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Welcome to the W. B. Busin Group Publishing's FAQ

Timing Market Turns

Frequently Asked Questions

Subscriber submitted questions, previously answered through the newsletter, are given full answers here.

What is the difference between investing and trading?
The important differences are holding time in a security and the expected rate of return.  The analysis process is the same. The decision process to enter and exit is the same . 

Which type of analysis works best for trading and investing, fundamental analysis or technical analysis?
Most simple or sophisticated tools of each discipline don't work very well if applied to each individual's trading or investing plan.  You must search and test parts of each discipline to find what works for your investment goals.  

We use our own versions of technical indicators and other algorithms.  We use fundamentals differently than most analysts.  We care more about the reaction to the fundamental data than the actual data.  A few economic data series are of value to us and we do track them for a measurement of a domestic economy and interrelationships with foreign economic activity and trends.

What is the difference between a Swing position and an Investor Core position?
Swing trade signals -

A Swing trade is entered and exited with short term profits as the object.  The typical holding period is 3 to 5 trading days.  The safest Swing trades are taken with a risk to reward of 5:1 or greater and with the prevailing trend.  countertrend swing trades are often higher risk trades because of the strength of the opposing trend.

The Investor Core position signals -

The Investor Core signals attempt to provide investors with timing for portfolio changes, such as adding new stocks or other vehicles, or to begin hedging the portfolio in any market.  The signals indicate severity or more than a typical countertrend swing move is at hand.

The Investor Core short position in a bull market is taken by an investor with long term investments at the beginning of a short term or intermediate term corrective phase.  Hedging protects profits and replaces a taxable event by delaying or postponing portfolio liquidation.  

It represents the hedging activity necessary to protect an investor's profits during a trending phase with options, or using a part of risk capital to enter a leveraged counter trend fund.  For example, a portfolio with a diversity of cash, stocks and bonds can be partially hedged in a correction by using stock options for the largest holdings and a leveraged Bear mutual fund for the duration of the correction.

The Investor Core signals are long, short or cash. They may be treated any way an Investor finds useful.  In simple terms:  1. If the Investor Core is long or in cash, then a hedge is not called for.  A long position indicates a prime opportunity to either increase a portfolio or to leverage the portfolio to increase the total rate of return.   2. If the Investor Core is short, the Investor is likely to benefit from a hedge. 

In a Bear market, the Investor Core will remain short until a countertrend rally is likely to occur.  Then the hedging is reduced or eliminated to capture some upward benefit in portfolio components.  As the bear market rally ends, the Investor core returns to a short position, or full hedging to portfolio neutral.

How do I use your Timing signals and market analysis service?
I assume you have no investing or trading plan, which means you have not written a risk management plan.  Without a comprehensive and adaptive investment plan for all of your risk capital, using our signals and analysis won't help you much.

A capital management plan always contains a plan to assess your risk profile for any investment or trade.  After you have completed your planning design and find a vehicle class (mutual funds, stocks) that meets your risk tolerance, then our timing service and analysis can help to raise the level of comfort for the investing or trading decision you have made.  Timing the entry or exit can reduce losses and add potential profit percentage points to each transaction.

Once you have done those two most important requirements,  writing out a (1) capital management plan and a (2) risk management plan for trading and investing, the answer to your question will be quite easy to see. 

Using an experienced professional financial planner will make the planning process and the general plan more suited to your tolerance for risk.  It is a lot of work and that's why fee-based planners get paid well.  Everybody wants to be the headline act at Carnegie Hall.  A few will learn what is required and then practice enough to get to the Carnegie Hall of investing and trading. 

What is a Time Locus?
Our objective Time Locus turning points mark a change in behavior by market participants.  Market indexes/stocks/bonds/commodities can only go forward  in one of three basic directions:  upward, downward and lateral. 

Our Time Locus turning points add a fourth potential action: an acceleration of the recent trend.  These usually occur after a lateral phase.  Acceleration points are not common, but also are not rare.  They occur in all timeframes.  They are coordinated within the existing structure of the market.

Time Locus contain  no directional indications.  We subjectively classify them as minor and major by applying these Time Locus to our recursive models.

What is a Time Loci?
Loci is plural for locus.  We more than one Time Locus point arising from our algorithms and models.  Sometimes they occur on the same date or on the next trading day.   In 2007, the August 10 & 13th were a pair and, the August 22, 23, 24 cluster.
 

What are volume patterns?
We have identified reliable volume patterns that occur during specific market conditions and during/near Time Loci turning points.  They are proprietary and are derived from our algorithms.  These patterns become valid when price action then follows the expected track associated with the particular volume pattern(s).

What is market structure?
It the functional state or framework within which any investment vehicle is operating and progressing in a specific timeframe.  In technical terms, a market phase can be described by Elliott Wave Theory as described by its namesake, R. N. Elliott. 

Elliott Wave is a convenient way to describe and track the order in the markets.  Markets are not random.  If markets were random, there would be no markets.  Markets and market prices are not coming from some computer crunching out prices of some stock by using a random number generator.  Markets are made by people and their decisions about price and quantity.

Straight to the point, if markets are random, then people are random and behave randomly.  Random market theories resemble the self-serving logic required to explain philosophy that we really don't exist and are just a figment of our own imagination.  Plainly stupid.

Learning the functional truths of an Elliott structure is difficult and requires time that most people are unwilling to commit to or invest in themselves.  Most people who have studied the numerous books and courses become frustrated due to each author's apparent need to make it very complicated.  The result has been thousands of people who hate Elliott Wave Theory and its marketers. (We  like that people reject even basic Elliott Wave.)

In our view, simple Elliott phasing structure works, if the analysis is kept simple by using a few flexible rules.  Understanding a few esoteric characteristics of structure, like subdividing and overlapping phases, helps to keep the trading sails full and our market expectations normal. 

From personal experience, we have always benefited from understanding the structure of any entity and the rules it 'lives by'. 

When many people reject what they don't understand, then you must learn about that subject, and why they reject it.  Large groups of people in agreement are likely to be wrong.  If so, you will have discovered another nugget in life.

What do you trade and why do you only trade through TimerTrac.com?
Most of the traders of the W. B. Busin Group day trade currency pairs (Forex).  It is the easiest to analyze and trade.  It is the most liquid market in the world.  Occasionally, some of us will trade the American equity markets. 

Why trade the most difficult liquid market when an easier and more liquid market is available.  There is always a bull market in the Forex market.  It is conveniently open 24 hours a day, 5 days a week.  We trade the European session, so we can focus on the American markets for this newsletter service during the U.S. RTH.

We enter our trades at TimerTrac because they are independent and provide an unbiased quantitative measure of trading our calls on a particular index or vehicle (we will add bonds, metals and others soon).

We believe that the markets can be timed, and timed precisely - potentially timed perfectly.  We believe it because we have seen it, have done it and traded it for years.  The Time Locus turning points are objective results produced by our proprietary algorithms.  The Time Loci have no indication of high low, or lateral direction.  They simply say "a change begins here and ends when the next one arises."

We are the imperfect interpreters of those objective signals.  When we are wrong about a turn in a market, it is usually an error about the direction for the next part of a phase.  We expect to be wrong sometimes, but we try to correct our views quickly in view of structure and trend. 

We were wrong about structure following the 2006 low.  It took considerable time to settle on the composition of the current structure.  Throughout that process of discovering the structure proper, the Time Loci produced were indeed accurate, from intraday timeframe to weekly timeframe. 

As of August 2007, the structure proper in our view, is that the broad market indexes have set in a top of the second upward pulsive phase that began at the lows of 2004.  We expect a third and final upward pulsive phase to begin at the latest by early October 2007. 

When that phase completes (Christmas 2008), we expect a long term decline in equities that will last at least 18 months, potentially up to 30 months.  The depth and length of that bear market can be affected by domestic and international markets and economies, and by the policies of those foreign governments. We expect the 2004 lows to be challenged before the next long term bull market resumes.

What indicators do you use?
I assume you are referring to 'technical charting indicators'.  We use several momentum indicators for immediate indications of strength of trend across all timeframes (monthly, weekly, daily, 195-minute, 130-minute etc.).  Our daily and intraday models are based on a few proprietary real time mathematical algorithms. 

Which is the most important thing for getting good profits when I am investing? Is it timing, volume, sentiment, indicators or price?
All of those factors are important parts of an analysis process of a market or investment vehicle.  None of these are as important as a sound disciplined trading or investment plan.  The most important part of that plan is money management, or risk management.

Assessing risk tolerance for yourself is a deeply personal process.  It becomes the heart and brain of your investment planning.  If you have not completed this process of accounting for how you feel/think/react when you lose money or make money, then you might be an investor/trader who loses money frequently and can't figure out why.

Libraries and book shops are filled with books on the mechanics of investing and trading.  Among those books you will find comparatively few books on personal risk tolerance and self assessment for trading and investing.  The very best books or courses on investing/trading mechanics are completely useless unless you apply the lessons clearly stated about self assessment and risk management.  

If you want to know why 90% of traders lose money, ask a losing trader to show you his/her written trading plan.  They won't have one.  Most successful traders won't show you their trading plans because they are quite personal and are reflections of their disciplined trading mind.  They may show you the rules they religiously follow, but not the actual plan.

What is sentiment and how does it affect the signals?
Our proprietary Daily Sentiment Index is another measurement of human behavior.  It measures what people are doing in the markets.   We don't publish our various monthly, weekly and intraday sentiment measures. The Daily Sentiment Index and Intraday Sentiment Index for the equities markets are  valued trading tools for entry and exit of a transaction by an investor or a trader.

All of the components of the Daily Sentiment Index have been back tested over decades of weekly and daily data.  The several components measure human behavior in the markets.  These components are not the standard put/call index option ratios.

We composed the current version over the years and refined it for our purpose of finding a leading or current indicator of extremes in sentiment.  That is why the Daily Sentiment Index hit an extreme in mid-February 2007 while price tracked laterally for several more days.  But with that bearish extreme of 80, we believed that a strong decline was soon to set in. 

When we built the original sentiment models, we were using data for individual non-financial businesses looking for seasonal or cyclical trends in their business or industry. Sampling data came from surveying real people using a service or product. 

The results of what people said were compared with what they actually did.  This result was compared to a follow-up survey of those sampled who had or had not acted as they indicated.  This was a labor intensive process.

The short of it, always (and still does) results in consumers, corporate buyers, or investors doing what they want based on an emotional decision, not based on an objective prioritized plan.  For example, people who buy shoes most often are those with lots of shoes at home.  Income levels have only a small impact on who buys shoes frequently.

Many years ago, we wanted to know what all traders and investors were doing too.  We applied our non-financial model of sentiment to the everyday buying and selling of stocks or bonds or commodities.  Similar results were produced but with even higher correlation to the extremes of emotional decisions. 

Those extreme points are visible at market highs and lows, in any timeframe, in any market we have sampled and tested.  Learning how to use these emotional tags are the keys to effective marketing plans for a business, just as they are keys to profitable investing and trading.

Our Group understands the importance of the following rule.  "The markets are simple if you can understand human beings.  They do what they want, not what they should."  Measure the result of subjective decisions by the masses, and you will know what to do and what not to do.

In business, one measures a successful competitor and an unsuccessful competitor.  The results are the same as in the stock markets.  Successful investors and traders trade with a disciplined plan. Unsuccessful investors and traders do what they want without a plan, and never figure out why they are always losing.

What does "timing market turns" mean?
In all timeframes, markets of any class move by price or move in quantity, or both.  This can be found with third world street vendors to Wall Street investment markets.

The ups and downs of a stated market are marked by changes in direction.  We call these changes in direction, "turns".  We believe that timing these turns is the single best way to increase any rate of return measurement within a sound money management plan. 

***Yes, it is a basic tool to try to buy low and sell high.  But that should not be the essential mission of any part of a money management plan.  The primary goal of a plan is to not LOSE money whilst trying to make some.   Preventing losses and minimizing losses is 90% of successful money management.***

Why do you buy and sell only the indexes and not futures or options?
Good question.  With so many people reading our newsletter, no two readers are alike. Their investments, their trading mental states, etc. are all different, and more importantly, each individual changes their views from moment to moment don't they.

Our subscribers do have one thing in common, they trade or invest in vehicles related to or contained within an index (stocks, ETF's, tracking stocks, index futures, index options, stock options). 

Stocks in an index may be positively or negatively correlated to the movement of an index.  An index futures series tracks the underlying index, just like a tracking stock or option moves with its underlying stock or vehicle.

The analysis of data for the underlying index or vehicle produces the same results (actually more robust) for timing and direction.  So, instead of analyzing the derivative, like QQQQ, for a some of our subscribers, we use the NDX  data and produce signals for futures traders, option traders and QQQQ traders.

If you can answer questions for 10 different investment vehicles with one answer, then that makes an efficient service to the many subscribers.  Why analyze 500 correlated stocks when analyzing the S&P 500 Index produces the same result.

How often do you trade?  What is your win/loss ratio?
Win/loss ratios and trading frequency are interesting items when back testing a system or strategy.  They have little to do with being profitable in real time trading and investing.

Trading and investing is about only two specific things.  Trading or investing is entirely about you making money.  The two things are "you" and "making money".   It's that simple.  If you find a method to make money in the markets while losing very little, then refine it.  Then trade it.  Then trade it again and again.

How much money can I make using your signals?
I don't know.  It's possible for you to lose all of your money in a single trade if you choose the wrong vehicle, even if we make money on a trade.  There is no limit on the human potential to lose money.  Many people could have tomorrow's Wall Street Journal with all of tomorrow's data, and still lose money. 

If you think that is an exaggerated myth, then you haven't let a profit run into a loss by selling too early or too late.  There are millions of ways to do something wrong and only a few ways to do something correctly.

As the Group says, "No plan, no profit."  There are no shortcuts.  None.
In the markets, in any business, you have to choose whether to be a winner or a loser. 

The difference between what is required to be a winner and what is required to be a loser is vast.  It takes longer to learn to become a consistent market winner than it does to become a doctor; and, just as much work.  Anybody can easily find ways to lose money.

If you are unwilling to invest the time and education in yourself to learn how to invest or trade, then send your risk capital to a favorite charity, or go to a casino and bet it all on one spin of the roulette wheel.

This is the only guarantee in any securities market:  "You will lose money."  How much and how often depends on you and your commitment level to learning and improving. 

Fewer and smaller losses is directly correlated to how disciplined you are and how much you learn and apply to trading.  Stop learning and you will lose bigger.  Lose bigger and you will stop trading - soon.

What type of person is successful investing in the markets?
In our view, there are two classes of intelligent people investing and trading in the world marketplaces.  The two classes are intelligent smart and intelligent dumb.  Intelligent smart people are confident that they are correct because they know they are smart.  They are the 80% of market participants that we measure in our Daily Sentiment Index.  They are wrong at important market turning points.

Intelligent dumb people find confidence through methodical research and planning because they know that they can't possibly know everything.  They learn continuously from successes and errors. 

The intelligent dumb adapt to new conditions they discover in a market.  They use simple discovery and analysis systems.  They stay dumb and don't become overconfident because of a successful trade.

The allegorical tortoise and hare is played out every day in any market.  Our Group's methods of analysis reflect the dumb tortoises, slogging through data and applying what little we know.  We listen to the market, even when it whispers. 

We make errors but we expect them.  We become uncomfortable when we have many consecutive successful trades.  We know any winning streak will end but we are prepared for it because we know we are fallible.  We plan for errors.  Errors are opportunities to learn and improve.  Successes are encouragement to persist.

We may agree with the intelligent smart people during some phases of the market and its trends.  But we know we will soon depart from their views as a high or low approaches.