Wednesday January 01, 2014


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Trading Strategy




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Albert Cheung (Ph.D.)    E-mail :- 


Trading Strategy

Market Rhythm

It is very important for a trader to determine the market rhythm first so that he/she can concentrate on which cycle chart one should use, whether daily, weekly, monthly. If the market is very volatile, one should concentrate on the monthly and quarterly cycle charts. Daily and weekly cycle charts can then be used as a fine tuning for the exit or entry level. In general 70% - 80% of the time, most market movements can be described by the daily and weekly cycle charts. 

Trading Outside the Normal Range

When the market break through the daily cycle's normal trading range, weekly and monthly cycle charts should be used as reference. A warning signal for a trending market will be hoisted if the market is trading outside the  weekly cycle's normal trading range. Usually in a strong trending market 5-day cycle and 22-day cycle charts will be used to substitute the regular daily, weekly and monthly cycle charts.

Oversold and Overbought Condition

Under extreme circumstances the system will fail to generate the probability chart and the market condition is then defined as oversold or overbought. There is a great uncertainty but the market has a very high tendency to reverse its course. Trading is not recommended in the oversold or overbought condition.

Pattern Recognition

The distribution of the bars in the projected profile do offer some idea on the market movement. A projected profile with several prominent peaks would suggest a range trading market. On the other hand a projected profile with only one symmetrical peak would indicate that a trending market is developing.

Determination of entry/exit points

The odd is in one's favor if  entry/exit points are positioned at the extreme end of the normal trading range of the daily or weekly cycle charts or at the vicinity of a monthly projected chart point. The chances is less than 20% - 30% for the market to close outside the weekly and daily cycle's normal trading range

Stop loss placement

Stop loss level should be placed at 1 - 2 bars away from the entry point and entry/exit point should be positioned at the vicinity of projected weekly or monthly-cycle projected chart points. The market has 70% - 80% chances in closing within the normal trading range in the daily and weekly cycles. When a new position is opened, the projected profit and loss ratio should always maintain a value of greater than 1.5.


All rights reserved. I assume no responsibility for any error and am not liable for any damage that may result from the use of this information. The forecasts are based on quantum index analysis system that I have developed and may or may not predict the market movement accurately.

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Albert Cheung (Ph.D.)    E-mail :-

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