T.E.M.P.O.S. is my personalized way of approaching the financial markets. Risk management is the number one consideration before placing any trade, but aligning entry points with the consideration of multiple beneficial variables increases our odds of success dramatically. There is no Holy Grail in investing, and every mechanical system goes through periods where it simply doesn’t yield great results because it has a structure that is limiting. That is why I believe in utilizing the best qualities of multiple systems, and cross-referencing them to give us a non-biased perspective on the markets.
T.E.M.P.O.S. stands for the following:
- T – Time (cycles)
- E – Energy (fractals)
- M – Momentum
- P – Price (volume)
- O – Orientation (technical analysis)
- S – Sentiment (COT, surveys, opinion)
Each one of these variables used individually can result in a great trade…occasionally. However, when used in combination with each other, they become much more powerful.
For example, cycles are the use of time to predict when an instrument has reached a price low and is due for a bounce. However, that knowledge in a vacuum does not provide us enough information to make a long trade. Is momentum moving powerfully downward? Is sentiment overly bullish? What are the weekly and monthly charts saying? How do we control risk if the position goes against us?
As you can see in the SLV chart above, limiting yourself to one system can blind you to other things that are happening in the market at the same time. As an investor, this can result in a search for news or commentary that confirm your system, rationalizing your position when a move starts to go in the opposite direction, and ultimately selling when emotional pain reaches its maximum threshold for a maximum loss.
The Swiss Army manufacturers knives with multiple tools because they understand that it is impossible to predict which tool will be the most useful at any given point in the future. We need to have the same multifaceted approach as investors because we don’t know what opportunities the market will present to us. In baseball, the best hitters can only work with the pitches that the pitcher gives them, they must have patience and not chase out of the strike zone. The highest paid players are the ones that produce the greatest results when that pitch finally does arrive. The market rewards investors similarly.
The daily member reports will contain commentary from the perspective of my T.E.M.P.O.S. system. The charts section is an archive of regularly updated T.E.M.P.O.S. charts for your browsing privilege. I will also occasionally send out intraday updates as conditions warrant and provide member feedback in the comments section on T.E.M.P.O.S. principles.
Join me in refining your investing.
Steve Chapman, TRI