Should You Trading the Market Cycle System?

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Should You Trading the Market Cycle System?

Trading the market cycle system is not yet heard by beginners in forex. At least, you may have heard, a great year to buy American stocks is when there is a presidential election. However, it is true that in every American presidential election since 1928, only 4 of the 21 years have seen the negative performance of the S & P 500 Index or the equivalent. Does that sound good? This kind of system has many names but is most commonly known as a market cycle system. Care must be taken to consider whether they are worthy to follow.


The first thing to ask yourself when considering such a system is whether the logic behind the system is enticing. There is a market cycle system based on the moon cycle. Before you laugh, you might want to consider the fact that senior police officers have noted if they feel there are more terrible crimes on full moon nights. However, a rigorous survey found no significant effect of the moon on human behavior with possible exceptions to the sleep cycle.

Maybe a more intellectually interesting case can be made to buy shares in the presidential election year. The logic is this: The president wants to be re-elected, or wants the candidates they want and who are linked to win, and therefore the government does what they can to produce an economic boom, which drives the stock market, and is designed to end once the election is over.

This can be a reasonable argument, although there are some serious weaknesses in it, such as the independence of the Federal Reserve. However, even if you find interesting evidence, you have to move on to the second step, which is looking closely and critically at the data that supports the market cycle system.


We see that 17 of the 21 years in the sample produced positive performances in the case of a stock purchase system in the presidential election year. This sounds pretty good: the win rate is almost 81%.

The first question that must be asked is how this compares to ALL years since 1928. Twenty-four of these sixty years produce negative returns, which means that 60% of all years are winners. While 81% seems very superior to 60%, we must remember that statistically sixty is a sample that is far better than twenty-four. In fact, samples under two hundred tend to be very statistically unreliable. So for simple statistical reasons, you should be very vigilant about the risk of money on a system that only has twenty-four sample points, especially if the results don’t seem to be so different from ordinary years!

Another aspect of the data in the presidential election system that we should take a closer look at is the average rate of return, not only the proportion of years which gives a positive return. The average return rate is 9.45%. As it happened, the annual average return from 1928 to 2015 was 11.41%. So, assuming only twenty-four data points can be received, only by looking closely at the data that we can see, this system will not all crack.


If you want to trade this type of system, first examine how the system will work.First of all, there are several academic studies which show that the effect of “momentum” is on speculative financial markets such as stocks, commodities and Forex. This means that if the price of something goes up or down in a few months, then in the next few weeks the possibility does not continue in the same direction. The most successful forex trend trading strategy has focused on trading the USD pair only where prices have moved in the same direction for the previous three and six months.

At Forex, research shows that trading swings and positions in currency pairs USD is a little more profitable where trading enters on Monday, right at the beginning of the week, or just on weekends on Fridays. This study was conducted over the past 14 years which has just entered the H4 chart after a deep pullback began to turn towards the trend of 3 months and 6 months, using the main pair of USD. This number is the average expectation in return for the ratio. We can see awards that are faster ahead on Monday and Friday. That is information about the Market Cycle Trading System that you can deepen yourself and can be practiced on your system

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