In plain terms — Oscillations of different durations act on the same chart. The trading cycle is the one you select as the horizon of the plan; tools and decisions are calibrated to it.
The trading cycle is the cyclic component adopted as the operating unit for analysing entries, management and exits in a specific programme.
It is not a universal number and is not automatically the dominant cycle:
| Term | Question |
|---|---|
| Trading cycle | Which component have I chosen to trade? |
| Dominant cycle | Which component dominates a measurement or observed span? |
| Nominal cycle | Which label in the scale am I using as a reference? |
| Current wavelength | What duration am I estimating in the current sample? |
A dominant component may be unsuitable for the desired horizon, costs or frequency; conversely, a component selected for trading may not have the greatest magnitude at every point in time.
What it determines
Once the trading cycle has been stated, the historical method calibrates the following to it:
- the duration of the reference envelope;
- the spans of half-span and full-span averages;
- the shorter components used for timing;
- the horizon of observations and targets;
- the expected trade frequency.
The selection does not eliminate variation. If wavelength or magnitude changes, tools built on the previous value may deteriorate.
Criteria to report
An entry or analysis that uses “trading cycle” should specify:
- market, timeframe and time unit;
- nominal and measured wavelength;
- identification method;
- number of samples;
- operating reason for the selection;
- conditions that require recalibration or suspension.
Language error — Writing “trading cycle = dominant cycle” erases a methodological decision. If a post-Hurst source uses “dominant” in a different way, the definition must be attributed to that source.
Historical example
In the 1968 Screw and Bolt case, Hurst builds the plan around a component of approximately 18 weeks. The example documents a selection made for that issue and period; it does not turn 18 weeks into the mandatory trading cycle for other markets.
Sources
- J. M. Hurst, The Profit Magic of Stock Transaction Timing, Prentice-Hall, 1970, Chs. 4, 7 and 8.
- David Hickson, “Trading with J. M. Hurst”, post-Hurst white paper, Sentient Trader.