GBE CYCLE

TRADING GUIDELINES

By Jim Prince

www.GBEMembers.com©2013 The Greatest Business on Earth

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The Greatest Business on Earth™

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Phone: 541-955-2885

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© 2013 The Greatest Business on Earth.

All Rights Reserved.

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GBE CYCLE TRADING GUIDELINES

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Risks of TRading You should undeRsTand

ImpoRTANT NoTICE

The risk of loss in trading commodity futures contracts can be substantial. There is a high degree of leverage in futures trading because of the small margin requirements. This leverage can work against you as well as for you and can lead to large losses as well as large gains.

Past performance is not necessarily indicative of future results and examples of historic price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or are likely to occur.

These ResulTs aRe Based on siMulaTed oR hYPoTheTiCal PeRfoRManCe ResulTs ThaT haVe CeRTain inheRenT liMiTaTions. unlike The ResulTs shoWn in an aCTual PeRfoRManCe ReCoRd, These ResulTs do noT RePResenT aCTual TRading. also, BeCause These TRades haVe noT aCTuallY Been eXeCuTed, These ResulTs MY haVe undeR-oR oVeR-CoMPensaTed foR The iMPaCT, if anY, of CeRTain MaRkeT faCToRs, suCh as laCk of liQuidiTY. siMulaTed oR hYPoTheTiCal PRogRaMs in geneRal aRe also suBJeCT To The faCT ThaT TheY aRe designed WiTh The BenefiT of hindsighT. no RePResenTaTion is Being Made ThaT anY aCCounT Will oR is likelY To aChieVe PRofiTs oR losses siMilaR To Those shoWn.

strategies using combinations of positions, such as spread and straddle positions may be as risky as taking a simple long or short positions.

This brief statement cannot disclose all the risks and other significant aspects of the commodity markets. You should carefully study commodity trading and consider whether such trading is suitable for you in light of your circumstances and financial resources before you trade.

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GBE CYCLE

TRADING GUIDELINES

The studies i use in this methodology include two different Moving Averages: the MACD Oscillator/Histogram and the Slow Stochastic. i don’t use these studies as they might typically be used. i use them to help me identify the trend, the power in the trend, and if the trend is nearing a cycle high or cycle low.

in addition, i use two of these studies to help me discover if there is divergence in the market. This is vitally important because it can alert me to a possible turning point in price before it happens!

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GBE CYCLE TRADING GUIDELINES

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STUDIESfirst, be sure you have the studies properly set in your charts. Click on “studies” in the

ToolBoX and then select the applicable studies from the drop down menu and enter the appropriate Params as seen in the screen shot below. (note the pane sizes designated for each study have been changed too.)

once you’ve saved the studies, be sure to also save them as a template below the chart. By following this simple step you won’t have to build the studies individually on each chart. new charts will automatically come up with the studies displayed.

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GBE CYCLE TRADING GUIDELINES

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ENTRIES To ThE UpSIDETo identify possible entries to the upside, the following must appear on the chart!

1. The 50-period moving average (which appears as a blue line on my charts) will help you determine the short-term trend (when used in conjunction with Trend seeker). if this moving average is pointing up, we only want to consider entering positions to the upside.

2. The 20-period moving average (which appears as a red line on my charts) will help us gauge the depth of retracements for entry purposes.

3. Prices must pull back to a “zone” around either the 20 ma or the 50 ma for long entries. once we identify this occurrence we determine where the slow stochastic is in its cycle.

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GBE CYCLE TRADING GUIDELINES

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SLow SToChASTICWe use this study is to help us determine the rhythm of the market. in other words, as the

market breathes, this study helps us to see if it’s inhaling or exhaling. depending on where it is in this cycle, it will help us determine whether or not we will enter the market.

if price is in an uptrend (the angle of the 50-period moving average line is pointed up) we’ll only consider entries if (a) prices pull back to either of the moving averages, and (b) the slow stochastic is at (or below) the 25 level and is hooking up. entries occur if the slow stochastic has hooked to the upside. Then we’d place our order to go long (or buy call options) one tick above the price bar that developed when the stochastic hooked up.

notice how the arrows on the charts point to areas where lows in price correspond to lows in the studies! This is the rhythm we want the market to be in when contemplating long positions!

a stop loss is placed just below the low of the entry price bar.

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GBE CYCLE TRADING GUIDELINES

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mACD oSCILLAToR/hISToGRAmThis is the middle pane on our chart page. use this to help determine the strength of the

momentum of the trend and if there is divergence forming between price and momentum. if there is, you need to be alerted to a possible turn in the market! This is a very powerful way to use this study!

divergence with this configuration turns prices lower!

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GBE CYCLE TRADING GUIDELINES

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ENTRIES To ThE DowNSIDEfor possible entries to the downside the following must appear on the chart!

1. The 50-period moving average (which appears as a blue line on my charts) will help you determine the short-term trend (when used in conjunction with Trend seeker). if this moving average is pointing DOWN, we only want to consider entering positions to the downside.

2. The 20-period moving average (which appears as a red line on my charts) will help us gauge the depth of retracements for entry purposes.

3. Prices must retrace to a “zone” around either the 20 ma or the 50 ma for short entries. once we identify this occurrence we determine where the slow stochastic is in its cycle.

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SLow SToChASTICif price is in a downtrend (the angle of the 50-period moving average line is pointed down)

we’ll only consider entries if (a) prices retrace to either of the moving averages, and (b) the slow stochastic is at (or above) the 75 level and hooking down. entries occur if the slow stochastic has hooked to the downside. Then we’d place our order to go short (or we’d buy our put options) one tick below the price bar that developed when the stochastic hooked down.

notice how the arrows on the charts point to areas where highs in price correspond to highs in the studies! This is the rhythm we want the market to be in when contemplating short positions!

a stop loss is placed just above the high of the entry price bar.

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mACD oSCILLAToR/hISToGRAmin this example of MaCd divergence you can see how the market was trending lower,

formed divergence, and then rallied! The divergence alerted us to a possible turn in the market before it happened!

divergence with this configuration turns prices higher!

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GBE CYCLE TRADING GUIDELINES

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TREND SEEkER™ultimately the best opportunities will come if both Trend seeker and the 50-period moving

average are pointing in the same direction. in my opinion, this is when you’ll find the best possible setups take place based on this methodology. if they don’t line up, it’s still possible to take the trade based on the direction of the 50-period moving average only, however, it does not offer the highest possibility of success on its own.

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GBE CYCLE TRADING GUIDELINES

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CLoSINGfollow the guidelines listed and you’ll have done your utmost to make sure you’re on the

“right” side of the trend!

GBE CYCLE TRADING REfERENCE

In which direction is the 50-period moving average pointing?

➥ Up = long futures or call option entries only.

➥ Down = short futures or put option entries only.

What is the Cycle of the Slow Stochastic?

➥ is it at or below 25 and hooking up for long entries?

➥ is it at or above 75 and hooking down for short entries?

When trending higher have prices pulled back to a zone around the 20- and 50-period moving averages when the stochastic slow has hooked up?

When trending lower have prices retraced to a zone around the 20- and 50-period moving averages when the slow stochastic has hooked down?

Bonus = Is there divergence on the MACD and/or the slow stochastic?

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GBE CYCLE TRADING GUIDELINES

For More Information On

To help you reach expert status with this market timing approach, i highly encourage you to watch my January 2013, april 2013, and June 2013 webinars found here. after viewing the webinars you’ll need to watch my four short Training Videos dated: 04/19/13, 04/26/13, 05/03/13, and 05/10/13.

also, please read both the february 2013 and May 2013 Mastering the Chart newsletters.

You may also want to read this short article from my weekly newsletter as a follow up.

also note that Trend seeker™ is still a very important part of the analysis structure. Trend seeker analyzes the last 6 months of data, so it looks at the trend from a longer time frame versus using the 50-period moving average. That said, i absolutely love setups where both the 50-period moving average and Trend seeker are pointing in the same direction! This combination can provide very powerful setups and opportunities!