Trader and consultant Cynthia Case (Cynthia Kase) relies on a set of technical indicators, which she independently developed for her trading signals. The case makes decisions solely on these technical indicators and does not rely at all on basic analysis.. She first got acquainted with trading in August. 1983 of the year, when the management of Standard Oil of California – company, where she worked at the time, transferred her to the trading department as part of the management training program. Having a specialty of a chemical technologist, Case brought new perspectives to the practice of trading. "In 1983 two things happened, important and interesting in oil trading, Case says.. –In 1983 year there was a contract for crude oil, and the personal computer has finally made its way into business. I persuaded them to put the computer in the room., where did the trading come from?. For a trader in the early '80s, I was very computer literate., because I had a technical background.".
One of the first lessons, that Case learned about trading, it was, that it's necessary to be alone, if you're going to be a good trader. Can't listen to it, what everyone thinks. I believe, what it takes to stay focused, sleep well, keep calm, and then everything will fall into place. You can't be worried all the time.". Although Case considers himself currently exclusively a technical trader, according to her, “I didn’t start technical trading until 1985 of the year. Technical trading is much more difficult, than it might seem on the surface.".
“This requires a lot of work and does not mean at all, that after reading a book by John Murphy in two days, you can go to auction", Case says, referring to the book by John J.. Murphy (John J. Murphy) «Technical analysis futures markets", often referred to as "the bible for technical traders".
Over time, Case began to develop her technical indicators, which she now offers to her clients. She is currently trading for herself., but also acts as a consultant for about thirty corporate clients. “I am an ordinary technician in that sense., what I use patterns, momentum and trend. But, as opposed to empirical observations, my indicators use statistics". Two of the statistical weapons, developed by Case, known as PeakOscilltor, pulse indicator, which can use cross market comparison, и Dev-Stop, technology of setting stops depending on volatility. April, In the May and June issues of Futures Magazine, she published a series of three articles, where its technical indicators are described in more detail.
Talking about time frames, Case said, what does not do intraday trading, but her average trade lasts three to ten days. “My trading methods rely on exit strategies, not entry points., Case says. – I quickly withdraw profits. I have many more successful trades, but their returns are less.. I partially withdraw profits on danger signals, such as reverse patterns (reversal patterns) and impulse divergence (momentum)».
The case currently provides forecasts only for energy markets, but indicates, that its technical indicators work in all markets. In her personal trading, she prefers "deals with physical, not financial futures, because the latter are too dependent on arbitrary and political factors".
As a piece of advice to new futures traders, she says: “The only way to learn trading is to do it”. Case advises potential traders "to ask yourself the question more often - why? If you only want to make a lot of money, you won't see success".
Regarding the private trader, Case says: “I would not advise anyone to start trading, not having 50 one thousand dollars, that you don't mind throwing away, as well as money set aside, which would be enough for two years of life. Make sure, that money is not a problem for you. If you can not, having worked for two years, don't earn a cent, then trading is not for you. I would advise young people to start working with some broker or trading house. I personally think, that here the chances of success will be higher".
Case ended by saying: "The three most important things are the following: Firstly, You can't listen to other people's advice all the time., Secondly, there is no easy way. The holy grail is not here. Hard work and perseverance make a good trader. AND, finally, third: it should be fun".
Class of indicators by Cynthia Case
Cynthia Case indicators are a fairly common class of indicators. However, in Russia, for some reason, only a few traders know these indicators and use all their capabilities in their work.. Cynthia Case indicators automatically take into account changes in trading activity, related to time, trends and cycles of various lengths, as well as, which is very important, market volatility. Essentially, they reflect Cynthia Case's experience as an institutional energy futures trader.. Such traders do not have the opportunity to diversify their trading activity with a large number of trading instruments and are forced to resort to temporary diversification of their risks..
For early diagnosis
Cynthia Case's class of indicators is especially useful for that group of traders, who practice trading in one specific asset in a selected market segment. This is how most Russian traders work on the FOREX spot market.. One position is opened at the optimal (from a trader's point of view) currency, and this position, usually, not hedged by futures, nor option contracts, not to mention diversification by moving into other market segments (stock, bonds, etc.).
Adhering to the positions of fractal geometry and chaos theory, Cynthia Case in her book [1] suggests using these indicators only in fractally symmetrical markets. To them Case, first of all, relegates commodity markets to deep investment horizons, as well as stock market and the FOREX market on short intraday time intervals. She comes from that, that tick price movement is random and unpredictable. Therefore, the emphasis in his market analysis Case puts not so much on predicting market development, how much on the earliest possible diagnosis of a randomly occurring trend and following it in line with the “trend is friend” principle.
With their indicators, taking into account the non-linear nature of market development, The case successfully complements the capabilities of well-known "classic" technical indicators [2]. A fractally symmetric market is described by the theory of deterministic chaos. In this case, our ability to predict the course of events in the market is significantly limited.. Despite the randomness of price fluctuations, there are repeating combinations in the market, proportions and combinations, what makes it possible to use them in trading. Cynthia traditionally uses three Elder beams to identify a trend., moreover, its main operating range is daily. Market analysis Case begins with a weekly, makes the main conclusions on a daily basis, and he looks for market entry moments on intraday sweeps (usually, 60 minutes or less).
Market research Case carries out with the help of complex analysis, based on the Elliott wave principle and Fibonacci ratios. The complex also includes: two specially constructed oscillators, combined indicator, the most reliable, according to Case, candle combinations, as well as an indicator, automatically indicating the level of placing a stop-loss order. Besides, she uses symbols on charts, which help to understand the driving forces and motivation of the market. Since the price movement in the market, according to Case, due to the Gaussian random walk, then in her work she pays great attention to the analysis of graphs. The analysis is carried out in two ways.
The first is the use of traditional Bar Charts. An example is a screen with three chart scales - Daily Charts, Monitor Charts (based on 5-8 bars/day) и Timing Charts (contain 15-24 bar/day). For example, crude oil futures, NYMEX, traded 325 minutes/day - respectively, Monitor Charts will be built as 41-65 minute bars.
The second option for plotting (on the recommendation of Case) uses ConstantVolumeBars − charts, on which bars are displayed, not based on time, like traditional barcharts, and based on TickVolume. For example, ConstantVolumeBars, containing 55 Ticks, created from bars, each of which contains 55 price fluctuations. Case considers the relationship between TickVolume and Volatility/Risk to be the basis for using just such charts., which is more pronounced on this type of graphs.
Cynthia Case boils down the basics of her market forecasting to the following:
1. When receiving a signal in the direction of the current trend, it is perceived as a signal for a possible entry into the market in the direction of the trend. The first signal against the trend is ignored. If a countertrend signal is confirmed a second time, it is perceived and traded (with a possible entry into the market against the trend).
2. The basis of the analysis is the Elliott wave analysis. Note, but, that there are no hard and fast rules in interpreting these signals.
3. Elliott's current analysis may not be supported by the course of events. Get ready to rethink your strategy, if the market situation has changed radically.
4. Do not rely on someone else's opinion and forecasts. Don't read any basic research, don't watch the news, related to the market you are trading. Strive for the maximum objectivity of your opinion, which only price information can give.
5. Do your market analysis, when it's closed.
Fibonacci analysis
Case uses traditional Fibonacci Retracements & Extensions, supplementing them with their own rules. All price movement scenarios, according to Case, can be reduced to three rules:
• Shorter Than Rule. If the waves 1 And 3 have approximately the same scale, then to calculate the target of the 5th wave, the ratio is used 0.618 to the wave 3.
• Equal to Rule. If the wave 3 noticeably exceeds the length of the wave 1, wool 5 is rarely small - most often it turns out to be equivalent to a wave 3.
• Longer Than Rule. If the wave 3 transcends the wave 1 and does not contain CandleSticks Reversals (cm. above), then the purpose of the wave 5 calculated, based on the ratio 1.618 to the wave 1.
Fibonacci Retrasements are used by Case without any significant additions or changes. The only remark is made about the wave 2, which often has great depth (to 0.75 from the wave 1).
Shouldn't be forgotten, that Case studies are best used as a long-term trend-following tool, not a short-term trading timer.
