We live in a world of cycles. Night/day cycles, seasonal cycles, moon cycles- all sorts of time cycles.
Time in itself we can not measure with any part of the body, and we genuinely get lost when cycles are larger than our life span. We use a comparing mechanism for evaluation to define our surroundings. It makes sense that interpretations become cumbersome once we have no comparisons that we experienced in our lifetime.
Unfortunately, this inability to "feel time" can be detrimental, and it is essential to compensate for the intuitive lack.
Just like we have created in life measuring devices like calendars and clocks not to be fooled by our subconscious, we need "roadmaps" in trading to not let hope and fear stir us into cul de sac.
In trading, we have the most common time cycles like exchange trading periods, 1/5/15/60 min-4h-daily-weekly-monthly annual cycles, seasonal price behaviors, earnings and expirations cycles, and many more.
Again the mind often fools us by merely comparing an upcoming event to a similar previous one and eludes us from the truth on how cycles overlap, in which cycle one finds oneself, how cycles affect each other, and mostly cycles where a previous event would be outside our life span.
One way to reduce market evaluation risk under this topic is to create macro and micro cycle maps ahead of time to guide one through this challenging terrain:
practice's and educate:
A first step to familiarize oneself with looking at the market is simple edge extraction of noticeable time events that come in high probability sequences like:
and than expand those ideas over larger time frames within ones life span like:
The goal in these initial stages is to gain confidence in looking at the market from a time perspective and gaining knowledge on principle and edge extractions in this lesser-explored field of market perception.
Take advantage of exploring these concepts on tick charts and alike to walk away from rigid time frames and limited views of how to perceive a market to cut prismatically through turning points, for example.
Once this is achieved, it is encouraged to expand cycles larger than one's life span and to overlay cycles to achieve higher probabilities on how likely events are happening at certain stages for Intermarket alignments and high probability nodes, to name just two.
And again, thinking outside the box, i.e., focusing on an elimination process rather than looking for the needle in the haystack, is very useful.
For example, time sequences where it is not very likely for events to be presenting themselves can be extremally useful:
In this case, cycle highs and cycle lows always match the selected time grid, which indicates in which years it is less likely that we do not see a high or a low:
An important concept is the identification and classification of specific price behavior to quantify general market behavior.
What happens to many traders is that they find themselves switching from consistently winning to losing because e a larger cycle has changed. Their systems and expectations aren't aligning with the new cycle.
Accurately predicting cycle changes can be incredibly valuable to administer the suitable systems and mentality at the right time toward markets.
macro market cycle examples:
watch this stairstep market above-does that pattern ring a bell?
Market behavior is vastly different within these larger cycles, and cycle switches have crushed even the most successful traders in the past.
Looking at the chart above with its blow-off top and general principles you found in this article, ask yourself if the question "when are the lows in?" is the right question.
Or if we find ourselves in a much larger cycle of the markets with substructures that should have us adjust to focus on different market strategies than a buy and hold and one of waiting for a market low.