MESA and Trading Market Cycles: Forecasting and Trading Strategies from the Creator of MESA, 2nd Edition [Hardcover]

John F. Ehlers (Author)

Book Description

ISBN-10: 0471151963 | ISBN-13: 978-0471151968 | Publication Date: January 4, 2002 | Edition: 2

Makes one of the most popular tools of market analysis available to a wider audience of traders and technical analysts
Pioneered by John Ehlers in the late 1970s, the MESA method of price pattern analysis uses powerful wave theory analysis techniques, originally developed for the field of electrical engineering, to measure market cycles. MESA systems are currently used by technical analysts the world over. Top brokerages lease them and supply their clients with MESA signals and charts. And MESA systems consistently have been rated #1 by Futures Truth, the consumer reports organization of the futures industry. In this highly anticipated Second Edition of his classic work, Ehlers updates his MESA theories and makes them more accessible to a wider trading audience. Completely revised, featuring five new chapters, this new edition incorporates Ehlers's digital signal processing research into MESA. It also includes EasyLanguage programming code that makes it extremely easy for traders to take the leap from theory to practice.

Editorial Reviews

From the Publisher

Written by the creator of MESA, a popular, proven and successful computerized trading system. Establishes a philosophical foundation for the existence of cycles in the market, detailing their basic characteristics. Traditional moving averages, indicators and momentum functions are examined from the cyclic perspective in order to confirm effects in the dynamic marketplace. All of the principles are combined in examples to illustrate how trading strategies can be altered to improve probability of establishing successful trades. --This text refers to an out of print or unavailable edition of this title.

From the Inside Flap

Cycles appear everywhere in life, from the world of nature to the world of economics. Market cycles-one of the few measurable market parameters-come and go, but when measured with a fast-reacting algorithm such as Maximum Entropy Spectrum Analysis (MESA), previously unforeseen trading opportunities suddenly become apparent.

In MESA and Trading Market Cycles, Second Edition, MESA pioneer John F. Ehlers returns to reveal more of the inner workings and hidden mechanisms of MESA-the author's well-known and highly respected computerized trading system-and provides both traders and professional speculators with definitive information on using cyclical analysis to create and execute highly profitable forecasting and trading strategies.

This revised and completely updated resource first validates the existence of market cycles by reviewing the history of cycles and the advances in techniques to measure them. It then profiles the basic characteristics of cycles and fully describes moving averages, momentum functions, and indicators from the cyclical perspective. From here, Ehlers focuses on MESA, explaining how it works, how it compares to the Fast Fourier Transformation (FFT), and how traders can use its high-resolution spectral estimates to consistently pinpoint and exploit market cycles and trends.

MESA and Trading Market Cycles, Second Edition also contains new chapters which provide information that makes MESA a much more powerful tool. Topics within these chapters include:
* The Sinewave Indicator
* The Instantaneous Trendline
* Trading Trend Mode and Cycle Mode
* Making standard indicators adaptive:Commodity Channel Indicator (CCI), Relative Strength Indicator (RSI), and Stochastic Indicator
* Developing highly effective automatic trading systems using MESA-measured cycles
* Stock market systems, along with computer code (EasyLanguage) to implement them

Combining MESA, cycles, and technical analysis, this vital guide shows you-whether you're trading in the stock, options, or futures markets-how to boost the probability of establishing successful trades and profitably increase your bottom line. MESA and Trading Market Cycles introduces you to a new way of thinking that will not only lead to highly effective new indicators, but will also provide you with insights into market activity that you would never have imagined.

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: Wiley; 2 edition (January 4, 2002)
• Language: English
• ISBN-10: 0471151963
• ISBN-13: 978-0471151968
• Product Dimensions: 6.3 x 0.8 x 9.4 inches
• Shipping Weight: 14.6 ounces (View shipping rates and policies)
• Average Customer Review: 3.0 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #274,777 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

42 of 47 people found the following review helpful:

1.0 out of 5 stars A Theorist with communication skills problems, December 20, 2002

By A Customer

This review is from: MESA and Trading Market Cycles: Forecasting and Trading Strategies from the Creator of MESA, 2nd Edition (Hardcover)

This book is just plain horrible. I am a trader and a cyclical investor. I am also an engineer with Engineering Mechanics background, and very familiar with the complex math explained by Ehlers. But let me tell you, for people without any background in math this book is an absolute waste of time.

The most important thing that Ehlers should have focused, he simply forgot or ignored. The book fails to show real life examples with buy-sell signals using the indicator. It goes on and on along the theoretical lines of cycle analysis and it stays at that throughout the book.

It would have been much more entertaining to explain the indicator and show real life examples. But from my experience as a researcher and writer of research articles, people from this field tend to embelish and emphasize the theoretical size while completely ignoring the pure and simple aspects.

A simple cycle analysis done with moving average detrending as explained by Pring is much easier. Also, a simple look at the charts and the drawing of a simple cycle lines is all that it takes to show you the turning points.

23 of 28 people found the following review helpful:

5.0 out of 5 stars Important Update of a Gem of a Book, March 28, 2002

By 

Jim Geiger (Rochester Hills, MI USA) - See all my reviews

This review is from: MESA and Trading Market Cycles: Forecasting and Trading Strategies from the Creator of MESA, 2nd Edition (Hardcover)

The broad trading public has been slow to recognize John Ehlers work to apply cycles methodologies (from the sciences) to trading markets .... which is good for those of use who have discovered Ehlers' work with MESA (Maximum Entropy Spectral Analysis).

The first edition of this book is still the clearest and most concise discussion of applying cycles theory to markets I've ever read. This new edition retains all of the content of the first edition, but updates it with a lot of new and additional information from Ehlers' recent research into cycles and his development of trading indicators and tools.

Many are familiar with the J.M. Hurst classic: "The Profit Magic of Stock Transaction Timing". Ehlers goes far beyond Hurst's pioneering work. Ehlers is an original thinker, applying new techniques and research using MESA to the market. Hurst was using a multi-million dollar mainframe in the 60's .... all of us have 10,000X more computer power sitting on our desktops than Hurst had .... Ehlers techniques can help the serious trader and investor turn all that "horsepower" loose on the market today, making it accessible to even us small traders.

Hurst was also constrained to using Fourier Analysis for cycles detection .... Ehlers' MESA overcomes the need of Fourier for long data spans to compute cyclic content.

If you're serious about the markets, this book needs to be part of your library .... along with Ehlers other book: "Rocket Science For Traders"

7 of 8 people found the following review helpful:

5.0 out of 5 stars Very Good Book, May 7, 2006

By 

John W. Kercheval, III "Professor Kercheval" (Georgetown, Washington, DC) - See all my reviews
(REAL NAME)   

This review is from: MESA and Trading Market Cycles: Forecasting and Trading Strategies from the Creator of MESA, 2nd Edition (Hardcover)

I was a disciple of John Ehlers' in the early 1990s when I bought
the MESA3 and Epoch analysis programs (both for DOS) and my trading abilities improved greatly. I use those two programs to this day with superlative results.

I cannot give a similarly positive review to his newer software offerings as I have not examined them personally and information provided to be by users who have indicated that their results were less than satisfactory.

Ehlers' books are, in a large sense, amplifications of the instruction manuals of these progams and set forth the basis on which to study trading according to his ideas and theories.

This book is an excellent read for both the casual and professional trader regardless of whether or not one actually uses his software. Ehlers is highly intelligent, extremely experienced, and the practical application of his theories is adequately explained herein.

This work ranks as yet another significant contribution to the arena of securities trading by the author.

Professor John W. Kercheval, III
Georgetown
Washington, DC