Time

[hwsteele]

I decided to start this thread to talk about how I use time with price in trading. I have looked over Trade2Win and have not found much of anything about time that comes close to how I personally use it with price. I AM NOT TRYING TO TELL ANYONE HOW TO TRADE. I am just laying out my methods for all to see. When I explain something about time and how I use it I will give MANY examples of what I'm talking about. I don't believe theory is good for much in trading UNLESS YOU CAN PROVE IT. To prove something takes more than one or two hand picked charts that makes a theory look good.
Now my favorite market is the SPX so I will be using that as my example for most everything at least to start with. I will be dealing mostly with the last six months of data. When I give and example I will show how I use it not only once or twice but many times. And not only many times but all consecutively. If it does not work out I will show that also not just all the pretty stuff.:-0
PLease feel free to ask questions or make comments on what you see posted here but PLEASE let's keep it nice. If you just don't like what I am saying then maybe you should read something else.:cheesy:

 

[options]

Good. Well done.

Read the snippets over on the other thread and it does make sense to keep things separate.

I looked at time and price quite a few years back, even less around then for any research.
Only knew one trader who spoke of only another trader that even mentioned it let alone used time and price in actual trading. He was by account very successful, but would mention nothing of his methodology.

The closest I came to working with it was to find the most opportune time to trade, such as the first few hours of the day and the not so opportune times like over the lunch period.

When I tried to take it out to longer time frames like daily and weekly, whilst I could see some time patterns developing I could find nothing consistent to tie it to.
I even went into lunar cycles and using 27 for a cycle. (think it was 27 without checking back).

Would the lunar pull of the moon have effect on the markets?
Well, yes, they do. It is clearly there in commodity markets. Time to harvest, take to market, sow, and repeat. Poor weather? low/bad crop. price goes up. Abundant supply of the crop. Price goes down.

Dead easy to predict. Harder to make money in it though due to the human element.

The only thing I didn't put into the equation was the weather. And I should have done. But I didn't know how to factor in say bad news coming in about weather and a crop and the time it took to filter into the market.

I know this is off track to the market you trade. Perhaps this is another element (no pun intended) to be discussed at a later date.
Certainly time and price will be enough on their own to keep us going for some time.
I look forward to seeing you 'take' on it.

 

[trendie]

hwsteele,
look forward to reading your insights about time.
I did look into time as a means to trading a while ago, and decided to be undecided.
I used the Zig-Zag function on my metatrader platform to objectively decide highs and lows, and counted the bars between highs and lows. although I found some sort of 84 day cycle, which I decided to interpret as 21-day multiples (cant remeber why), I found it difficult to use as a predictor, as the variance was unpredictable.
Over on the older FX threads, as a group, we decided that 4-pm was a high probability high or low of the day (GBPUSD), ie, potential reversal. It even got known as Chow-Clown O'clock if I remember correctly!!
Of course, these is Delta, but thats longer-term.
I have had a look at Matrix, and its all fib-counts, but sometimes its calendar days, sometimes its trading days, so there is a lot of interpretation.
so, looking forward to learn something new.

 

[wasp]

Also, if you remember Trendie, there was 'big ben'.. Not sure if that still holds true? ie 8am was cable prime time...

The one thing I try to focus my decisions around are what I perceive my markets main players will be also focusing on. My market being GBPJPY. Naturally, I am aware predominately of UK and Asian opening sessions and pay less attention to the US session, purely due to the 2 currencies in play.

I shall be looking to see if I can come up with any time correlations with bar counting today and add them up if I find them.

 

[wasp]

Maybe it works better in Indices and equities but I am yet to find a solid count Not sure if you see anything differently as I am still curious!

 

[hwsteele]

Good. Well done.

Only knew one trader who spoke of only another trader that even mentioned it let alone used time and price in actual trading. He was by account very successful, but would mention nothing of his methodology.


When I tried to take it out to longer time frames like daily and weekly, whilst I could see some time patterns developing I could find nothing consistent to tie it to.
I even went into lunar cycles and using 27 for a cycle. (think it was 27 without checking back).

The only thing I didn't put into the equation was the weather. And I should have done. But I didn't know how to factor in say bad news coming in about weather and a crop and the time it took to filter into the market.

Glad to see that you are as open to the idea of time being as important as price.
It's funny how information about price is given away freely but the information about time is what cost the big bucks. Years ago when I believed I could learn everything I needed to know about trading from a book or course and not actully trading I paid big bucks to "learn" a bunch a CRAP about time. My father has spent about $30,000.00 on information that proved almost completely useless. It wasn't until I started looking at price and time for my self with an open mind and the willingness to put forth the effort needed that things started to show up. I started to see how things work (at least how I see them work) I decided that I would never charge money for what I have learned. The thing is even laying out all the information that I will be only the people who are willing to work will be able to fully understand and use it well.
You talk about the lunar cycle. I use that to forecast turns in the SPX all the time. I would say it's about 80-85 percent correct. The thing about that cycle is most people don't know how to go about using it correctly. From the time I started to be interested in the lunar cycle to the time I finally saw the correct way to use it was over two YEARS!
What can I say sometimes I make Forrest Gump look like a genius?
I will get into the more "interesting" stuff like the lunar cycle later in the thread.

hwsteele,
look forward to reading your insights about time.
I did look into time as a means to trading a while ago, and decided to be undecided.
I used the Zig-Zag function on my metatrader platform to objectively decide highs and lows, and counted the bars between highs and lows. although I found some sort of 84 day cycle, which I decided to interpret as 21-day multiples (cant remeber why), I found it difficult to use as a predictor, as the variance was unpredictable.
Over on the older FX threads, as a group, we decided that 4-pm was a high probability high or low of the day (GBPUSD), ie, potential reversal. It even got known as Chow-Clown O'clock if I remember correctly!!
Of course, these is Delta, but thats longer-term.
I have had a look at Matrix, and its all fib-counts, but sometimes its calendar days, sometimes its trading days, so there is a lot of interpretation.
so, looking forward to learn something new.

Well trendie, I hope something I have to say will ring true with you and that you will be able to at the very least get some ideas for study.

Maybe it works better in Indices and equities but I am yet to find a solid count Not sure if you see anything differently as I am still curious!

I took a look at your chart and 4 hours jumped out right away. Also multiples of 4 worked out well too.

 

[MrGecko]

FWIW, I think some people use Fib. extentions on time - say the distance from one pivot to another is 100 hours, they mark out 161.8 hours and watch out... TOS have the capability in their package, along with the ability to set cycles along the x axis.

 

[wasp]

I took a look at your chart and 4 hours jumped out right away. Also multiples of 4 worked out well too.

Tres interesting as for other reasons I won't mention as I don't want to take the thread of course, but 4 hours is a key time in my trading, but not because of time... Hadn't looked at it this way and it is uncanny...

 

[hwsteele]

Ok, the first thing I want to make sure that everyone understands is that bigger cycles can stretch and compress littler cycles. A little cycle can put along at say a 10 hour frequency with a 40 to 50 point amplitude when all of the sudden a 60 hour cycle with a 100 point amplitude crests. At that point in time the bigger cycle becomes responsible for more of the price action than normal. The smaller cycle is distorted by the bigger one and has it's amplitude compresses to only 10 or 15 points. Some times it's compressed enough that it has almost no amplitude at all. The small cycle can also be stretched out by the bigger one so that instead of 10 hours it might take 11 or 12. Once the influence of the bigger cycle has fallen back into normal range the 10 hour 40 to 50 point amplitude of the smaller cycle will show back up.
Because the above happens allot you won't find cycles repeating perfectly for very long.

Once a strong cycle or "time pivot" is discovered for a particular market you will be able to use it for a long time just not consecutively in most cases.

The second thing to understand is that time cycles of the same length can and almost alway do overlap. Look at the chart to see what I mean.

 

[hwsteele]

This post will explain one of the methods that i use to time the SPX.

As hard as it may be to believe what I'm about to say, it does works well for me on the SPX.
This method comes from the idea that price and time are the same thing. I have a couple of fundamental problems with that idea so i set out to prove/disprove it to my self with some experiments. After all of the experimentation that I did I still don't believe that price and time are completely the same thing(interchangeable). I found that it seems to be that you can use price as time, but almost every thing I tried that used time as price just didn't work well. To me that means they are NOT interchangeable in both directions. i.e. price to time and time to price.

Turning price into time did seem to work well though and this is one of the methods that I use to do that:

It is very simple in operation. I will explain it and then give nine examples all consecutive.

On the daily chart find a swing high or swing low. Then find the very next swing high or low after the first one.

Example: If you find a swing high look for the next swing low. What we are looking for is the range of the swing in points.

After you calculate the number of points from the swing high to low or low to high round up or down to the nearest whole point.

Example: If you find that the range is 43.17 points round down to 43. If it is 53.86 then round up to 54.

After that count the number of calender days from the last of the two turns used to get your range. The day that the count ends on in theory should be a pivot day.

All examples are with the SPX
1:
May 19 high 1440.24
May 27 low 1373.07
Difference 67.17
Target August 2nd

2:
May 27 low 1373.07
May 29 high 1406.32
Difference 33.25
Target July 1st

3:
May 29 high 1406.32
June 3 low 1370.12
Difference 36.20
Target July 9th

4:
June 3 low 1370.12
June 5 high 1404.05
Difference 33.93
Target July 9th

5:
June 5 high 1404.05
June 12 low 1331.29
Difference 72.76
Target August 24th

6:
June 12 low 1331.29
June 17 high 1366.59
Difference 35.30
Target July 22nd

7:
June 17 high 1366.59
June 24 low 1304.42
Difference 62.17
Target August 25th

8:
June 24 low 1304.42
June 25 high 1335.63
Difference 31.21
Target July 26th

9:
June 25 high 1335.63
July 1 low 1260.68
Difference 74.95
Target September 14th

The charts that I added show how the targets turned out. You can use the information above to check the pivots I used to get the targets.

Tomorrow i will explain how I trade with these targets.

 

[hwsteele]

In this post I will explain how I would normally go about trading with the timing method explained above.

If you look at the first chart you will see we get to the number "2" first. If you look you will see the the market is clearly in a down trend when the number 2 shows up indicating a swing point. The market should at this point start going up at least for a short while, and it did. I would not make a trade here as it goes against the main trend.
You could if you were feeling spunky use the number 2 as a place to look for a day trade, but that's about all.

Number "3" and Number "4" land on the same day. In this example the swing that is timed with both 3 and 4 turns the market back in the direction of the main trend. This is what we are looking for. I would enter as soon as the price action for this day goes in the direction of the trend PAST the CLOSE of the previous day. I would put the stop ten points from where I entered the trade.


Number "6" happens in an up trend. I do consider it an up trend because we had three days in a row with higher closes. The third day just made a higher close but it was higher. A small retracement happens and then the number 6 times a swing that should turn the market back up. Again I would use the same rules to enter. Once price makes it past the close of the day before I, in this case, go long with a stop 10 points behind.

Number "8" happens on a weekend. I would still trade when a timing point lands on a weekend on Monday but in this case it goes against the trend so no trade. To me the trend is still up because we have not had three lower closes in a row. You could if yo wanted to use the information to day trade.

Number "1" happens on a week end also but the timing day does not turn the market this time. This trade is saved because the price never goes above the last days close. Iif it had we would have been stopped out for a ten point loss.

OK going to the second chart we see that number "5" happens on a week end again and the number "7" happens on the Monday right after that weekend. So effectively they both point to the same day, Monday. The last full three day count in the same direction was up and the turn that 5 and 7 point to should be down. So I wouldn't trade it more than a day trade.

Number "9" is a little more complex. If you look you will see that the market turn that 9 is forecasting happens right after three higher closes so the market is considered in an up trend. But if you look at the three last PIVOT highs we have had they were all lower.
September 2, 8, 12. That is a more powerful indication than three closes in the same direction so we consider the market to be in a down trend. Because of that I would have made the trade for 9.

Tomorrow I will give the next way I use this timing method.

 

[wasp]

Ok, the first thing I want to make sure that everyone understands is that bigger cycles can stretch and compress littler cycles. A little cycle can put along at say a 10 hour frequency with a 40 to 50 point amplitude when all of the sudden a 60 hour cycle with a 100 point amplitude crests. At that point in time the bigger cycle becomes responsible for more of the price action than normal. The smaller cycle is distorted by the bigger one and has it's amplitude compresses to only 10 or 15 points. Some times it's compressed enough that it has almost no amplitude at all. The small cycle can also be stretched out by the bigger one so that instead of 10 hours it might take 11 or 12. Once the influence of the bigger cycle has fallen back into normal range the 10 hour 40 to 50 point amplitude of the smaller cycle will show back up.
Because the above happens allot you won't find cycles repeating perfectly for very long.

Once a strong cycle or "time pivot" is discovered for a particular market you will be able to use it for a long time just not consecutively in most cases.

The second thing to understand is that time cycles of the same length can and almost alway do overlap. Look at the chart to see what I mean.

This is fascinating stuff and have been looking into moreso... All a bit manic and not enough screens to give it full attention during the week so will post more at the weekend but still watching!

 

[options]

Well, I found my first stumbling block last time around.
I took the cycles from end to end.
Never crossed my mind to look at/for overlaps.

Now thinking about it using a 27 (or was it 28?) day/night lunar cycle would give it an overlap.

 

[Johnny Trader]

The best time tool I know of are simple trend lines. Trend line is the most accurate tool I know off. I do pay attention to the moon, the four equinox, and have a time rule of times up = times down, I also measure time in Fibonacci relationships and also yearly dates from significant tops and bottoms, like we had a top October 10 2007 and now a bottom October 10 2008 (so far).

I had a Gan friend how was more time the price oriented. Price and time and volume are what is real in the market.

I look forward to read more about your insights about time and how it can be used in day trading.

 

[zarif]

nice posts - please keep them coming as very interested.

rgds

 

[hwsteele]

The same timing method that I showed you before can be used on more than just the daily time frame. The chart that I added today is the 5 minute time frame and shows that it works just the same. I left the "9" off of all of the prices that I noted on the chart to try and help the clutter. Every price you see that I have noted on the chart should have a "9" in front of it.
I only gave five examples on this chart but that was also to keep it from getting too cluttered. If you pull up a 5 minute chart of the SPX for 10-21-08 and look for your self you will see that there were many more examples on just this one chart.
I used yesterday because it was the most recent data and I don't want any one to think I'm "picking" my examples to make myself look good.
There is a rule about the 5 minute charts that I have noticed over time that is mentioned on the chart its self. I will go into it a little more tomorrow when I explain how I would trade the information on the chart.

 

[trendie]

The same timing method that I showed you before can be used on more than just the daily time frame. The chart that I added today is the 5 minute time frame and shows that it works just the same. I left the "9" off of all of the prices that I noted on the chart to try and help the clutter. Every price you see that I have noted on the chart should have a "9" in front of it.
I only gave five examples on this chart but that was also to keep it from getting too cluttered. If you pull up a 5 minute chart of the SPX for 10-21-08 and look for your self you will see that there were many more examples on just this one chart.
I used yesterday because it was the most recent data and I don't want any one to think I'm "picking" my examples to make myself look good.
There is a rule about the 5 minute charts that I have noticed over time that is mentioned on the chart its self. I will go into it a little more tomorrow when I explain how I would trade the information on the chart.

:-0

 

[Glenn]

All looks rather like John Crane's Reaction Cycles (Advanced Swing Trading, 2003).

Glenn

 

[UKtradergirl]

Interesting thread. Definitely adding this one to my list of things to study in greater detail. Nice to come across a different outlook on things now and again, and if it works and can be added into my own trading- all the better!

Thanks for sharing your knowledge.

UKTraderGirl

 

[hwsteele]

All looks rather like John Crane's Reaction Cycles (Advanced Swing Trading, 2003).

Glenn

I don't know that name. Has he been around for a long time?
Does his work include only time related things or is there more?
Also, does he work with any Gann stuff. I have found that people who have an interest in Gann wind up studying the markets much the way that I tend to, from a time stand point.
From reading John Crane's book, or any other source for that matter, do you have anything you would like to add about time? I am always open to "new" ideas so if you have anything to share please feel free to do so.