Economics

We’ll examine trading the financial market cycle – a continuation of the discussion from here. There are four stages to the financial market cycle: The first stage of the stock price cycle is “Indecision”. Stage two is indicated by a rising trend pushed up through greed and market euphoria. Stage three is another period of indecision. Stage four is a period of time where prices fall and the market is gripped with fear and panic. Then the cycle returns to stage 1.

The world operates on a cyclical engine. The earth year is an annual cycle; humans and animals have a lifetime cycle where they are born, procreate, live a little more and die. Similarly, industrialised economies ride the wave of cycles of expansion, peaking, contraction and trough. Economists say that industries within those industrialised economies undertake their own cycle of birth, growth, maturity and decline.