This blog posting was originally posted here as Tutorial #12 for our software Forecasting Made Easy
Let me start this tutorial by explaining the difference between the Master Time Factor and the Advanced Master Time Factor.
W.D. Gann’s forecasting method, the Master Time Factor (MTF) used historical cycles to find which cycle is repeating in todays market. W.D. Gann only used historical cycles that were the same time frame as the market he was looking to forecast. So W.D. Gann studied historical daily charts to forecast the daily chart and historical monthly charts to forecast the monthly chart and so on.
The Advanced Master Time Factor (AMTF) in our software Forecasting Made Easy allows you to mix and match time frames when doing historical research. This means you may want to forecast the daily chart and can overlay historical data that is a 5 minute chart, 60 minute chart or a monthly chart. You can mix and match historical data in any time frame combination allowing you to do research that no other software allows. Now lets look at the chart below.
The chart below is one of the teaching charts I created back in February to show what Forecasting Made Easy can do. The orange bars are the daily chart for Microsoft MSFT. This is the primary data set that we want to forecast. With Forecasting Made Easy you can overlay almost any time frame combination onto this daily chart. What I did was overlay 9 historical data sets on this chart. These were 60 minute data, covering one month each. This means that 9 historical data sets of 60 minute data covering one month were laid on top the daily chart for MSFT. I then proceeded to look for a best fit pattern match. The picture below shows the daily Microsoft chart with the two 60 minute price lines that represent the best fit.
I am always asked for advice on how to pick the best fit line. The answer is that you want to see the historical data form several turning points that line up with the data you want to forecast. In the picture below, I have added the labels A, B, C, D, E, F and G which mark tops and bottoms in the daily MSFT chart and the blue line which is the 60 minute data for the month November 2011. This blue line is the best fit line. When I make a forecast, I never use just one line. I always use two or three close-fit lines. The green line on the picture below is the 60 minute chart line for the month of October 2011. I selected this line because it started at a base at point G and then moved up following the curve of the MSFT price data and it also seemed to follow the blue best fit line. These two lines were used to teach how different time frames could be used to forecast the daily chart using the Advanced Master Time Factor.
The final chart below is an update to the two charts above. You can see that starting from February 1, 2012 to May 15, 2012 the daily chart of Microsoft followed the forecast curve at points 1, 2, 3 and 4. The blue best fit line has come to an end but the close-fit green line is still tracking well with daily Microsoft. This forecast curve shows there should be a top in daily MSFT in late May 2012 and then a bottom in mid June 2012. We will try to do another follow up in late June to see what happened. These types of accurate forecast are extremely common using this forecasting method.
NEW TUTORIAL: If you own Forecasting Made Easy or you are using the free trial, open the help file and look at the section titled “Chart – Master Time Factor”. In this section of the help file, you will see a new tutorial named, “Tutorial 3: MTF S&P 500 Mini March 23″. This tutorial discusses forecasting the S&P 500 mini contract on the 30 minute time frame. The Master Time factor can be used to forecast the next day’s price action on intraday charts so we will be adding new tutorials to the help file discussing forecasting intraday charts especial the S&P 500 mini.
The new version of Forecasting-Made-Easy 2012 which has the Master Time Factor forecast method is now available for download. You can download and read about the new software on the web pages below. Thank you for your patience.
We will write more soon.