The FLD Revisited
We can use a simple low pass filter to improve trading signals from the humble FLD, find out how in this article.
Improving a Classic
One of the most useful tools in any toolkit for a Hurst Cycles devotee is the humble FLD. The simplicity combined with the powerful insight it can offer are extremely useful once a full phasing analysis has been performed and wavelengths derived.
The trading signals it can produce are good, robust and various strategies around crosses are available of course. However, the nature of market motion is composed of periodic components and totally random components. This random noise tends to increase as we move to lower timeframes and in our experience is highest at timeframes of less than 1 hour per bar. This makes sense as volume per bar is relatively lower and there is more chance (especially in an illiquid or overnight market) of rogue participants pushing price outside the range of what we expect the smoother, robust and periodic components to produce. This random nature of markets is something we accept as Hurst Cycles traders and is detailed by JM Hurst himself in…