Welcome to the inauguration of Four Dimension Trading! Many market analysts focus primarily on the dimension of price, the best approach is to examine the weight of evidence from all four dimensions, price, time, momentum, and sentiment. No method is perfect, and traders need to know how to handle eventual losses. This site will also examine the Psychology of the market mass mind and Psychology of the individual trader.
Initial markets to be covered, Stocks, Bonds, Gold, and Oil. Later the site will expand into Currencies and Individual Stocks.
An important trading goal is the discovery of high return low risk market turns, when a turn is found evidence from the market dimensions will be explained. At various times Elliott Wave Theory will be used to explain market movements. The Wave Theory was discovered by R.N Elliott in the 1930’s and explains how the mass mind operates.
The basic Elliott Wave pattern consists of five waves traveling in the direction of the primary trend, followed by a three – wave retracement of the progress. The five – three combination is a component of a larger five wave pattern, which is also part of the next larger pattern. This fractal progression continues to infinity. For a greater understanding of Elliott Wave Theory – please read the “Elliott Wave Principle” by Frost and Prechter.
Elliott discovered that the wave theory applied to all aspects of human activity. The five – three pattern appears in all markets, the economy, and even in the record of patent applications. The pattern can be seen on a one – minute stock chart, one – year chart or a chart spanning decades.
The US Long Wave chart illustrated in this blog is an update of a long – term chart from my article “The US Long Wave” which appeared in the 2015 Bonus issue of Technical Analysis of Stocks & Commodities. If you are not a subscriber go to traders.com to get a free one-month trial to view my article and others.
The US Long Wave chart represents the US economic/stock market growth for two- hundred and thirty years. It corresponds with global progress which was the most dynamic growth period in all of human history. This incredible era of progress is probably why the corrective waves were so brief. Super Cycle wave (II) was three years, Super Cycle wave (IV) was nine years.
In 2020 the US stock market may have completed the fifth Super Cycle degree wave. If so, the five waves up from the year 1790 would be wave “ONE” of a developing Grand Super Cycle wave. The subsequent Grand Super Cycle wave “TWO” implies a stock bear market that could continue for decades.
There’s no predestination in the markets, the mass mind like an individual can change direction. The next blog on this site will examine an alternate wave count.
You may be asking, why you’d need information about a very long-term cycle when you’re interested in making a trade that will last a few weeks or even a few days?
Because of the fractal nature of markets, the long-term picture helps define the intermediate view which in turn, clarifies the short-term view.
The first few blogs on this site will focus on the long and intermediate term perspective of the US stock market before drilling down to the short-term view. Afterwards, other markets will be explored.