Extreme TMA System

Cycles in Sentiment

Most of us understand that cycles are part of the fabric of life and the world we live in. Seasons come and go, night follows day, the tide rises and falls. The way we perceive opportunity is also cyclical. Feelings of optimism have to start somewhere, however tentatively. As these feelings take hold, especially among large, interacting groups of people, they feed on what went before and grow.

They continue to grow until things appear to be as good as they can get and at that point, they are. Ebullience then gives way to a sense of reality, which gives way to the first inklings of doubt, which in turn become feelings of pessimism and eventually despair. Then, when things look like they are as bad as they can be, they are and at that point the cycle starts up again.

This simplified view of the mood of the crowd, the essence of contrarian investing, is our starting point. Prices in freely traded financial instruments progress in cycles of sentiment and market action, rather than being a random distribution of independent prices, is governed by underlying form.

At any one time there is a multiplicity of different sentiment cycles operating together. For example, it is quite possible for a long term investor to be negative on the market, but at the same time for a short term trader to be positive. A raging bull market to a day trader will just be noise to a pension fund manager. It is all a question of which cycles are under observation .

JM Hurst

Sometimes price cycles on a chart seem to be obvious, while at other times they are unclear. Critics say that because cycles seem to come and go they cannot be trusted. Mostly, however, these commentators lack the tools to correctly see beneath the surface of the market and to identify the cycles at work.

In order to do just that JM Hurst, an aerospace engineer working in the 1970s,developed an innovative approach to market analysis.

Seeking to apply his knowledge of the mathematics of cycles to financial markets, Hurst developed a system which he briefly taught as a course. His original work is dense and a little complicated, but can be distilled into the following concepts:
Fig 3.8 Mastering Hurst Cycle Analysis

All financial markets are cyclical.
There exists a finite set of cycles from very long to very short which tend to recur: the Nominal Model.
These cycles are related to one another by a factor of two or three: they are Harmonic.
Cycles build upon one another to form larger composite cycles: the principle of Summation.
The longer the cycle, the larger the change in price: the principle of Proportionality.
Cycle lows tend to be sharp as the shorter cycles in the composite bottom together: Synchronicity.
On the other hand peaks (in equities at least) tend to be rounded as cycles tend to top out in succession.
Despite all of this, variation from the norm is to be expected. The market is a huge, sometimes unruly mob of competing interests, not a physics laboratory.

This is a very important information to know and to understand our system which is based on cycles and bands just like the Hurst cycles and Bands.

Cycles build upon each other to form composites and it can be very difficult to isolate individual cycles within the composite unless a phasing analysis is carried out.
When a long cycle is trending, its shorter component cycles tend to be swamped: their amplitudes are muted and they are therefore hard to pick out.
Similarly, during fast sell offs, cycles tend to compress in length, which again makes them difficult to identify.
In order to resolve the composite into its component parts, the Hurst analyst phases the chart by picking out the cycle lows and marking their time locations in the grid.

hi bass, its been so wonderful having u around this thread all this while Al. Has been absent, extremely wonderful input u have made wit regards to TMA and bands may God bless u. Pls sir can u elaborate more on how this bands moves wit price from one timeframe to another? Its relationship is still a bit confusing to me. Tks for replying.
(I can't rest until i am).

EU trying to break the consolidation ( Last Higher Low ) and the up trendline (UTLD) downward and my Trend CCI is starting a new Bear Trend, notice how the RSI is crossing the 50 Level downward a 38 pips left to the Low ADR Level, and so does the other EU Pairs.

Jnr, AL explain it a hundred times all over the thread go here for a summary and make sure u download and read all the stuff on the first page, by the way i don't think that AL is trading this system anymore i always bump into him on other threads and he use other setups.

Regards,
B.R.

Here we go, EU is collapsing.

Following the EU trend with the Turtles

Yes, but another push up. Than h4 trend down should take place.

I took nice long during London. Missed short though. Just went of a cup of coffee and it was half done by the time I got back (I was away like 30 min tops!).

BR



Bass, how are you doing with improvements on ETMA? I almost gave up on it. Trends are strong and in such environment it just doesn't work.
BTW: we can go private on this if you want. I don't want to discourage anybody. Bottom line is still, in ranging market ETMA is great. just lately this seems to be rare.

BR

Sharing with you Some patterns that i see on the Daily TF.

AN Triangle.
EU Rising Wedge.
EG Channel Down.
GU Ascending Triangle.

Regards,
B.R.

When everything goes well here's what we got, Daily possible target around 8770.

The EU Hurst Analysis :
Euro/US Dollar

The way in which price and the 20-day FLD were interacting puzzled me at the beginning of the week, but then I realized that the cycles were running short in the Euro, and that the trough of Friday 4 January 2013 was a trough of 80-day magnitude. I published a video about it just in time to catch the move.

The Euro is looking bullish now, but eventually the 40-week cycle will exert its influence and pull the Euro down into the 40-week cycle trough expected in about April/May this year.

http://sentienttrader.com/wp-content...2013-01-12.jpg

And Gold.

I thought that it would be helpful to take a step back and look at the bigger picture in Gold as well. The W-shapes are clear in the first 40-week cycle following the September 2011 peak. Now of course Gold is expected to complete the bigger W-shape for the current 18-month cycle that has the 40-week cycle peak of October 2012 as its center point. Price is falling now to the second trough of the W, then it is expected to pull back up to the final peak of the 18-month cycle expected in about July this year.

http://sentienttrader.com/wp-content...2013-01-12.jpg

And the USDX.
US Dollar Index

The US Dollar is putting up a fight, but there is little doubt now that the 54-month cycle trough we discussed last week still lies ahead. The bar counts show how the cycles have been stretching, but it looks as if there are about 7 weeks still to go.

http://sentienttrader.com/wp-content...2013-01-12.jpg

Hi Al,

Thanks for the great thread, it mirrors my trading method and is just what I was looking for. I usually like to trade the lower time frames like the M15, as described in the beginning of the thread.

Unfortunately all of the various versions, indicators and EA's of your system that have evolved in producing your final version are not posted, since the final version has always been updated and revised only in the first post.

Would it be possible to upload all of your versions and full documentation into one zipped file so stragglers such as myself could benefit from this great thread.

If not I understand, maybe it's just too much info or I am being a pain, however if possible could you post the full method with indicators and EA's for the version shown in the attached screenshot.


Or maybe if some trader reading this could post the indis, EA's and documentation for the method in the screen shot below.

Thanks guys,

cheers, Pete.

Bassramy,

First, I enjoy reading your posts, always something useful and informative. Thanks!

Second, I have been incorporating some wave analysis into my trading using a 3 hour centered moving average cycling around a Hodrick Prescott filter of 144 periods. This shows when price has really moved excessively into overbought/oversold positions and therefore a trader could catch a trend with less draw-down to be expected. Simple, but effective. Ala a vortex cycle. On the bottom of this attached chart you will see how I use RLW% with various periods overlapping to signal cycles in a different manner. This chart has the RLW% set with periods matching the cycle waves measured from peak to valley. The longest period is 720 daily bars (dark green), then 360, 180, 120. The price chart itself has the Hurst Channel indicator applied with settings at 120 for short period and 720 for long period since that seems to be impactful cycle periods.

Third, perhaps this addition of a spectrometer will assist in a visual aid for the Hurst Cycle analysis. Side note: checked out the Sentient Trader site and videos today, good stuff.

Thanks,

sjc

Extreme TMA, Centered MA, Spectrometer all in play...Hurst Channel removed from price chart.

sjc

Hi Coondawg71!
Back in time i was searching for cycle analysis tools like yours but ended on a brick wall.
Can you please direct my attention to a place where i can study that methodology and find indies to test if they fix to my ts?

Many thanks mate.
Regards

Spectrometer is an indicator that I had FXCM translate into Lua for the current platform of TradeStation Marketscope. But it originally was written for Metatrader back in 2009 and the programmers ported it from MLQ5. Centered Moving Average is an indicator which you will only find in Lua for Marketscope, it was a custom request from a trader, Tigre3. Hodrick Prescott Filter is common,regardless of platform, should be able to get that if you wish.

The method of trading shown in the illustrations is just a combination of items that I have learned to implement, in a pursuit of utilizing the tools in a manner to extract as best a visual representation of Sine Waves. To understand Sine Waves would do all traders a great deal of good. Price Action is not so much vertical as it is more rotational. I utilized the HPF as my moving Median Line in an Adaptive fashion so that it is always alive and I don't need to constantly draw Median Lines manually or plot Andrews Pitchforks (which is a very powerful method in itself). Back to the Spectrometer for a minute, I manually measure the peaks and valleys on each of the waves to come to the periods which you see used on the price charts for the RLW% indicators; the indicator as it stands now does not offer the trader to set the parameters for the waves representation.

Hope that helps.

sjc

Hello bassramy and the rest of the contributors who have developed or improved this system, this is my first post to this thread so just saying hi and thankyou for what seems to be a profitable system.

I have just finished reading the whole thread, wow took some time getting through it but I survived and made it to this side, lol.

On Monday I will start to demo it so please be ready for a barrage of questions, only kidding, most questions I had have been answered by reading through the thread so now I think I'm up to speed. Anyway we will see.

Thanks again Alfredo(absent from thread) for your time in developing this system.

I wish you all many pips.