Replies to post #22007 on Cycle Trading

[No-Quarter]

Upon further study, I should have used a ~$140 price for TQQQ (from your green dashed line day) as the start point to calculate percent gain.

~140 to ~185, - not - ~125 to ~185.

Still, a very impressive ~32% gain while I have been sitting on my hands...

https://www.calculatorsoup.com/calculators/algebra/percent-change-calculator.php

[Duma]

If you will look again you will see that I qualified the 15.6% gain by saying it was 1X. The actual gain of TQQQ was 46.8%. I don't really care how much some trade gained, what I want to know is how much did my account go up. So if the 1X gain (QQQ) is up 15% and I am invested at 100% (actually invested at 33% for TQQQ), I immediately know my account went up 15%.

You may have also noticed that when I was reporting on my ROKU spread trades, I never ever talked about what % gain the trade had. I could have said I invested $700 and I then had a $300 profit for a 43% gain. That means nothing to me. When matters is what did it do to my account value. I don't even do singles spreads in my largest account because a $300 gain is so small as to not be worth it. Always think in terms of your account.

I see that TQQQ did a 2:1 split last night.

[Duma]

My rules are written on the chart and you have them right from what I can see. However there is one rule that is not written there and that is that M65 needs to be flat or increasing. I follow my M65 phases always to know what phase the market is in. Going long in a declining market never works. There needs to be some sign the market is turning. A flat M65 is my sign. So at the point of my trade the market (or at least TQQQ) was transitioning from DS (distribution) back to MU (mark up). Always be long during AC (accumulation) and MU. See my board intro for a fuller explanation.

If you want to actually trade the subwave such as w2 or w4 during a decline in the market, then one can ignore that rule. But be ready to exit fast when the market turns. My rules are set up to not let me exit fast, so that I can stay with the longer term trend until it really does die. This always cost me more $ at the end of my trades that I like, but that is the price I have to pay to not be taken out of the trade too early.

So the basic rule as you noted is trade long when M3 XOZ (cross over zero) and sell when M5 XUZ (under). Note I have a special rule if the last wave ends in a blow off top where the closes exceed the uKC (upper KC).

[Duma]

As I said in my last post, I always lose more more money at the end of a cycle that I like and I am some times a little late getting into a trade. This trade is a perfect example of the latter. I did not get a daily M3 signal until after the market had made a big gap up. What a waste.

So I thought about this a lot and while I wanted to keep my system a pure daily system that needed only be checked on after hours, I couldn't resist to add a 60min element. If I am in my chair at the right time, then I can take advantage of it. If I am traveling or in the desert, then I just have to go by my daily rules.

So on Nov 2nd, TQQQ had had a long run down and had now tagged the lower KC twice. That can be a pretty good sign that the market might be thinking about turning. So if I feel a daily signal is coming if the market goes up soon, I switch to a 60min chart and take the same signal there.

Look at the 60min chart below. It is beautiful. Note that M65 MU peaked out back in the middle of Oct and had been in a 15 day or so run to the bottom. It first passed through DS and into MD (mark down). Don't ever be long in MD. Then on Nov 3rd market started to go up. M65 flattened and M5 xoz. Bingo go long.

Note that the day ended with a wave 2 pb and then did the next day what wave 3's always do, gap up. Note that it gapped again the next day.

One could still trade the 60min chart if you wanted but it really is a waste of time. Note how quickly M65 went from AC to MU and then rolled over. It bottomed on Nov 16 and then start up again. If you look on the daily chart you will see that was w1 and w2 forming. And then the very famous w3 started. Don't ever miss a wave 3, that is so key.

A similar process can be used to exit.

[Duma]

Here is a cycle chart with notes

[Duma]

Last year I started watching a Market Breadth chart and for a while I thought I had found the golden secret of knowing when the market was going to turn. But it wasn't long before the charts totally failed me, telling me to get out of the market and all the while the market kept moving up.

Price is all that matters in the end. No other measurement or TA knows where it is going.

I think you have similar charts. My advice to you is throw them away. Follow the M65 and price on what ever time frame you want to track and I think you will be much happier.