Just in Time Trading

Referring to our last article in TW #66, we will show more of our time cycles systems and focus on the SPX expecially. (All predictions have been sent to Tradersworld in advance and support our results.) Also we will review August 2017 and point out some periods to come in September, which will now a lot of volatility. Please take join the ride and just try it, you will be surprised (see special offer for Tradersworld)

We are of the opinion that TIME is the most important variable in trading, especially if combined with trend forecasts. For this purpose fractal Time cycles have been discovered after years of research.

If a trader has a high percentage chance to forecast when a trend will begin, his hit ratio and win/loss ratio will already rise dramatically.

Should this trader also have a reliable prediction of the trend, therefore knowing when and in what direction it will happen, then the odds are even more in his favor.

That is exactly what DeLorean (time waves and patterns on a small scale) predictions do, forecasting when a trend will start and in what direction. DeLorean does this with on average an uncanny precision, although there are and will be shorter periods that forecasts are less precise.

The only way to be able to profit from DeLorean predictions or any Time cycle is by applying the method consistently and use a fully quantitative approach. This is where our Time Patterns and waves are different from Elliott Wave, because the latter is – although quantified and systematic- in the end an interpretation of teh count. Even worse, if the correct pattern has been found, a trader does not know what the next wave will be or when it will start. Using DeLorean this is much more clear and effective.

Performance DeLorean

Nevertheless the SPX has shown correct predictions 80 % of the time since it’s introduction in March 2017, without exception. Over the longer period in our tests, there were a couple of months where predictions had a hit ratio of around 50-60%, with some times a small loss. Drawdown has been very low in spite of other theoretical risks.

Time Patterns and Time waves

In our Time Patterns and Waves, DeLorean is a subsystem on a smaller time frame that predicts the next day’s opening to be UP or DOWN (or neutral if unknown). Larger scale time Patterns and Waves show if the trend is positive or negative for a longer period, from intraday to several weeks. For more insight in indicators and time patterns, see below under “Examples of time cycles”

All our time cycles are very different from the standard cycles in use and have the following characteristics in common, principally the same concept for every time frame:

  • The Time Waves and Patterns reflect the mood of humanity and/or of the herd of investors and traders. Negative (red zones or declining indicators) or Positive (green zones or rising indicators) exist
  • Time cycles are multilayer.
  • Our cycles are Dynamic cycles like in nature, which are changing all the time and never exactly the same, therefore difficult to discover.
  • Because Time Patterns and Waves are behaving in line with a rhythm that can be quantified exactly, it is possible to calculate time patterns, waves and indicators as well as events in advance, who show when and what force is at work at a time in the future (or past)
  • Time is fractal. Every time wave consists of smaller time waves that have the same characteristics, which waves are again dividing up in smaller waves. Just like Elliott Wave patterns.
  • Smaller time cycles are aggregated for different time frames to show if the force is negative or positive
  • the maximal strength of time cycles result in time patterns and events, which are shown at the time of occurence in the chart.
  • Time Patterns (green and red zones) are very useful to assess risks during a couple of days- sometimes weeks- when the market turns red or green. For example during elections .Time patterns did warn for Brexit, Trump, French and UK elections)

DeLorean forecasts

There are two different ways to use DeLorean.

Firstly predicting the opening of the next day of an index. So, simply stated, if 30th of August has a DOWN trend, traders short/sell the SPX the 29th end of day, before it happens.

This is already available for the DAX and SPX. (The Nikkei is under construction to be released next month.) Consequently traders can travel around the world playing the opening of the main indices worldwide.

One or 2 months in advance all trends are predicted for every trading day, which is based solely on Time cycles not knowing the outcome or existence of any future event.

Using indicators of several time cycles and max force of time patterns, the opening for the next day compared to the closing is predicted. Since the market is closed and traders are asleep, they will react frantically and all together as soon as the markets open up. This way the risk of a gap, considering DeLorean signals are on average significantly right, is to the advantage of the trader.

The second way to use DeLorean is for daytrading. The fluctuating indicator as well as extrema of time patterns signals a rising or declining trend, which can be played actively several times during the day.

DeLorean SPX -opening trading system

August 2017

Again the last month was a very good month for DeLorean SPX. Although it originally has been developed for the DAX it appeared that it worked exactly the same using the SPX, adapted for the different time zone.

Even better, since the SPX is the leading index in which worldwide events, trends, crises and positive/ negative moods are reflected, it will catch the general mood that DeLorean is playing. Using the SPX, a trader can trade the ES future on the SPX all day long. Therefore, should DeLorean have a false outcome, adding a protective stop will cut losses even when the trader is asleep. (the European DAX index closes for 8 hours so here we have overnight risk and gaps)

The more volatile a market becomes the more useful DeLorean will be, even if only used as a warning signal or trend indicator without trading it. It pictures the market risk that investors try to manage using all sort of quant technology.

With a result of around 80 % DeLorean SPX had a very good result again, also because of the crises that took place. The market corrected almost 5% and recovered, which has been foreseen at the beginning of the month. Trading 1 mini ES future resulted, depending on strategy used, in a profit of $1700,- (strict entry and exit at close and open of SPX index) up to $4000,- (using protective stop and profit protection, see picture below)

Results as follows:

  • May: 80% correct, 43 points profit
  • June: 87% correct 29 points profit
  • July : 89% correct 47 points profit
  • August: 78% correct 37 points profit

Result DeLorean SPX August 2017, using protective stop and profit protection. Low drawdown and high hit ratio.

Result DeLorean SPX August 2017, using protective stop and profit protection. Low drawdown and high hit ratio.

September 2017

Looking ahead for the month there are some important events that will have a strong effect on the markets, like the German elections and potentially new threats of North Korea. And, as allways decisions of FED and ECB. The following does not forecast the opening, which can be quite different from the rest of the day.

German elections

German elections on the 24th of September will be accompanied by a lot of insecurity and crisis situation, looking at the fact that it is all red zones on election day. Normally Angela Merkel can not loose, but something (else) seems to be happening. Could also be another worldwide event, like North Korea, but normally this is not a coincedence. In spite of the tension, mainly green zones after the election is positive for DAX and SPX indices.

negative time cycles around 26th of September

Below we mention some negative and positive periods

Periods negative trend/mood around:

  • 11-13 Sept, 25-26 Sept, 4-10/14 October, 1-4 Nov, 22-23 Nov, 10-11 Dec

Periods positive trend/mood

  • 17-19 Sept, 27-29 Sept, 8 Oct, 29-31 Oct, 7-8 Nov, 5-9 Dec

DeLorean SPX Daytrading system

Applying the indicators and time patterns in a day trading system, using software or a trading platform and preferably let it trade automatically according to fixed set of rules. Especially the direction of the indicator has been used to create an advantage, which is executed using entry and exit confirmations.

In addition traders can use the indicator as a guideline to be forewarned of an impending rise or decline in the market. Using the indicator very often direction can be forecasted – with a bandwith of a couple of hours. Although the indicator can be calculated on a 5 minute basis, it will not kick in that precisely, but normally within the hour.

Example chart intraday trading

SPX August 2017 daytrading strategy. Red and green zones in chart show negative and positieve direction of trend, consequently traded short and long respectively.Because of generally correct direction indicated by indicator, hit ratio is high.

Examples of time cycles

Shorter term cycles

Already we showed on example above of time cycles around election day in Germany above. Another example would be the period of beginning of October. This pictures shows one of the positive time cycles right below the chart (green/blue) and another negative below in red. One can easily see that these cycles alternate in strength and therefore either the positive or negative force is dominant.

Positive and negative cycles culminate in a an uptrend or downtrend force and alternation shows that ups and downs in the markets happen all the time. The cycle that is stronger and lasts longer normally reflects the trend.

Longer term cycles

The following chart shows the crisis atmosphere that will intensify and become dominant from now on into 2018. The green-positive time cycle shows a decline and erratic fluctuations on a lower level, which is negative in general. It reaches it’s low in September/October, recover and decline again beginning of 2018. At the same time the red -negative indicator is accelerating to a top where it stays almost for all 2018. This is an indication of high volatility and negative markets if accompanied by decline in the green line. The year 2008 had the same extreme high in the red line.

Long term trend is dangerous for 2018 because of strong and negative red line and weak green line

Research

As stated before, all time cycles are exactly calculated using physics and math. Thereafter we have researched its effect on teh markets and traders/ investors psychology. Using direction and testing the result of the trading system is one way to accomplish the job. Next applying statistics to look for significance of the results to determine if results and probabilities are statistically significant is the next step.

Another way to research price action in combination with our Time cycles, indicators and waves is to convert part of our waves and indicator to patterns. Next we search the pattern database to see how many times this pattern under investigation has matched in the past and what trend SPX or DAX indices did show when the pattern was active.

The example below shows a pattern of a double top in the indicator, which has been searched in the database. Because of a big gap at the opening, it is interesting to know if this will repeat with high probability every time the pattern reappears.

Results of matching patterns are listed and sorted on correlation at the right side of the screenshot. Double clicking on one of these patterns will automatically show it in the chart and if it behaved as expected. This way it can be analyzed for performance on opening or intraday.

Results of patterns found of the selected Double Top pattern

Furthermore, we analyze its performance using statistics and we will look at the outcome if the pattern appears around the opening of the day. The picture below shows results for double top pattern at opening for segment 1 (circled inResults of patterns found of the selected Double Top pattern red). On average performance of 0.54% in the left section of the chart pattern. Also, a win/loss of 82% in 23 observations/occurences of the pattern.

Above one of the high correleation patterns found which appeared at the opening

Definitely this pattern is included in DeLorean SPX forecasts whenever it reappears in the future!

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