Hi Rares

Before proceeding, I suggest editing your cats.ini file which says:

20120712.16,20121113.22,0.01

100

so that the end date is in the future a bit, say the end of the year 20121231.23 because otherwise we cannot make forecasts.

Generally I load the speclog.csv file into a spreadsheet and sort on the 5th column so that the most significant cycles (lowest Bartels) come to the top. You can ignore the first two lines as they refer to less than two cycles and therefore have 0 set because no Bartels exists.

There are a large number of cycles found, and many are less than p<0.05, but many of these will be spurious cycles. I would start with the ones with p<0.01 or p<0.02, but perhaps leave out the 2.11572 period because very near to period 2 is in danger of being aliases. See http://en.wikipedia.org/wiki/Aliasing for info about that. Generally avoid periods less than 2.5 and be wary of less than 3. As an option you might also include some longer periods with p<0.05 or so. These are just rough guides. You don't want too many cycles to start with. They have to earn their keep. But leave that aside for now ...

For the purposes of demonstrating how to make a projection using cycles analysis, let us just 4 of the longer cycles with periods 305.63522, 272.4201, 130.31892, 124.08486 and remember these periods are in units of the time step of 1 hour.

clear the stack and put pairs of sine/cosine waves with these periods on the stack...

Z 305.64 Usc 272.42 Usc 130.32 Usc 124.085 Usc

Note that Usc is a macro that will make two stack entries with period of the number loaded immediately prior, one a sine and one a cosine. We now have 8 entries on the stack which can be checked by doing ?

Next, load your data series and do a regression equation from the 8 waves

F60 R8

and you will get some statistics listed on the screen. It will also replace the original series by the equation for making estimates from the sines and cosine waves. You can use that equation on the 8 waves to make estimates, which will continue into the future:

M8

Now we want to see the original series and the estimates, but realize that we are only estimating some medium frequency part and not the overall movement of the prices. (The trading is really with the fast cycles like 9.90635, 5.13169, 9.74359, 17.25275 hours. But this is to demonstrate what happens.)

F60 g2

this shows the estimates in red and the original series in black. Quite clearly it doesn't follow the trend on the graph. But many of the peaks and troughs (not all by any means) do correspond. You have a projection also to the date that you set in the cats.ini file.

Note that the 4 cycles used are interacting and sometimes making wider swings and sometimes cancelling each other out. Obviously if you want to trade these cycles, then you would be best to use the parts where the swings are wider.

This is just a first primer. Try it out and understand what CATS is doing at each step. Try it with more and with less cycles. Include some of the longer ones and some of the shorter ones. If you want to see what is happening with the shorter ones, you will need to view just a part of the data. CATS is not fancy software when it comes to this. See the D command.

A note about trading. It is a risky business and I do not recommend it to anyone. If you must do it, do paper trading for some time first to see if your method is any good. Then only use funds that you can afford to lose. And don't cry when you go down, don't lose your cool, but if you have a good system it will go up 55% or 60% of the time. Never 100%.

Have fun

Ray