Mastering Hurst Cycle Analysis: A modern treatment of Hurst's original system of financial market analysis

by Christopher Grafton

Overview

One of the best classical methods of technical analysis brought up to date

This book offers a modern treatment of Hurst's original system of market cycle analysis. It will teach you how to get to the point where you can isolate cycles in any freely-traded financial instrument and make an assessment of their likely future course.

Although Hurst's methodology can seem outwardly complex, the logic underpinning it is straightforward. With practice the skill needed to conduct a full cycle analysis quickly and effectively will become second nature. The rewards for becoming adept are high conviction trades, tight risk management and mastery of a largely non-correlated system of analysis.

In this extensive step-by-step guide you will find a full description of the principal tools and techniques taught by Hurst as well as over 120 colour charts, together with tables and diagrams. The Updata and TradeStation code for all of the indicators shown is also included.

Find out more at: https://notes.hurstcycles.com/

Product Details

ISBN-13:	9780857190628
Publisher:	Harriman House
Publication date:	11/30/2011
Pages:	384
Product dimensions:	6.10(w) x 9.10(h) x 1.00(d)

About the Author

Chris Grafton is currently Managing Director of Vectisma, an independent market analysis firm focusing on UK and European equities based in England. Previously, he has held positions on the sell side at several investment banks in London and Tokyo and also worked as an analyst / trader for a London based hedge fund specialising in Japanese equities. Chris speaks fluent Japanese, is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

Table of Contents

Praise for Mastering Hurst Cycle Analysis xi

About the author xiii

Acknowledgments and thanks xv

Introduction xvii

1 The Properties Of Cycles 1

Introduction 3

Basic Quantities 5

Visualising Period and Amplitude 8

How Cycles Combine 10

Properties of Market Cycles 17

Conclusion 39

2 Basic Tools I: Valid Trendlines 41

Trend and Trendlines 43

The Concept of Trendlines 45

Trend Direction 48

Trend Strength 54

The Real Nature of Trend 56

The Valid Trendline (VTL) 61

The Key Role Played by VTLs 65

Conclusion 74

3 Basic Tools II: Displaced Cycles - The FLD 77

Introduction 79

Properties of the FLD 80

Plotting the FLD 83

Applying FLDs 86

FLD Combinations 96

Conclusion 101

4 Isolating Market Cycles I 103

Introduction 105

Cycle Envelopes 107

Phasing Analysis Set Up 115

Conducting a Phasing Analysis 121

Conclusion 138

5 Isolating Market Cycles II 141

Introduction 143

Spectral Analysis 145

Phasing Analysis - Daily Chart 152

Conclusion 163

6 Selection, Set Up And Entry 165

Introduction 167

Creating a Shortlist 169

Scanning Charts 178

Entering the Trade 190

Short Selling 199

Conclusion 207

7 Managing Open Positions 211

Introduction 213

Case Study ? JP Morgan Chase 2002/2003 214

Conclusion 234

8 RSI And Elliott Wave 235

Introduction 237

RSI and Elliott Wave - the Basics 238

Case Study I: Gold, November 2008 249

Case Study II: Euro/USD, January 2010 260

Conclusion 269

Conclusion 273

Appendices 283

Appendix 1 Elliott Wave Patterns 285

Appendix 2 FLD Code 295

Appendix 3 Inverse Moving Average Code 301

Appendix 4 Cycle Envelope Code 303

Appendix 5 Diamonds Grid and Numbers 307

Appendix 6 Final Diamond Placement Code 321

Appendix 7 Discrete Fourier Transform Code 331

Appendix 8 Volatility Index code 345

Recommended further reading 347

The Sentient Trader 348

Index 349

Editorial Reviews

A carefully constructed, thorough and extremely readable guide to a complicated area of technical analysis. It is well presented and illustrated throughout with 120 legible diagrams and financial charts, showing real examples from the markets that make Hurst's work accessible.” —Money Maker magazine

“This book is highly-recommended for any market analyst or trader who wishes to add cycles to their analytical toolbox. This is a clear and concise introduction.” —Bill Sarubbi, Fund Manager, Cycles Research Investments LLC, Vienna

“Cycles are one of the most underutilised, and yet most rewarding, sources of information available to an analyst or investor. If it is possible to anticipate a reversal, and track it in real time, then eager investors should want to know about it. Until relatively recently, cycles have not been properly understood, so there has been a dearth of practical knowledge. This gap is now being filled by dedicated researchers such as Chris Grafton. His book brings together the ideas of one of the pioneers of cycle analysis - the engineer, J.M. Hurst - and presents them in an easily understandable and very useable form. Once mastered, the techniques explored in the book should be a source of significantly enhanced market understanding and very profitable investment.” —Tony Plummer, Author, Forecasting Financial Markets, Director, Helmsman Economics Ltd

“I really like this book. It takes the excellent original idea of Hurst and brings it right up-to-date in the modern computer era. It explains cycles and harmonics and shows how to construct Valid Trend Lines and Lines of Future Demarcation. It does not pretend that this subject is easy, but does explain it with very clear charts and writing. The work shows the relationship to Elliott waves and RSI oscillations. There are some clear worked examples and ideas of how to put on and manage a trade. Most investors will find it a useful addition to their knowledge. Well done Chris Grafton.” —Robin Griffiths, Cazenove Capital Management

“Through clear, straightforward explanations of the tools and up-to-date market illustrations, Grafton makes Hurst cycle analysis accessible to today's trader. Readers gain not only a thorough understanding of cycles but also the skills to begin implementing cyclic analysis immediately.” —Julie Dahlquist, Ph.D., CMT, Editor of the Journal of Technical Analysis and coauthor of Technical Analysis: The Complete Resource for Financial Market Technicians

“JM Hurst's Cyclic Principles are perhaps the most powerful yet misunderstood concepts about the workings of financial markets in the history of financial trading. Published in the 1970s, Hurst's work has survived into the 21st century because it is so powerful and effective, but the application of his principles and the practice of his trading methodology have been shrouded in a cloak of arcane mystery. Christopher Grafton has done a great service to the 21st century trader by thoroughly presenting Hurst's work in a format that replaces the pencil, eraser and chart pad with a computer. Armed with the tools that Grafton includes in the book (and an understanding of how to apply them) the reader will be well placed to start honing their analytical skills and putting this powerful theory to profitable use.” —David Hickson, creator of Sentient Trader Hurst Trading System (www.sentienttrader.com)

From the Publisher