Trading Turn Dates

Trading is all about dealing with probabilities. When you have a
method for calculating turn dates that produce a high degree of
probability that the market will likely turn, it is important to
understand how to properly deal with it.

Forecasting turns is not the same as trading. Forecasting is part
of market analysis, not trading. Forecasting is all about dealing
with probabilities, not trading. So where does trading enter into
the picture?

Once you have the probability figured out to your satisfaction,
you must then decide whether the information you now have in
your hand can be exploited for profits. You must determine the
potential for risk and what the minimum probable profit happens
to be. When you have those two pieces of information, you can
decide whether the risk is worth the reward.

When it comes to using TURN DATES for market timing and
trading, some make the mistake of assuming that every turn
date should be traded. This is far from ideal. In addition, some
look at turn dates and start to anticipate that it will be a top or
bottom in advance. Again, this is not ideal.

The ideal way to deal with TURN DATES is not to trade towards
it, but following it. In other words, if you expect the market to
turn on a particular date, and perhaps you expect it to be a
bottom, it is best that you do not trade as if a bottom will occur
unless you have some pretty good reason to believe so. If you
are comfortable with following market cycles, perhaps you have
that confidence. For most of us, however, TURN DATES are best
used by trading FROM THEM, not TOWARDS THEM. In other
words, wait until the TURN DATE arrives, and then you can see
what it can or cannot form.

For example, if prices have been dropping and a TURN DATE
arrives, the obvious expectation is for a bottom to form. If you
have evidence to suggest this is likely, such as noting price
reacting off support, you'd want to be looking to BUY the market
at that time. Another way is to WAIT until it confirms the bottom
and then buy into the market.

It is dangerous, if all you are using are TURN DATES, to trade
TOWARDS the date because you expect it to be a bottom (or
top). Anticipating a bottom for a future turn date and then
selling into the market because of that belief alone can be a
quick way to lose a lot of money. This also includes TURN DATES
that when calculated indicated a higher probability to be a
bottom, or top. Just because the indication leaned strongly
toward a bottom over a top (or the other way around), it is
better to simply LET THE MARKET SHOW WHAT IT WILL LIKELY
FORM when that time comes.

I cannot stress enough the importance of letting the market tell
the story when it comes to using TURN DATES. When I trade
using FDates, I may have some reason to expect the next FDate
to be a top (or bottom). Expecting it to likely be a top does not
indicate that I should buy the market. Rather, if I'm going to buy
the market, it is because a bottom is forming or has just
confirmed from an FDate. I'm going to trade FROM the date, not
into it.


Rick Ratchford is an analyst, trader, author and speaker specializing in the forecasting of market tops and bottoms in the Futures and Commodities, Forex markets. To learn how you can use FDates Market Timing to time your trades with greater precision than ever before, go to: http://www.amazingaccuracy.com