Chapter 14 – Market Cycle

    My Trading Methods using Market Cycle

The best way to use this market cycle information is to trade around the time of reversals. Of course it is extremely important to put the context of the market into consideration, and then possibly enter a trade if you have enough reason to justify it.

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For instance, if the market has been relatively flat on risk sentiment, meaning there are no strong sentiment demanding for risk or seeking shelter in save-haven currencies, or just a regular trading day, you could look at the market just around the reversal time, especially the JPY pairs.

Then, once enter a reversal trade from the top or the bottom, depending where the market was trading at, then wait for the next hour or so and close your trade in profit. Of course, you need to consider the context of the market and there are no sentiment driven reasons for the market to move higher. Usually this will play out 8 out of 10 times, giving you at least 30 to 80 pips of profits, sometimes even more.

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So I enter the market at around these reversal times, usually timing my entry just after a spike in the market. For instance, if you are looking to short the GBP/JPY just around the reversal and the market has been pushing it up, wait for a final spike up just around the reversal, and then you can enter a SELL trade, possibly at the top, for at least 50 pips of profit.

Remember, we look at the premarket trend and we are looking to trade AGAINST that trend that is how we trade the reversal times…

The second usage for the market cycle is the market continuation time. When you are holding on a trade, market may move up and down, and sometimes shake you out of a trade. But by knowing you are in a market extension time, you can hold on to your trade just a few moments longer for a extra 20 ~50 pips of gain. I have seen this time and time again, especially during the London trading hours, if I just held on to my trades until 7:00am, I would have made an additional 50 pips… This is a tip that is worth millions for the right person.

Of course, when you are in a losing trade and the market is going against you, sometimes we get emotional and want to get out of the trade when it is pretty much the worst case scenario… Keep your eye on the reversal time. If you are anywhere close to them, just hold on and the market will give you a better exit. Sometimes, even let you break even. Of course, once again, if the market is driven by risk sentiment, then I do not recommend holding on a losing trade, even if the reversal is just around the corner.

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

Comments

  1. darth crane says:

    Great information. I believe fundamentals are the way to go in FX. To gauge strength Equity’s have indices, commodities have futures and FX has fundamentals.

  2. Clement says:

    I like Henry a lot because he always hits the nail at the head. His write-ups are always concise . May God add to your blessings. I’m very grateful!!!

  3. Ismail Abdul-Aziz says:

    Where can we find the download link of the book of News Profiteer.pdf of Henry Liu?

  4. Stephen says:

    When creating this market cycle chart, were you historically looking at a 5min time frame to come up with the graph? Can you please explain how the red and green lines were established? Thanks

    • Stephen, the time frame is not considered for the market cycle chart. The green and red lines simply represent the ranges (green: upper range, red: lower range).

      • So to look at Midnight to 2 am EST where the market is ready to break out, the Green line says that by 2Am Historically the move to the upside will be over and at around 2am we should be starting to look to exit a long trade and look for signs of a reversal. Correct? Thanks

  5. oyedeji muyiwa says:

    Hello kelvin, am still new in forex trading so what is the best time frame to look out forin order to use market cycle and the best pair of currency.Thanks

  6. The timings given on the PDF and the one’s on the website are different. Does it mean that these timings keep changing?

  7. oyedeji muyiwa says:

    Hello Kelvin, thanks for this winderful info about the forex.please i will like to know if these market
    cycle normally occur during all trading session.or just a few, if yes please shed light on those session.Thanks.

  8. Kelvin, thanks for a wonderful article. I think you have a typo error. Shouldn’t the last minor market reversal time be up to 12.30 pm EST instead of 12.30 am EST?

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