The analysis process that Sentient Trader performs is at the core of the software's success at trading the markets. The analysis process is very different to the analysis process of any other cyclic-theory based software that we are aware of and that is because the analysis process that Sentient Trader uses is based on the analysis process presented by JM Hurst in his Cycles Course.
What is so different about this process?
It is this different analysis process that we strongly believe holds the secret to successful analysis and trading on the basis of cyclic theory, and represents the true genius in JM Hurst's work.
There are three stages to the analysis process proposed by JM Hurst in his Cycles Course:
The first stage of the analysis process is a matter of identifying the dominant cycle, and positioning the troughs of this cycle. Hurst defined the dominant cycle as being the longest cycle represented a channel plotted on the charts that were provided with the Cycles Course, and so we have had to interpret his intention and define the dominant cycle for ourselves. This is how Sentient Trader defines the dominant cycle:
The dominant cycle is the longest cycle with at least four clearly defined troughs visible in the data.
In the Entry stage of the analysis Sentient Trader will identify the dominant cycle (as one of the cycles in the Nominal Model that it is using for the analysis), and then it will identify all possible troughs of this cycle. Using these possible Sentient Trader starts building cyclic models, which are models representations of all the cycles present in the price movement.
The identification of the troughs of the dominant cycle is a very important part of the phasing analysis process, because the rest of the analysis process relies upon the accurate positioning of these troughs. For this reason it is important to know which cycle Sentient Trader is treating as the dominant cycle, particularly when you wish to influence the analysis that Sentient Trader is performing. This information is available in the Analysis Summary.
The second stage of the analysis process is called extension because the analysis is extended from the dominant cycle down to the shorter cycles. Because of the Principle of Synchronicity the positioning of any troughs that are synchronized with the cycle longer than the cycle being analyzed at the moment are transferred directly to this cycle.
The process of Extension is primarily a matter of resolving the positions of the interstitial troughs (between the troughs which are synchronized with the longer cycle). When the position of a trough cannot be resolved definitively Sentient Trader creates additional cyclic models which represent the alternative trough positions and then moves on to the next cycle.
When resolving the positions of the troughs of a shorter cycle, the positions of the troughs of longer cycles often becomes clearer and so although the general direction of analysis is from longer cycles down to shorter cycles, the analysis process often reverses and longer cycle troughs are resolved as one works.
The final stage of the analysis reverses the direction of the analysis process, and the cyclic model is completed by working from the shortest cycle back up to the longest cycle, and resolving the position of all troughs by means of applying the Principles of Synchronicity and Harmonicity.
Sentient Trader follows the process outlined by Hurst and as described above, but there are a few subtleties and additional steps to the process:
After an analysis has been performed it is possible to view a log of the process by using the menu Tools > View Analysis Log if the Option Build Analysis Log is selected (Tools > Options > Analysis tab > Build Analysis Log).