The creator of this theory JM Hurst claimed a 90% success rate trading on the basis of his theory, and yet the theory has remained largely undiscovered and often misunderstood. This Market Cycle theory describes the movement of the financial markets like the combination of an endless number of cycles with an allowance for some randomness and fundamental interaction like major news events.
Hurst Cyclic Theory
Hurst defined eight principles which like the axioms of a mathematical theory provide the definition of his cyclic theory. The eight Principles of Hurst’s Cyclic Theory are as follows.
- The Principle of Commonality – All symbol price movements have many components in common which have similar classes of tradable instruments that have common price movements.
- The Principle of Cyclicality – Price movements consist of a combination of specific waves and therefore exhibit cyclic characteristics.
- The Principle of Summation – Price waves which combine to produce the price movement do so by a process of simple addition.
- The Principle of Harmonicity – The wavelengths of neighbouring waves in the collection of cycles contributing to price movement are related by a small integer value.
- The Principle of Synchronicity – Waves in price movement are phased so as to cause simultaneous troughs wherever possible
- The Principle of Proportionality – Waves in price movement have an amplitude that is proportional to their wavelength.
- The Principle of Nominality – A specific, nominal collection of harmonically related waves is common to all price movements.
- The Principle of Variation – The previous four principles represent strong tendencies, from which variation is to be expected.
Wave analysis is a skill that is learned and perfected, much like learning to play a musical instrument.
The settings for this indicator are as follows:
- Days Cycle - How many days back are used for the cycle calculation, if you are using a low timeframe and a high days cycle value then no results will show, it is best to use a 54-day cycle for an hourly chart and a 1-day cycle for a 1-minute chart.
- Wave Amplitude - this is the amplitude of the wave as shown in the diagram above.
- WaveLength - this is the length of the wave as shown in the diagram above.
How to Trade using the Hurst Cycle Indicator
We have included two PDF documents with the download to help you understand and trade with Hurst cycles.
- Hurst White Paper.pdf
- Core Concepts of Hurst Cycles.pdf
How To Install The Indicator
First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install onto the platform.
* Manual trading only - source code not available.