Hello,
In any business, rules are the backbone of success, providing the structure and discipline needed to thrive. Trading and investing are no exceptions—they must be treated with the same seriousness and rigor as any entrepreneurial venture.
As a wave trader, I rely on a refined set of rules that blend technical analysis with Wave Theory to understand market behavior. Wave trading is a powerful strategy that analyzes price patterns to uncover the cyclical nature of market trends, enabling traders to predict future movements and seize profitable opportunities.
Understanding Wave Trading
Markets don’t move randomly—they ebb and flow in predictable waves. According to Elliott Wave Theory (a type of wave theory), trends unfold in a series of five waves (known as impulses) followed by three waves (corrections). Mastering this rhythm allows you to anticipate where the market is headed next, giving you a strategic edge.
Our Trading Rules
Here’s a breakdown of the essential rules I follow as a wave trader, designed to guide you through the process with clarity and precision:
Impulse: A robust, directional price surge made up of five sub-waves, signaling the dominant trend.
Correction: A smaller, counter-trend move consisting of three sub-waves, acting as a pause or pullback.
Recognizing these phases reveals the market’s underlying structure. For example, spotting a five-wave impulse upward suggests a bullish trend, while a three-wave correction might signal a temporary dip—perfect for planning your next move.
Identify the Pattern Formations
Look for patterns that can help you anticipate the next moves e.g. the expanding triangle, Bullish flag or even reversal patterns.
Identify Entry Points
Timing is everything. Pinpoint the perfect moment to enter a trade based on your wave and pattern analysis.
Wait for confirmations like a breakout above a flag pattern or a signal from indicators such as moving averages or MACD that align with your wave count.
Look for Targets
Set clear profit targets to stay disciplined and secure gains.
Wave projections, like the expected end of wave 5 in an impulse.
Look for Exits in Case the Trade Doesn’t Go Your Way
Not every trade is a winner, and that’s okay. Protect your capital with stop-losses placed at logical levels.
Where to set them: Choose points that invalidate your analysis—like below a key support level or a wave pattern’s critical threshold. If the market breaks that level, your trade idea’s likely wrong, so exit calmly.
This removes emotion from the equation, safeguarding your account for the long haul.
The Power of Discipline
These rules aren’t just guidelines—they’re your shield against the emotional rollercoaster of trading. Write them down, pin them up, or keep them handy on your trading desk. Reviewing them before every trade reinforces your commitment to a systematic, objective approach. Discipline turns good strategies into great results.
Wishing you success on your trading journey!
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
In any business, rules are the backbone of success, providing the structure and discipline needed to thrive. Trading and investing are no exceptions—they must be treated with the same seriousness and rigor as any entrepreneurial venture.
As a wave trader, I rely on a refined set of rules that blend technical analysis with Wave Theory to understand market behavior. Wave trading is a powerful strategy that analyzes price patterns to uncover the cyclical nature of market trends, enabling traders to predict future movements and seize profitable opportunities.
Understanding Wave Trading
Markets don’t move randomly—they ebb and flow in predictable waves. According to Elliott Wave Theory (a type of wave theory), trends unfold in a series of five waves (known as impulses) followed by three waves (corrections). Mastering this rhythm allows you to anticipate where the market is headed next, giving you a strategic edge.
Our Trading Rules
Here’s a breakdown of the essential rules I follow as a wave trader, designed to guide you through the process with clarity and precision:
- Identify Impulse & Correction
Impulse: A robust, directional price surge made up of five sub-waves, signaling the dominant trend.
Correction: A smaller, counter-trend move consisting of three sub-waves, acting as a pause or pullback.
Recognizing these phases reveals the market’s underlying structure. For example, spotting a five-wave impulse upward suggests a bullish trend, while a three-wave correction might signal a temporary dip—perfect for planning your next move.
Identify the Pattern Formations
Look for patterns that can help you anticipate the next moves e.g. the expanding triangle, Bullish flag or even reversal patterns.
Identify Entry Points
Timing is everything. Pinpoint the perfect moment to enter a trade based on your wave and pattern analysis.
Wait for confirmations like a breakout above a flag pattern or a signal from indicators such as moving averages or MACD that align with your wave count.
Look for Targets
Set clear profit targets to stay disciplined and secure gains.
Wave projections, like the expected end of wave 5 in an impulse.
Look for Exits in Case the Trade Doesn’t Go Your Way
Not every trade is a winner, and that’s okay. Protect your capital with stop-losses placed at logical levels.
Where to set them: Choose points that invalidate your analysis—like below a key support level or a wave pattern’s critical threshold. If the market breaks that level, your trade idea’s likely wrong, so exit calmly.
This removes emotion from the equation, safeguarding your account for the long haul.
The Power of Discipline
These rules aren’t just guidelines—they’re your shield against the emotional rollercoaster of trading. Write them down, pin them up, or keep them handy on your trading desk. Reviewing them before every trade reinforces your commitment to a systematic, objective approach. Discipline turns good strategies into great results.
Wishing you success on your trading journey!
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
Free stock markets analysis Telegram channel:
t.me/stocksfromtechnicaleye
Paid trading group
patreon.com/thesharkke
Reliable broker
go.tradenation.com/visit/?bta=37130&brand=tradenation
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Free stock markets analysis Telegram channel:
t.me/stocksfromtechnicaleye
Paid trading group
patreon.com/thesharkke
Reliable broker
go.tradenation.com/visit/?bta=37130&brand=tradenation
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.