DIY: The “Rule of the 4” to Trade the Hurst Cycles.

The dream of every Hurst Cycles Trader is to Buy the minimum and Sell the maximum of the Cycle: The Holy Grail of the Cycles Trading.

For many years I have been studying, researching, programming and backtesting any kind of indicator, setup and trading strategy until I came to the conclusion that:
The Holy Grail of the Hurst Cycles doesn’t exist.

But there is a Good News!
You don’t need to buy the bottoms and sell the tops in order to make money with the Hurst Cycles, you just need to trade the Sub-Cycles.

You can do it by applying the “Rule of the 4” which says:

“Every cycle is composed by 4 Sub-cycles of similar duration and amplitude”

Let’s analyse it.

The 4 Sub-Cycles of a Standard Hurst Cycle

You just read that “Every cycle is composed by 4 Sub-cycles of similar duration and amplitude”, here a visual representation of this rule:

You can’t buy the bottom and sell the top of the main Hurst Cycles but you can try to:
Buy and Sell the Sub-Cycles in the direction of the upper cycle.

HOW?

  1. Identify one Hurst Cycles with our Hurst Cycles Method (Don’t know it yet? Download it here!)
  2. Take the duration of this Hurst Cycle and divide it by 4. (Example: 192/4 = 48 periods)
    This is the average duration of the Sub-Cycles.
  3. Identify the Sub-Cycles with the same Hurst Cycles Method as in the point 1.
  4. Buy the Bottoms of the Sub-Cycles when the main Hurst Cycle is bullish.
    Sell the Tops of the Sub-Cycles when the main Hurst Cycle is bearish.

Here an example on the GBP/NZD H1 Chart.

In the screenshot above I’m using the Premium Cyclical Indicator to identify the Hurst Cycles.

Conditions:
The Black Line represents the main Hurst Cycle:
When the line is on -1, the cycle is bearish.
When the line is on +1, the cycle is bullish.

Entry Signals:
The Blue line represents the Sub-Cycles:
When the line turns to -1 and the main Cycle is on -1, it’s a sell signal.
When the line turns to +1 and the main Cycle is on +1, it’s a buy signal.

The inputs are:
Main Hurst Cycles 192 periods. (Black Line)
Sub-Cycles 48 periods: 192 / 4 = 48 periods. (Blue line).

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