate that it is STRONGLY DOWN. The future FLD indicates that this cyclewill influence prices to rise for a short time, and then form a peak.
Thesub-dominant cycle (next wave down from the dominant cycle) has a wavelength of17.3d, or 17 bars. This is assumed to be the 20d nominal wave. This cycle isoverdue for a TROUGH (and a very minor nest-of-lows). This is probably theSECOND of 2 sub-waves. The underlying trend to this cycle is currently FLAT,likely turning UP. Recent fulfilled projections however would seem to indicatethat the underlying trend is STRONGLY DOWN. The future FLD indicates that thiscycle will influence prices to rise for a short time, and then form a peak.
The pre-dominantcycle (next wave up from the dominant cycle) has a wavelength of 67.5d, or 68bars. This is assumed to be the 80d nominal wave. This cycle is just beginningto FALL. The underlying trend to this cycle is currently slightly DOWN, likelyaccelerating. Recent fulfilled projections however would seem to indicate thatthe underlying trend is STRONGLY UP. The future FLD indicates that this cyclewill influence prices to rise for a short time, and then form a peak.
Σ L iscurrently DOWN (strength: 1), and accelerating.
The 34.8dCYCLE component of Σ L is currently STRONGLY DOWN (strength: -3 cycles), andaccelerating.
The 17.3dCYCLE component of Σ L is currently FLAT, likely TURNING UP.
The 8.8dCYCLE component of Σ L is currently DOWN (strength: 1), and accelerating.
The 4.4dCYCLE component of Σ L is currently STRONGLY DOWN (strength: -2 cycles), andaccelerating.
A shortercycle than that selected would have been the ideal cycle to trade, howeverbecause of the weakness (low amplitude) of that cycle, we have selected alonger cycle, and so now:
The 8.8dcycle might be the ideal trading cycle, with an average potential of 6.7% perhalf-cycle. This equates to 66.5%because of leverage settings. However trading such a short cycle is not recommended.The 17.3d cycle is therefore chosen, with an average potential of 8.6% perhalf-cycle. This equates to 86.0% because of leverage settings.
CURRENTFLD PATTERN PROJECTION:
Price hasrisen over the past 1 bars (last close 1891) in an otherwise DOWNWARD pricemovement, with the FLD pattern indicating an impending UPWARD move, because: Itis possible that the first sequence of the FLD pattern has already beenfulfilled, by the low of 1831 on 2019/8/28 which would indicate that thesecond, UPWARD sequence of the pattern is now in progress.
The firstFLD pattern sequence (ref #0) projects a price movement DOWN to a target of1772.53 by about 2019/8/29.
Thesecond FLD pattern sequence (ref #1) projects a price movement UP to a targetof 2012.98 by about 2019/9/9. This move would imply a 2-tier cascade of price crossesover the 8 day to 17 day FLDs (est: 2019/8/31 & level: 1910.05) . Thisprice move breaks above the 4 day, and the 8 day, and the 17 day VTL implyingthat the price trough of 1831 on 2019/8/28 is the expected trough of the 34 daycycle. Price might cross OVER the 34 day FLD on 2019/9/6 & level: 1958.93however this FLD cross is too late in the cycle to be considered valid, and soit is more likely that the FLD will form resistance at this level.
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