Dynamic Trader Software Example - Time Rhythm Zones - Page 1

Dynamic Trader's Time Rhythm Zones

Time Rhythm Zone (TRZ) projections are one of the many features that are
unique and exclusive to the Dynamic Trader software program. The TRZ routine
projects a zone of time with a high probability of completing any degree of trend
from long-term to very short-term. The user should first project the TRZ for the
larger degree swings followed by projections from the smaller degree swings. The
highest probability time zones to anticipate trend change are when the short-term
projections overlap with the longer-term projections.
For projecting the time zone with a high probability of making a top, the Time
Rhythm Zone compares all previous high-to-high cycles and low-to-high cycles
of similar degree and instantly calculates the overlap period. The TRZ overlap
period defines a time zone with an 80% probability of completing the trend. An
80% TRZ means there is a 90% probability of the trend reaching the minimum
target date and a 90% probability the trend will be complete by the maximum
target date. The time between the minimum and maximum target date is the 80%
TRZ.
A Timely Example For Bonds
The bond example below is timely. This example was completed on Jan. 8 and
will show there is a high probability of completing a minor to intermediate-term
high by Jan. 9. While no time projection routine is 100% accurate, you will see
that there is a 90% probability of at least a minor high by Jan. 9.
The first step is to project the intermediate degree TRZ. The chart below is T-
bonds. The intermediate degree swings typically lasted 3-7 months. The TRZ for
a high is projected from the most recent intermediate-term low on Aug. 26, 1997.
The broad period of Nov. 14-Feb. 10 is projected for the next intermediate term
high.
While this period is too broad a time to take a specific trading position, it does
provide us with the minimum and maximum dates from when to expect the bull
trend from the Aug. 26 low to complete. Once the July 31 high was exceeded, we
should not expect the bull trend to complete prior to Nov. 14 and should
anticipate it to last no longer than Feb. 14. Examine the chart below.

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The chart above includes two swing files generated by Dynamic Trader that
overlay the daily data. The thick gray lines are the Reference Swings. They
represent the larger degree bull and bear cycles. The thin blue and red lines
represent the intermediate degree swings which were typically 3-7 months in
length.
Time Rhythm Zone Detail Table
A click on the TRZ on the chart brings up the Time Rhythm Zone Detail Table.
The table shows the low-to-high swings were projected from the most recent low
on Aug. 26 and the high-to-high swings were projected from the most recent high
on July 31. The time overlap of these two projections falls in the period of Nov.
14 to Feb. 10. There is a 90% probability that the next intermediate term high will
not complete prior to Nov. 14 and a 90% probability that it will not extend beyond
Feb. 10.

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An intermediate-term high made in the Nov. 14-Feb. 10 period should be

followed by a decline greater in time and price than any since the Aug. 26 low.
While this TRZ provides us with a high probability period of time to anticipate
the next intermediate-term high, we must now use smaller degree swings to
narrow this period down to a time zone that will be useful for making a trading
decision.
The Smaller Degree TRZs Project The Trading Cycle Trend Reversals
From the Aug. low, bonds continued to rally into the intermediate TRZ beginning
Nov. 14 as anticipated. It is now early Jan. What specific dates between now and
Feb. 10 can we anticipate this bull trend to make a top? The chart below is the
daily bond chart with a shorter-term swing file of swings that generally lasted 3-6
weeks. The Time Rhythm Zone projection from the Dec. 5 low projects that a top
should be complete in the Dec. 29-Jan. 15 period. Examine the chart below.

We have now narrowed the three-month period into a little over a two-week
period. This is still too broad of a period to help us make a trading decision. We
do now know that a top followed by a decline greater in time and price than any
since the Dec. 5 low should be complete by Jan. 15. We now want to see what
smaller periods of time within the Dec. 29-Jan. 15 period have the highest
probability of completing the top. Let's reduce the degree of swings one more

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time to see if there is a smaller period of just a few days within the Dec. 29-Jan.
15 period when a high should be made.
Use Intraday Data To Project The Short-Term Cycles
The chart below is March bonds with 5 Bars Per Day of data. Five bars per day
for the bond market are 40 minute bars. I always prefer to divide a trading day up
into even bars. Most of the Dynamic Trader routines and reports are designed for
intraday data as well as daily, weekly and monthly data.
The most recent minor low was made at 11:00 (EST) on Dec. 30. The Time
Rhythm Zone projection shown on the chart below projects the next minor top to
be made between Jan. 5-9. As of the afternoon of Jan. 8 when this article is being
written, bonds have made a new high today. This short-term projection suggests at
least a minor high should be complete by tomorrow, Jan. 9.

Let's reduce the swing degree one more time. The chart below is March bonds
with 10 Bars Per Day (20 minutes). Since the Dec. 5 low (not shown), all of the
very minor high-to-high cycles have been made within the fairly narrow range of
19-25 bars. If this rhythm continues, the next very minor cycle high should be
complete between mid-day on Jan. 8 and mid-day on Jan. 9. We are right in that
time zone now (afternoon of Jan. 8). At least a very-minor high should be
complete by tomorrow Jan. 9. This very short-term cycle high projection falls at

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the tail end of the Jan. 5-9 projection for a slightly larger degree top shown on the
previous chart.
Dynamic Trader includes a notepad routine where any comments or notes
may be kept with each chart. The notes kept with the chart below remind the
trader of the larger degree TRZs that are current for the bond market.

Time Rhythm Zone Analysis Is Easier Than You Think

Let's review exactly what the timing information these four degrees of Time
Rhythm Zone projections have provided us.
1. The intermediate-degree swings (3-7 months) project the next intermediate
term top should be complete in the broad period of Nov. 14-Feb. 10. The top
made in this period should be followed by a bear trend greater in time and
price than any since the Aug. low. Within this broad period, several lesser
degree highs and lows will be made. The first objective is to identify the
lesser degree projections from where a trading position may be taken.
2. The next lower degree TRZ projection points to a high in the Dec. 29-Jan. 15
period. From this period, a top is probable that should be followed by a
decline of 1-3 weeks or longer. A top in the Dec. 29-Jan. 15 period coincide
with the larger degree top projected from the Aug. low. The objective now is
to identify the narrow periods of time of a few days or a few hours from

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where to take a short position with minimum risk in the event the larger
degree top is also complete.
3. The smaller degree swings shown on the 5 Bars Per Day chart identify Jan.
5-9 as the high probability period for a high. Now we are reducing the time
zone to a period from where a trading decision may be made.
4. The very minor swings shown on the 10 Bars Per Day chart provide us with
less than a two day TRZ from where we can make the trading decision for a
short position with very little risk. The potential exists that this less than two
trading day period which overlaps three larger degrees of TRZ projections
may also be the period of the final top of the bull trend from the Aug. low.
This is why I always recommend trading at least two units. One to take
advantage of the short term cycles and the second to take advantage if the
intermediate term cycle also kicks in. If this anticipated short-term top is
exceeded, we will continue to use the TRZ projections from the short-term
cycles to project the next high probability short-term top prior to Feb. 15.
5. While the above example may seem like a lot of time analysis work, consider
that the intermediate TRZ projections shown on the first chart only have to be
made once every few months. The smaller degree projection shown on the
second chart, only have to be made every few weeks. These TRZ periods
may be entered on the notes routine and attached to the trading chart in
Dynamic Trader for easy referral. Dynamic Trader updates each swing file
every time the file is loaded. An updated TRZ projection is only two clicks
away. The smaller degree TRZ projections shown on the intraday charts are
quickly updated every few days and the trader is prepared each day for the
high probability TRZ projections for the minor highs and lows.

Do Not Trade Without Updated Time Rhythm Zone Projections Of At Least

Two Degrees
Time Rhythm Zone projections are a simple yet very powerful time analysis
approach. They are just one of several unique time analysis routines found only in
the Dynamic Trader software. The Trading Course that is included with each
software program describes the background and implementation of Time Rhythm
Zone projections in detail. More detail is also found in my new book, Dynamic
Trading.
The Dynamic Time Projection routine will also help the trader pinpoint the
exact time targets within the Time Rhythm Zones when the trend change has the
highest probability of being made. The combination of Time Rhythm Zone and
Dynamic Time Projections is the most powerful time analysis found in any
software program. How would you like to quickly and easily be able to project the
high probability time periods for tops and bottoms with 1-3 day time zones? You
will do just this easily and consistently with Version 2 of Dynamic Trader.

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