If we accept all markets (stock, commodities, currencies, base and precious metals, real estate, etc.) to be cyclical, whether it be daily, weekly, monthly, annually or over longer periods then it is only necessary to discover the correct time to buy or sell. Also, if one is competent to assume an opposing position on any market, theoretically there is as much to be gained in a down market (Bear) as in an up market (Bull). In fact, usually more quickly since a bear market, historically, collapses more rapidly than a bull market rises in its’ ascendancy.
Correct timing is, therefore, basically achievable through the mathematical programming of historical cyclical data and in its’ most simplistic form arrived at most accurately by utilizing a convergence of longer term moving averages with shorter term ones which when combined with other plotable technical impulses create buy or sell signals. A hyperbole of the same data will also produce a stop/loss signal to counteract most anomalies, or unforeseen fundamental aberrations (War, Political Upheaval, Climatic catastrophes, etc.) and thereby limiting loss or protecting profits on such occasions.
As a rule, for the average investor, buying and selling are primarily, fundamentally and psychologically, motivated decisions which are in themselves, along with normal supply and demand functions, causes for cyclical movements which are then accentuated by technical reactions at critical stages and the fact that large financial institutions and banks are mostly technically oriented is noticeably apparent in the volatile movements taking place at the technically charted buy and sell signals generated universally.
Timing, therefore, is not a question of mystery, luck or guesswork, but of applied knowledge and, above all, discipline.
The following chart is particularly indicative of all that is described above and not unusual. Clearly obvious are the cyclical movements, the convergence of longer term moving averages with shorter term ones creating buy and sell signals, as well as the trailing stop/loss points necessary when first establishing a position in order to limit loss and later to protect profit.
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The chart reflects the movement of the Euro to the U.S. dollar over the period of mid-July 2006 through the end of August 2007. Note that profits were achievable as the Euro gained in value against the U.S. dollar and in reverse profits were later achievable as the U.S. dollar gained in value against the Euro.
Quantum Forex Online never takes a position without a confirmed signal. Timing being essential to profit!