Cyclical analysis is the key to maximum returns. It is the process of analyzing market cycles to determine the best time to buy, sell, or trade stock shares. Investors and advisors who utilize this form of analysis can take advantage of the different parts of the market cycle to gain profit. Through statistical analysis, those in the financial industry can forecast the future by watching specific events at many regular intervals. By understanding the four cycles of the market, moves can be made to reduce risks and maximize returns.
Phases of Cyclical Analysis
Cyclical analysis can be broken down into four phases. Each phase is important when it comes to your investments. The four phases are:
- The Accumulation Phase- This phase begins after the market has bottomed out and when only the early investors, experienced traders, and corporate insiders begin to buy again. This is a good time to buy because prices have flattened, and investors will get prices at very values. The market begins to switch from a negative sentiment.
- The Mark-Up Phase- This phase occurs when the market has been stable for some time and is starting to move upwards. More and more people buy at this point. The market values grow substantially. Experienced investors unload their shares, which are at record high prices.
- The Distribution Phase- Sellers dominate this phase and prices stay locked for some time. At the end of this phase, the market changes direction and begins to shift downwards. Those who haven’t sold will break even at this point.
- The Mark-Down Phase- For those who still hold shares, this is the worst phase. Market values continue to dip and share holders who have held on begin to lose money on their investment very quickly. As prices dip significantly, early investors start to get ready to buy and the cycle begins again.
Your financial advisor has years of experience predicting and timing the market to invest your money successfully.
How to Use Cyclical Analysis as a Successful Trading Strategy
When you find a financial analyst, who is skilled in cyclical analysis, they can improve your bottom line. Cycles are one of the best indicators for good timing with buying, selling, holding, and sharing. Your financial consultant can help keep you ahead of the curve to open the door to opportunities for profit and stop the risk and losses.
At O’Connor Portfolio Management, we have years of experience in market cycles. We use cyclical analysis as a risk management tool, to help you maximize your returns, and achieve your financial goals.