Played by many, won by some: this is the most prominent feature of the market that many traders ignore. And the reason for their failure or say, for not being ‘successful’ lies in the nature of the market: it’s dynamic and volatile! It’s changing every now and then. So here arises the need of precision and ‘correct’ timing.
When we talk about precision and ‘correct’ timing, Short term traders [Day traders in particular] are the masters! This field is meant only for those who learn to discipline time with efficacy. Otherwise, be prepared to LOSE! Hence the low success rate.
Now again at the caveat it comes with: you can be one of the ‘many’ players who lose to make ‘some’ winners. So it’s better if you sharpen your timing precision. And this is quite obvious that if you want your mind to be that sharp and quick, you need to keep calm as well. So make sure you maintain a good balance between your stress levels, anxieties and other emotional conflicts of your work-and-personal-life.
Moving to the subjective part: Market Cycle Analysis
This is an older concept, well explained by a well known author J.M. Hurst. Here various cycles operating in the market are studied, each of them varying in their length and amplitude.
Learned and experienced traders would be knowing this thing very well, that, the most commonly used trading indicators in price charts are based upon these cycles. To understand this, take MACD, RSI or MMA as examples. They oscillate with all different time spans from a lower base value to the higher one. With experience, the trader grows the judgment power in him and gets to have a rough idea of the upcoming market trends.
So here is the real test of a trader’s real sense and judgment when he actually has to make a decision. It may happen that by the time he ‘acts’, the prevailing pattern may change and he may end up losing everything he staked. So he needs to be cautious while doing cycle analysis.
You must have noticed one thing about the cycle analysis that it’s not about a single cycle, but various cycles moving simultaneously which affect the market prices. And the irony is that, most of the traders end up losing SIMPLY because they focus on one cycle in particular and forget to take care of the rest. The cycle which seems dominant this moment may lose is dominance the very next moment because another cycle got dominant. This leads to a big change in market trend. Getting the point?
Be careful and don’t commit this blunder.
So the apt way to go for cycle analysis is keeping a strict watch on the all the dominant cycle periods simultaneously and check their amplitudes, i.e. the price values. Sum up all those [there will be both positive and negative values] and you’ll get a composite value. Plot it on the chart and you will get the similar pattern as shown by the price chart.
Since no trend is consistent, infact the whole market is dynamic, there isn’t any de-trending method to compare prevailing price with the future price. So in trading, what a trader needs is a sense of close approximation than perfection. No one can ever predict ‘exact’ figures in the market, it is always the ‘approximation’ which prevails. And as the time passes and you practice, your approximation and analysis skills become stronger.
As they say, it is not the matter of a day or two but constant and continuous pace of practice!