FLD Trading Strategy (Basic)
In this article we take a look at this useful strategy, created by Sentient Trader developer David Hickson. The technique relies on the predictable and robust nature of price interaction with the FLD.
Strategy Fundamentals
The first aspect to note when examining the strategy outlined here is that it is in no way related to anything Hurst wrote himself in any of his literature (aside from the FLD)! It is instead the result of many years diligent work by David Hickson (creator of the excellent Sentient Trader software) into the nature of the FLD and it’s relation to price action.
The FLD itself is explained in some detail in this article so please give that a read for the very basics of what the FLD actually is. Briefly recalled, it is price projected forward by half the period of the cycle component in question. The FLD is therefore 180 degrees out of phase with the price action of that component. This allows the analyst to gain robust insight into certain periodic components of interest within the instrument. For example, whether a peak or trough is left or right translated, informing the likely directional bias of the underlying trend (sigma-l). The FLDs available to use are based …