Trading Equities

with the Cycle Trends Live Program

The technique for the trading of Equities with the Cycle Trends Live program is very similar to that of trading Forex.

The major difference is that the trading time period in Equity trading can be much longer than in Forex and can extend for a few days or longer whereas in Forex trading major profits can be

realised in a few hours. Consequently the time frames used in Equity trading are longer than in Forex trading.

Cycle Trends Live is an upgrade from the very successful End OF the Day Program.

The live feed of prices to the program now gives traders, as in Forex trading, instead of using End of Day prices for the analysis, the option of using prices in time frames varying from 1 to 300 minutes.

The indicators and resultant signals derived from the analysis of the cycles of the securities in the Equity markets leads to the forecasts of the trends and entry and exit points for the trades.

The signals from the analysis can be applied to the trading of CFDs,Single Stock Futures and Spread Trading

As in Forex trading Cycle Analysis is the key to successful trading .Every minute of every day, as the markets move, cycles are formed. From these cycles we can see where the peaks and lows are and what direction the market is going to take.

Here is a graph of Anglo American tracing the peaks and lows as it traded and showing the trends.

A to B is an uptrend, followed by a sideways trend after C and then a down trend

Cycle Trends uses cycles to forecast these peaks and low points and to predict future moves

The function of the cycle is to forecast the direction of the price .It does this by showing the direction it is taking in the future zone. The future zone as shown in the graphs below is the focus of the trader’s attention. There are also other cycle indicators that assist in the forecast.

In Equity trading the live data feed provided by Sharenet or eSignal enable these cycle

indicators to be viewed in different time periods. The data comes into the program as the trades take place in the Stock Markets

Time Periods and how they are used for Trading

The Cycle Trends Live program allows the trader to use different time periods for the

analysis of the different markets

As you can see in this graph the trader has the option of trading with periods from 1

minute to 300 minutes. Initially the trader will confine his trading to the 30 and 60

minute periods.

These time periods allow the trader to perform the three main

requirements for successful trading namely

• Define the Trend

• Decide on the Entry point for the trade

• Decide on the Exit point for the trade

Through the use of multiple time frames the different time frames can be

viewed at the same time on the screen.

Although there are many time periods available to the trader we don’t use all these time periods when doing an analysis.

The principle is to keep the analysis as simple as possible.

You do this by confining yourself to a few time periods that become familiar to you. In Equity trading we confine ourselves initially to trading with the 60 or 30 minute time

periods.

The choice between using either the 60 or 30 minute time frames is judged by how the

cycles fit the past movement of the price.

Choosing the Data The Cycle Trends Live program gives the trader the choice of two different sets of data, either Forex or JSE.

By clicking on either the choice is made. As we are demonstrating equities we click on

the JSE button.

By clicking on JSE the trader is led to a menu, consisting of the top 40 and other

shares.

As seen below the menu starts with the Alsi 40 and then goes in alphabetical order to

the other shares.

You click on to the share of your choice for the analysis

Cycle Analysis and the Cycle Indicators

Here is a brief description of the Cycle Indicators that are used for successful trading

I am using this 60 minute graph of Anglo American PLC as the

example

ANALYSIS When you click on the chosen security, in this case Anglo American PLC, it defaults to 4

boxes

In Box 1 we have the price line of Anglo American with a closing price of 22200. The

red line is the Fourier trend derived from a mathematical formula of the price’s

movement .Both the Trendic and the TrueOBOS indicators described below are

derived from this line.

We have drawn a support line at the 20500 level. Support and resistance lines are an

integral part of an analysis with changes in trend very often taking place at these levels.

In Box 2 we have the Cycle Graph.

The program examines the cycle movements of the price in the past, pointing out those that have been repeating themselves.

It’s pretty straightforward and logical. The theory is that if the cycles have been repeating themselves in the past they will keep doing so and can therefore be used for forecasting the future!

The function of the cycle is to forecast the direction of the price as is shown in the future zone.

The future zone is the focus of the trader’s attention.

The trader is also looking for the peaks and lows traced by the cycle and where they are in relation to the moment he is examining the graph.

In the case of Anglo American the cycle is pointing downwards in the future zone forecasting a fall in its price.

This confirms the picture that the price is heading for the support line at 20500 seen in Box 1.

Also note that the peak of the price at Point “A” coincides with the peak of the cycle also at Point “A”

In Box 3 we have the TrueOBOS indicator. The “OBOS” in TrueOBOS stands for Over Bought, Over Sold. This indicator is considered by many to be the most important part of the Cycle Trends programme.

TrueOBOS is derived from the “Fourier trend line” that you see on the price graph. The currency becomes oversold when “TrueOBOS” reaches the thick green line. It becomes overbought at the thick red line.

In the graph TrueOBOS is at the zero level with the potential of moving to the oversold green line.

Note that at the peak of the price at point “A” TrueOBOS was at the red overbought line, also Point “A”, supporting the cycle peak in Box 2

Box 4 contains the Trendic Indicator.

Trendic is the indicator that we have developed specifically for Cycle Trends.

Trendic is there to trigger a buy or sell when a decision has been made that a cycle low or peak has been reached. You shouldn’t buy or sell until you get this signal!

Trendic signals a Buy signal when it moves through the zero level into the positive area and a sell signal when it moves into negative

In this analysis Trendic has moved through zero into a negative mode confirming the downtrend of the cycle in Box2.

Conclusion The direction of the cycle in the future zone plus the negative mode of Trendic point to

Anglo American sliding to the support line in Box 1 at 20500

Anglo American is heading southwards and the trader should be short of the equity

Here is a Trading Example using the Absa share in a 60 minute graph on

April 21,2010

Analysis In Box 1 the Absa price has moved up to reach a line of resistance at 14072. Very often

a change in trend will take place at resistance and support levels.

This resistance line has been drawn with a trend line cursor connecting the tops of the

price line.

In Box 2 the Array cycles give the projected trend.

The projected trend is seen in the future zone on the right hand side of the graph. The

cycle is at a peak as it enters the future zone with the potential to move downwards.

Box 3 has the overbought oversold indicator TrueOBOS. It shows that the Absa price at

14072 is near the overbought line. A reversal in trend will very often take place when

TrueOBOS reaches the overbought line, especially if it coincides with the price

reaching a resistance line.

Box 4 has Trendic 36 and Box 5 the Trendic 55 indicator

The function of the Trendic indicator is to show the immediate trend. The indicator has two zones, either positive or negative on either side of the zero line. In the graph

both Trendics are in the positive zone indicating that the immediate trend of Absa is

positive.

However the cycle in Box 2 is projecting that the immediate trend will shortly turn

negative

Trading decision Based on the fact that Absa had reached a resistance and an overbought level and the

cycle was at a peak the trader went short on Absa as soon as the Trendic indicators went negative. This occurred shortly after this graph was taken (not shown here)

At 5pm on the same day (21/4/2010) this was the result seen in the graph below Absa had dropped from 14100 at 11 am to 13900 at 5pm

Analysis

The Array cycle (the projected trend) in Box 2 is now in a definite down trend The

Trendic indicators (the immediate trend) in Box 4 & 5 are in a negative mode. Both indicated that further downside could be expected so the trader maintained his short

position.

This was the final position of Absa on May 7, 2010.

Absa had fallen to 12844 and there were signals from the cycle indicators that the

trader should cover the short sale.

Analysis The Array cycle in Box 2 had hit a cycle low and was trending upwards in the future zone.

The TrueOBOS overbought/oversold indicator in Box 3 is at the oversold level.

The Trendic indicators are still negative but the Array cycle is forecasting that they will

shortly turn positive

The trader covered the short to take a good profit especially if CFD’s were used in the

trade.

The Short position was covered round the 12800 level on Friday May 7.

The graph below shows that Absa bounced to the 13300 level on Monday May 10 by

1pm.

The cycles in Box 2 show that Absa is reaching a Cycle Peak and

The Trendic Indicators in Box 4 & 5 are now in the positive zone

The Cycle Trends Live program and course consists of the

following

• The Theory and Techniques of using Cycle Analysis for

Equities and Forex.

• Cycle Indicators and methods for trading Equity futures

• Cycle Indicators and methods for Trading Forex

• Standard technical Indicators such as MACD, Stochastics,Moving Averages and Trend Lines etc for

trading Forex and Equities

• The use of a live Sharenet data feed in trading