Commodity Futures Trader

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There are four major market cycles. Knowing these major market cycles is important for you and your trading system. Each market cycle requires a different approach from your trading system. Adapting to market cycles can improve your bottom line.

The four major market cycles are: 1) Trending, 2) Consolidating, 3) Breaking out of a consolidation and 4) Corrective. Lets discuss these market cycles now.

Trending is when the market starts to move consistently in one direction either up or down. An uptrend means each higher high is higher than the previous high and each lower low is also higher from the previous low. Similarly for the down trend!

A Consolidation market also known as Non Trending market will look like a sideways horizontal line on a chart. Consolidating is when the market is struck between two horizontal support and resistance levels. You can use moving averages or other technical indicators to determine whether the market is consolidation or trending. In case of a consolidating market, the moving average line will almost be horizontal.

Breaking out of a Consolidation is when there is a sharp increase or decrease in the price after the market has been consolidation for at least 20 bars.

Corrective is a short sharp reverse in prices during a longer market trend. In addition to these four market cycles, many traders also use Elliott Wave Theory to determine waves which are also an indication of market cycles.

The question is can anyone become a winning forex trader? Yes anyone can in my opinion. The only thing that is required is a winning trading plan. If you have not developed a good trading plan than dont enter the forex market. First develop one. Forex markets are not going anywhere. These markets will be there next year and after that. Enter only when you are prepared.

There was a great experiment conducted in trading history. This experiment is a perfect example of how a winning trading plan can help you become a great trader. Interested, then read on about the Turtle Trading Experiment.

Richard Dennis and Bill Eckhardt were two partners, great traders and commodities speculators. Both were arguing one day in the year 1983 whether great traders were made or were born.

Bill was of the opinion that great traders are only born while Richard believed that great traders could be made through a process of good training. In order to settle the matter, Richard suggested that they recruit and train a few novice traders. Train them. Give them accounts to trade and see how they perform.

An advertisement was placed in New York Times, Barrons and The Wall Street Journal. 1000 applications were received in response to that advertisement. The Turtle Trading Experiment had started.

Only 80 were called for interview after shortlisting. 13 were selected for the experiment in the end. They were known as the Turtles.