Passing The Torch: Unleashing Cycle-Based Trading Through Teaching The Next Generation of Traders
It has been a while since I have written a blog post. Time to catch up and give some updates on the Big Kahuna Trading Club. About a year and a half ago in the process of completing some new course material before I planned to push hard on a club launch, I had the fleeting thought that I needed to be ‘All In’ in launching the club and drop all other distractions.
I brushed it off thinking I could do it all. I have since gone down that track for the past year or more thinking I could split time and everything would work fine.
That may have been the case a few decades ago when I had a little more than the attention span of a gnat (aging will do that to you).
Meanwhile after examining my schedule for the past few weeks and seeing that my biggest distraction continues to be on my own trading, I have begun rethinking that premise. Trade monitoring, stock fishing, etc. often caused my ‘balanced’ schedule to slip well into the afternoon before I found time to do some of the daily videos, blogging, etc., necessary to get this new style of trading out there.
With the usual distractions of life on the Homefront, very little actual blogging, etc., ended up happening throughout the week and thus the delays in this project continued to occur. Last week I was listening to a podcast and the podcast mentioned that if you want success in any area, you need a ‘singular focus’ towards that goal.
I certainly agreed with that having had great results in the past with a ‘singular focus.’ And I also knew that I had to stop splitting time (for at least a little while until things really got cranking).
I knew that I had to shift my focus substantially because the clock was ticking on getting this out there. My health, age and willingness to work eighteen hours days is quickly waning as I am getting closer to retirement. I realized that with the right focus that maybe I could find and train someone on a high-level who can step into my shoes for the club duties during the day, while I do what I do best: finding great cycle-based trades and training others how to do it too.
This has been pretty important to me for years, actually going on through a few decades of trading system development and several additional years in course and website development.
Because I have an almost OCD level of attention (and perfection) to things I enjoy doing (other things housecleaning, house projects, not so much-just ask my wife) the project dragged on for years and years.
One of the casualties of that prolonged work period was a business associate who spent the better part of two years very much involved in the development of the website, copy and marketing presence. His name was Dave Martin and after spending a few frustrating years getting myself and another team member to speed things up he left and in doing so took his website work down which resulted in another year delay.
Fortunately, when I saw the writing on the wall, I managed to back up the website and although the work was not completely lost it took months to reconstruct it on a different platform. There were some pretty hurt feelings on both sides for a few years after that, but myself and my other team member managed to patch things up with him late last year. A few months later we found out through the grapevine that Dave had committed suicide. We actually did not find out about it until a few months after it happened.
Dave Martin Feb 18, 1963-October 3, 2024
Needless to say, we were devastated. We knew that he had been going through a lot especially since his mother, who he had been taking care of, had passed away. There is a part of me and my team member that can’t help but think that had we been quicker about finishing the website and training sooner, Dave’s path would have shifted, and he would still be here with us and helping us put together training seminars on the beaches of Hawaii 😭
Now, this next statement is going to come across as egotistical and if I were to read someone else who wrote it, I would feel the same. But as a trader who has decades in the trenches, I can and will say this without ego: “This new form of cycle analysis has the potential to transform the way a vast legion of trader’s trade IF more traders were aware of it. Just like Gann, Elliot Waves, Fibonacci, and even VWAP have done which are used by traders worldwide daily.
On my twitter (X) feed my tagline is: Author of 'The Surfer’s Guide to Stock Investing.' Ditch your Fibs, Gann, and Elliott Waves, cycle-adaptive trend lines RULE! And for good reasons. As a trader who has spent years testing and using every trade indicator imaginable, the one that I use the most on a daily basis is TSS Cycles.
Obviously, the clock is ticking...I am not getting any younger and I would like more than just a small handful of traders versed in these cycles to trade with them. This is why I feel the strong urge to find others who are 'stuck' in their trading to come and experience the power of TSS Cycles and maybe someday this new way of trading will be as commonplace as Fibonacci or Elliot Waves, etc.
There is a simple premise with our form of cycle-based trading and that is that once the key cycle line is set, the price channel is often 85-95% complete and within 5-15 bars the price will reverse in the opposite direction.
It looks like this:
This was on SPY intra-day 5’ bars…during a period of extreme volatility due to tariff news.
It works on every time frame: hourly, daily, weekly, monthly although the bar size used will either increase or decrease the number of bars to a turn from the CH-3 set. The correct channel line (CH-3) sets when the 3rd cycle-based trend line is in place.
The problem with using Fibonacci in a vacuum (and I do use it—but wisely, and only at the right time based on my cycles) is that it creates 'dead zones' until the CH-3 cycle sets in. That’s not a huge issue in intraday trading if you're taking a precise entry off a Fibonacci level—you might just have to wait an extra hour for the trade to kick in. But it becomes a much bigger deal on higher time frames (like the daily chart), where a Fibonacci entry might look tight and attractive, but the actual breakout could be months away.
Fibonacci ‘dead zones’ can be expensive in lost opportunity costs (as well as ‘theta’ burn if you are trading options) when that money could have been better employed in other trades until the trade kicked in.
It looks like this on Antero Resources (AR) in the fall of 2024:
This was a 2-month dead zone and if you were trading options, you would be unnecessarily burning premium. By simply waiting for the key cycle set (TM-3 a 5–7-month cycle) and waiting for a pullback to the channel completion, you would have had a near laser entry with no dead money!
This simple yet powerful strategy is all you need to consistently nail turns. When you know how and where the cycle sets come in, that is when you can drill down using other technical indicators (though not necessary).
Using Fibonacci randomly can annihilate your trading account but when you combine it with this CH-3 strategy, that is where you can capture laser trade entries WITHOUT dead zones-like this on the 15-second time frame:
This laser entry in today’s morning trading session was the result of identifying the higher time frame cycle set 5’ bars:
…And then drilling down between CH-3 & CH-4 using the lower time frame 15-SEC bars for a laser entry. Once you fully understand this cycle-based channel concept it can truly transform your trading AND financial life. More on this CH-1 to CH-4 cycle channel strategy can be found in our next blog post.
Paul Lemal
www.PaulLemal.com
