THE ML-MLH STUDY OF FLUCTUATIONS APPLIED TO RECENT TEMPERATURE FLUCTUATIONS IN FLORIDA: 1966 TO 1977
On a long distance call today from a Course Member he enthused on his profits from Bellies by use of the ML Method.
To show that this is a law of nature whenever there are fluctuations you see on the right a chart of high and low temperatures here in Miami during the past three months that corresponds to the high and low daily price ranges on our futures or stock chart.
One of the benefits of using this method is that it shows us the mathematical probability of going beyond previous P[ivot]s.
For example when you draw 1ML2-3 you see that the extension of that line passes well below the lower 4 which came on Dec.30th. If this was a price chart we’d surmise that prices were too strong to drop to that ML and that therefore the probability is that the P at 5 would be higher that at 3. That is precisely what happened to the temperature, on the daily low scale line. Similarly the fact that upper 5 was not higher than 3 indicated weakness there and the probability that 6 would be lower than 4 as actually was the case. Where this is a price chart such information adds to your profit.
Again when you draw 5ML6-7 you see that its extension is below 8 and that the probability therefore is that 9 will be higher than 7.
When you draw upper 8ML9-10 and you see that a big drop is indicated because the fluctuation failed to reach that ML.
But now draw the lower 8ML9-10 and see that the [missing] 11 is well beyond the Upper MLH. Empirically it has been observed that this apparent excessive show of strength almost invariably signals a major reversal of trend, the big drop that followed in this case. Check this on past reversals on your various price charts and note how often this is a valuable signal for future profits.
In order to learn how to make several hundred percent yearly rate by this method, practice paper trading by taking any old chart of Cattle, Hogs, Bellies, Beans, etc., and draw in the first ML you see on that chart, and the MLH line that prices are the most liable to cross. If the trend is down, enter your buy order at a price where it might close above that MLH. Or if the trend is up and your MLH is therefore sloping up, you have your order in as soon as a close is below that MLH. Enter the price at which your order would be filled so that as soon as you reverse your position by this same procedure, you’ll note the price and be able to figure the profit on this and likewise on al similar transactions. This will give you confidence in this method when you see the hundreds of percent you will be making when you do real trading. You’ll find there will be some whip-saw losses but with practice with your Course methods of eliminating these, they’ll be so small that your profits can absorb them easily.
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