Recession Indicator. When to expect the next recession. Piece of Trading

The probability of having a recession in the USA is: 

Recession probability for USA  Recession probability chart updated 02/23/2020

Last update: 23rd of February 2020


Economic recession is a part of the business cycle. We observe it when there is a general decline in economic activity. From a trader's perspective, it is a moment in time when wealth creation and distribution occurs.

Simply put every recession brings a lot of opportunities for a trader to make outsized gains. Those gains can come from two main channels:

  • Bear Market - if you are looking for a 20% decline in the stock market, a recession could bring such a one to you. Big and fast declines with many short squeezes provide the perfect environment for short-term traders. 
  • Next Economic Expansion - better than the bear market itself. The new economic expansion is where to look for swing or long-term opportunities.
    A wise man once said to me:
    "All those companies who survive the recession will come out of it twice stronger"
    .

The problem is that to forecast a recession is not an easy job. It is widely considered impossible. 

This proprietary indicator is an attempt to do that - to forecast the next recession in the USA. It comprises different measures in a specific order which will signal if a recession is coming. The time horizon of this indicator is 6-12 months (still working on lowering this diapason).

It has three levels:

  • 0% - 50%, GREEN - low probability of having a recession in the next 6 to 12 months; 
  • 50% - 70%, YELLOW - an increased probability of having a recession in the next 6 to 12 months. Still, there is a chance to go below 50% and to avoid the recession;
  • above 70%, RED - a very high probability of having a recession. Now if the indicator reaches values above 70% the recession is imminent.
Recession Indicator Zones

RECESSION INDICATOR'S Q&A
(Please read them carefully)

Q: How often it would be updated?
A: Weekly

Q: Why only for the USA?
A: The USA is the biggest economy in the world. It is fair to assume that if we are going to face a severe world economic crisis, a recession in the USA will be present as well.

Q: If we see it above 70% value can we place trades immediately?
A: NO! This indicator should NOT be used as an indication to open long or short positions. It doesn't provide investment advice. Also, have in mind that it was not tested in a real recession environment. Please read the Risk Disclaimer

Learn how to forecast and profit from the next recession!

(Click here)

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