ALVENTURES 
Commodity
Futures Trading
MARKET
REACTIVITY SYSTEM
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The
essential tool of this trading system is called the Market Reactivity Indicator.
First presented in Al Gietzen's best-selling book,
Real
Time Futures Trading, and later in Advanced Cycle Trading;
it represented the achievement of his goal to provide a trading technique
superior to others that were available. As he put it:
"Almost all of the previous
technical work I found in my research was based on a very narrow measure
of market behavior; price only. I set out to develop a system of
my own which used a broader measure of market behavior and had a basis
in some inherent behavior characteristic of each market . . ., and it had
to provide timing of trades superior to other methods"
This INNOVATIVEwork
grew from the study of cycles in the price behavior of the markets, and
from the realization that market price behavior can be approximated by
a combination of simple cycles of differing periods and amplitudes acting
more or less independently of one another. This is not a new concept;
it has been widely studied. The new idea is the manner in which this
premise is shown to apply; and, most importantly, the indicators that were
developed to track and exploit the cyclical nature.
Al Gietzen drew on the knowledge
that the wave equation describing the motion of waves on the surface of
water is mathematically linear; meaning that its many different solutions
for a combination of waves of different lengths and amplitudes can be added
together to get a new solution to the wave equation. Similarly, the behavior
of a market price over time can be described as a summation of cycle solutions
for different wavelengths added to an underlying average value.
But we don't need to be
concerned with the technical complexities. Al has done that for us.
Some may even argue that seeing cycles in the market behavior is akin to
seeing elephants in the clouds; if you look for them, you'll find them.
It is not important whether the markets have some fundamental reason for
behaving cyclically or not. It is only important that by describing
the markets in this way, we can construct a methodology that produces consistent
profits.
"You
are to be commended for the development of the Market Reactivity System.
It is truly remarkable in its accuracy."
Michael Wethington, Trader
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