Time As A Trading Tool
by Robert Miner
As a rule, most trading methodologies, or "systems," simply approach market activity from a price
perspective. But such an approach is incomplete; such an analysis of market activity is one-dimensional
without the other two dimensions that make the study whole. For this reason, while price is a very
important dimension of market activity, time and pattern can never be ignored. The key to this kind of
analysis and trading plan is to recognize the coincidence of time, price and pattern to indicate change
when the market is in a period with a high probability of change, price is at or near a price objective at
which there is a high probability of support or resistance and the pattern of the market activity indicates
change. Traders have the best opportunity to make a profitable trading decision when all the dimensions
of market activity indicate that change is likely.
Most traders who are well versed in Elliott wave analysis are familiar with price ratio relationships
between swings or waves. Projecting various price ratio relationships as a market unfolds will project
price objectives where a high probability of support or resistance exists; this type of projection also
applies to time relationships.
The typical time analysis that traders and market analysts perform is related to the "traditional" cycle
theory, which proposes that the market unfolds in specific fixed-length cycles. Because these cycles of
fixed-length periodicity are simply averages of past cycles, they represent broad time periods when a high
or low is likely and of limited use to the trader. Price activity can be considerable in a few weeks or
months and especially in today's markets, where the volatility is increasing steadily. To enter and exit a
trade, therefore, a trader must be able to narrow the time period to just a few trading days when the
change of probability is high.