Wave Analysis
EOSUSD: A Successful Leveraged Position Guide I was waiting for Doge to reach for 1 USD when I heard that Mark Cuban shorted it! Strange! Right?! There are some important points to be noted here, but I would name it "Probabilistic Mathematical Approach to Trading" as follows (even the Psychologicals of Trading):
1. How Mathematically it was Probable for Doge to grow from 0.77 to 1 USD?
2. Mathematically how much more it could manage to grow - I mean in percentages?
3. We are being told about how risky it is to open leveraged positions. Yes! They are too risky and yet highly profitable.
4. Based on the 90,90,90 Principle 90% of trader lose 90% of their wealth during the 1st 90 days! It is meant to be profitable for professionals who know several things:
4.1. Capital/Money Management
4.1.1. Always save 30% of your available money for things that might happen and you have no idea of. You are going to need that money:
4.1.1.1. Firstly, your prediction on the direction in one certain "TIMEFRAME" might turn to be wrong. Then based on that timeframe you may spot some part of that money.
4.1.1.2. When things go wrong you will not go bankrupt.
4.2. Risk Management
4.2.1. You need to "CALCULATE" Risk/Reward Ratio just before any trade based on you Trading Timeframe. It cannot be more less 1/4. This is very important to consider.
4.2.2. Just consider KEY SUPPORT/RESISTNCE Levels/Clusters - Dynamically & Statically (short near a strong Resistance & vice versa)
4.2.3. With a certain amount of money which has already been dividend into say 3 parts you may Long as follows (see the chart):
* For every position calculate the Risk/Reward Ratio;
- Long at the current Market Price with 3 - 5X : price needs to drop 30 - 20% for you to be liquidated. I longed EOS at 3.29 yesterday. (targeted at 20USD)
- Set a Stop-limit long at a lower price which is overlapping at least 5% of your previous position. I longed EOS at 2.6 as well. (targeted the same)
- Propose the Worst Case Scenario now long it with 3 - 5X. How possible is it to happen? I longed EOS at even 1.34!!! (targeted the same)
This is "Technical trading Mathematics" I am talking about.
4.3. Psychologicals of trading
4.3.1. Psychology of Trading is a SCIENCE. You do need to study about it. Observe the behavior of your specific property.
4.3.2. The market is being Manipulated and has been so ever. There are people whose profit lays in your loss. But, exactly, how powerful are they to impact a specific property?! But the most average & common that has higher turnovers during certain periods of time. Market Cap/Turnover during a certain time interval.
4.3.3. When you are assured that Bitcoin is the most frequently traded one, for example, then you need to know exactly based on the timeframe you have chosen, how much it can be fluctuated?! For instance, in 4H timeframe basis. You need to know the extents of your chosen time frame.
How probable is it to lose all the money?
How probable is it to earn enough to not only compensate probable losses, but also earn much more?
5. Last and not the least, is Reverse Trading Strategy. Earn from long and then earn from shorts when it is the time to do so based on your Tradin Timeframe.
I do believe this way there would be no loss if you know the followings in summary:
1. Mathematically Trading
1.1. Money Management
1.2. Risk Management
1.3. Psychologicals of Trading
1.4. Technicals (the choice of trading time frame; the Elliots; Key Dynamic/Static Support/Resistance Clusters; Volume; Trendlines & Price Movement Channels)
Now, a question comes to mind: If my scenario is going to work for EOS how much loss and/or profit I will have? Provided that out of my calculations applied in sample trading positions mentioned above I win/lose one or two?!
Always remember that you need a predefined Investment/Trading Portfolio Management Plan which requires the followings (PMI PMBOK):
1. Knowledge Areas
2. Processes
3. Tools & Techniques
Some positions are meant to be considered "diamond handed" like a routine business operation, yet some others need to be like BPR Projects and they need to be timely & agile.
(This is a tricky business cause it has its roots in human greed & fear.)
Characteristics of Corrective WavesThis is an educational video covering the characteristics of counter-trend price action.
The 3 Types of Traders. Who Do You Belong To? 🤔
There are thousands of different ways to trade the market.
During the last 100 years, various trading strategies and techniques were invented.
One of the ways to categorize them is to split them by types of traders.
Such a category type will lean on 2 main elements:
trading frequency and time frame selection.
1️⃣ - Scalper
I guess 99% of newbie traders start from scalping.
Trying to catch quick market moves and become rich quick,
newbies are practicing different scalping strategies.
What is funny about scalping is the fact that such a trading style is considered to be the easiest by the majority while remaining one of the hardest in the view of pros.
The main obstacle with scalping is a constant focus and rapid decision-making.
Scalpers usually open dozens of trading positions during the trading session, most of the time being in front of the screen constantly.
Paying huge commissions to the broker and dealing with complete chaos on lower time frames, the majority simply can't survive the pressure and drop, leaving the pie to true gurus.
2️⃣ - Day Trader
Day trading or intraday trading is the most appealing to me.
Staying relatively active, the market gives some time for the trader for reflection & thinking.
Opening and managing on average 1-2 trades per trading session, the intraday trader is granted a certain degree of freedom.
However, with declining volatility, quite ofter intraday traders get a relatively low risk/reward ratio for their trades,
3️⃣ - Swing Trader
Swing trading is the best choice for traders having a full-time job.
Primarily being focused on daily/weekly time frames, swing trading is not demanding for a daily routine and aims at catching mid-term/long-term market moves.
With an average holding period being around 2 weeks and opening 1-2 trading positions per week, swing trading is considered to be the least emotional and involves low risk.
The main problem with swing trading is patience.
Correctly identifying the market trend and opening a trading position,
the majority tends to close their positions preliminary not being patient enough to let the price reach their target.
Which trading type do you prefer?
❤️Please, support this idea with a like and comment!❤️
WHAT HAPPENED LAST WEEK? | GOLD CASE STUDY
Dollar gains on upbeat US Retail Sales data.
Gold Slips from 1 month peak.
Gold case study of last week action using Wyckoff method, Market structure, Liquidity concept and SnD.
EDUCATION - Candlestick Cheat Sheet ⚡⚡One of the most powerful tools in your trading arsenal should be candlestick patterns. Various candlestick patterns can tell us where the market is heading.
These patterns can be found on all timeframes, however the Daily candlestick patterns appear to be the most reliable.
Once you see these patterns, you can ready yourself for the next move and use other tools to enter the market such as flag patterns, MA strategy - which we've covered before (See linked charts).
EDUCATION - Candlestick Cheat Sheet ⚡⚡One of the most powerful tools in your trading arsenal should be candlestick patterns. Various candlestick patterns can tell us where the market is heading.
These patterns can be found on all timeframes, however the Daily candlestick patterns appear to be the most reliable.
Once you see these patterns, you can ready yourself for the next move and use other tools to enter the market such as flag patterns, MA strategy - which we've covered before (See linked charts).
Elliot Waves Complete Guide | Chapter 4.6 - "ABC Fib Lengths"Hello Traders. Welcome to Chapter 4.6! This is FINAL CHAPTER of my Elliott Waves series that took me 6 months to create starting from chapter 1. Here we will finally conclude with learning about the "Fibonacci Ratio Lengths for Corrective Wave Multiples". In the previous sub-chapter, we learned how to apply Fibonacci lengths for waves 1-5, now we will learn how to apply them to A-B-C corrections. This chapter is related to chapter 3.1 (corrective waves), so it would be best to re-visit or master that chapter first.
📚 Chapter 4 Glossary:
4.1 Alternation
4.2 Channeling
4.3 Psychology
4.4 Fib-Ratio
4.5 Motive Wave Multiples
📖 4.6 Corrective Wave Multiples
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Corrective Wave Multiples for an A-B-C Correction Overview
"How to Calculate the wave lengths for waves ABC"
1) In a Zig-Zag correction (go back to chapter 3.1 if you don't know what a zig-zag correction is), the length of wave C is usually the same length and equal to that of wave A, as shown in Diagram ①. But other ratios like the 161.8% (again, commonly referred to as the 1.618 fib) or the 61.8% (.618 fib), also happens within its structure for determining the length of wave C.
2) This specific ratio can also be applied to the first and the second zig-zag in a WXY 'double zig-zag correction' that can be seen in Diagram ②.
3) In diagram ③, we have a flat correction that can also be measured via Waves A,B,C - which are quite equal; however, the extended flat correction from the beginning of Wave B to Wave C has different ratios applied. In this case, wave C often represents the 161.8% (1.618 fib) extension of wave A.
NOTE: the concept of measuring the waves should always be the second part when analyzing the markets. Do not expect to correctly measure a target for a wave, if the overall count is not valid and rules were broken. The fibonacci numbers are complementary applied to the Elliott Wave theory.
THANK YOU! Refer to every chapter below, and happy learning. In future posts, we will be learning how to apply them in a PRACTICAL sense to the real markets! But first, we must memorize these chapters by heart as these chapters are the foundation to the whole Elliott Wave Theory.
Trade Safe.
X Force
XBTUSD The Theory of the Wolfe Wave :
The theory of my Wave structure is based on a law of physics that for every action there is an
equal and opposite reaction.
This action/reaction often shows a definite rhythm with extremely valuable projecting
capabilities to the trained eye. Many times however, little waves mix with larger waves and the
waters become muddied. Sometimes everything is in synch and you will get a rogue wave effect
similar to what occurs in the oceans of the world. These can be extremely profitable in the
futures and stock market.
On the following two pages, you will find the rules and the theoretical, bullish and bearish
Wolfe Wave structures.
Rules for Bullish Wolfe Wave Structure :
Please not the odd sequence in counting, as you will see, it is necessary for the inductive
analysis. By starting with a top we are assured of beginning our count on a new wave. The 2
point is a top. The 3 point is the bottom of the first decline. The 1 point is the bottom prior to
point 2 (top), that 3 has surpassed.
The 4 point is the top of the rally after point 3. The 5 point is the bottom after point 4 and is
likely to exceed the extended trend line of 1 to 3. This is the entry point for a ride to the EPA
line (1 to 4).
Estimated Price at Arrival (EPA) is trend line of 1 to 4 at apex of extended trend line of 1
to 3 and extended trend line of 2 to 4. Estimated Time of Arrival (ETA) is apex of extended
trend line of 1 to 3 and 2 to
4. Trend line of 1 to 3 and trend line of 2 to 4 must converge.
TOTAL 2Days Cycles Hello Traders
As you can see in the chart above, every red circle represents an important area in my opinion. As it is seen candle bodies in 2D chart are somehow important. When price is closed lower than a lower line (blue lines in each area), or above an upper line (yellow lines), it continued its way in that direction, almost sharply.
This point of view may be used in further areas found in 2D TOTAL chart.
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What is your opinion? Comment below.
If you like the idea, please hit the like button and follow me so that you won't miss the updates. The information given is never financial advice. Always do your research too.
Good luck.
Mastering elliot waves. Pattern isolation procedure.In this exercise I'm heavily focused on the process. There are no real conclusions drawn, and I wouldn't go and use this information in any way. Just another brick in the wall today. I thought about trying to overlay this pattern onto a chart, but then I realized that's entirely the backwards way of doing it. Please don't try to do that.
Elliot Waves Complete Guide | Chapter 4.5 - "Fibonacci Lengths"Hello Traders. Welcome to Chapter 4.5, where we will be learning about the "Fibonacci Ratio Lengths and Motive Wave Multiples" in Elliott Waves. This chapter dives into how we can determine the target for the next impulse wave. This one is an extremely important chapter if you want to primarily find the next possible targets for each consecutive wave. I have made sure to simplify it as simple as possible.
📚 Chapter 4 Glossary:
4.1 Alternation
4.2 Channeling
4.3 Psychology
4.4 Fib-Ratio
📖 4.5 Motive Wave Multiples
4.6 Corrective Wave Multiples
-----
Here are the ratios for the waves:
• Wave 1 - Has no target, this is the beginning of the wave structure for wave 2-5.
• Wave 3
• 161.8-261.8% extension of wave 1
• There are cases when the 261.8% extension goes past this level (Extension wave within the extension wave - please refer to the guide below about extensions:
• Wave 4
• Wave 4 is related to Wave 3 that will retrace to either the 23.6% or 38.2%
• Wave 5
• 100% of wave 1
• 100% of wave 3
• 61.8% of wave 1-3
• so forth.
- Wave 5 is usually the most difficult ones to calculate as there are variations due to possible extensions as we can see in waves 3 or 5. Wave 3 is the most likely to be extended, and if so, Waves 1 and 5 are probably going to be similar in size and time. If waves 1 and 3 look similar in size, wave 5 will most definitely be extended.
Basic Elliot Wave - EducationalThis post is intended for educational purposes only.
SCUSD is one of the better Elliot Wave examples I've seen and in my opinion a good use case for the theory. The aim of the post is to share some basic notable points to look for when trying to establish likely scenarios or just review what has happened in a previous impulse and subsequent correction(s).
Firstly, EW does not predict the future. Any analyst claiming a 100% accuracy is more likely to have access to a time machine. Patterns take different routes, waves extend and fail, and corrections can transform into a complex uncountable mess. However, the theory has its benefits and can be useful to determine where an asset is in the trend and the likely price & time targets for a future move, whether up or down.
Looking back on the case of SCUSD, a list of the notable points mentioned earlier:
1. 5 waves from low to high, clearly visible and difficult to misinterpret
a. 3 in the direction of the trend (impulses) and 2 against the established trend (corrections)
2. Alternation between the two corrections (wave 2 & 4)
a. Wave 2 was deep at 61% or the initial impulse
b. Wave 4 was shallow at 38% at took less time to complete than wave 2
c. Second waves will often have deeper corrections because it's early in the trend. It's simply harder to identify whether the asset will trend or not
3. Wave 3 is 161% of wave 1, a typical extension found in a third wave
a. Third waves are typically the longest and will have a much higher participation rate than any of the other waves
b. Usually, there's a lot of good news around an asset in third waves, and trend chasers are good at identifying these moves
c. As mentioned the participation rate is high and this is clearly visible in the volume exchanged
4. Wave 5 is 61% of wave 1 & 3 combined. There are a number of ways to anticipate the length of a fifth wave but the length can vary based on the asset class
a. Fifth waves typically have less participation. Traders tend to take profit in the third when volumes are high and the asset is loved
b. Fifth wave participants tend to be retail traders that are late to the party and expect the asset to continue in one direction "up only"
c. Notice the difference in Relative Strength (RSI) between the peaks of the third & the fifth. It's rare to see more strength in a fifth wave because of the aforementioned
d. With big players out of the market the strength and volumes exchanged during a fifth rarely meet that of the third
5. The wave 2 & wave 4 trendline. Once broken, the new trend is confirmed
a. Note, this is not something one wants to wait for confirmation on because price will most likely have already retraced 50+%
6. Bear! The first wave (wave 1) of a higher degree is now complete and so commences wave 2 of the higher degree
a. This is not something one would enjoy sitting through. As mentioned in the wave 2 of a lower degree, second waves tend to be deep and take a lot of time
b. You can expect a 61% haircut and in the case of SC, that's exactly what happened.
c. A wick below and close above on a high timeframe is perceived bullish. This can be expected and a point where traders will be hoping to get some lucky bids filled.
d. Expect bad news during this period. The trend will only change once the bad news has no affect on the price, usually once everyone has been flushed out.
7. Correlation in time between the initial impulse and the subsequent correction should be noted. In the case of SC, multiple conditions have been met.
a. It has retraced 61% of the initial impulse
b. There is a one-one (+/-) correlation in time of the impulse and correction
c. Time is too often overlooked. Time and price are the two data points you have by default on a chart. You're missing out if you're using one and not the other
d. Wave 2 typically takes a lot of time to complete but provided it has completed at least 38% in time of the initial impulse, the condition of time is met
e. Aiming for 61-100% of the initial impulse, and considering price action during that period is a decent approach
8. Resumption of higher degree trend after conditions are met.
a. After a first and second wave is complete, the expectation is a third wave.
b. A good target for a third wave in the case of SC would be 161% of the first impulse measured from the end of the second.
9. Can you be sure that even if the prior wave 1 high is broken that SC for example is going to complete five waves?
a. No, just because an asset is moving upwards does not mean it's a 5 wave (higher degree) impulse. It is also possible that the entire move is a correction (e.g. 5-3-5)
b In this case, a likely take profit target could be a one-one extension of the first wave which explains why you will often see selling at price points like the one-one ext.
10. If you made it this far then well done. Hopefully you'll take something valuable away from reading this post or maybe this isn't new information to you and I missed something / mentioned something that is not correct. Let me know in the comments.
Good luck out there!
Trading - Expectations VS RealityHey Traders,
In this post we will aim to clear some of common misconceptions of trading and how we can help you go further in your trading career by giving you all the tools you need to better understand the market and kill the game.
____________________________________________________________
1. Trading is easy.
Trading is relatively easy IF you know the rules of the market and use certain analytical techniques. Once you have a full arsenal of technical tools, you can easily understand the market and figure out where it may go next.
2. Market moves in one direction.
That can be true to a certain extent where we have trending markets. However, within that trend there are various types of pullbacks. Once you understand the different market phases, you can make money whether it's a trending or ranging market. Opportunities are endless!
3. Buy when low. Sell when high.
If only things were that straight forward, right? Sometimes the lows aren't really the lows and the highs push higher and higher. This is when you need to understand the different patterns and structure of the market to help you figure out where the best possible place is to buy or sell.
Once we understand the market, we need a trading plan. How do we enter? Where do we enter? Where is the stop loss? This is where having rigid checklist really helps! You can tick things off the list and grade the trade setup from good to bad and then enter accordingly using various entry methods.
It may sound like a lot of but once broken down into little bits, you can learn this EASILY and know exactly how to analyse and enter trades!
____________________________________________________________
What we will be covering:
- Market structure: Impulse & Corrections
- Using Index charts to correlate your trades (Very important Topic!)
- Drawing a trendline and levels correctly – There’s a hack to it!
- Using Moving Averages Correctly
- Combining higher timeframe & lower timeframe
- Different patterns and how to trade them
- More topics to come!
Comment below on what other topics you would like to see!
I hope this post help clarify some of the misconceptions of trading and the different elements involved.
See the links below for information on how we can help you!
Do you know the inside of the candle?A typical candle will have an Open, High, Low, Close. You will see these referred to in some text, articles and indicators as O,H,L,C
Below is the structure of both a Bullish (Green) & Bearish (Red) Candle
The cycle shown below, is the action within a candle, think about this – the candle opens at say 100, it dips to 95 and starts gaining ground to 120, before dropping a little to 115 and closing there.
Why is this important?
Think of it like a football (soccer) match – the game starts and plays out during a set time, much like the candle – and at the end we have a score. The actions in the match tell the story, but it’s the end result that counts.
So, what is the story?
The middle of the candle known as the body is equal to the spread and gives a clue as to the sentiment of this particular candle.
Sentiment
A wide spread gives the indication of strong sentiment, of course if the candle is red with a long body it would be strong bearish sentiment.
If the body is narrow – it suggests a weak bias overall.
Do the wicks matter? – well yes, of course. They tell another story, the wick can give you the equivalent of the match highlights – how much time/effort was committed in the oppositions half. If you think of it still as a sports match.
Although the body (spread) is small this image shows a different type of strength, well actually it is more weakness to the upside than downside strength. The market has tried to push higher and failed.
Wicks in some more detail.
Inside the wick you can see effort with lack of reward. Shown in the image above, this can be exaggerated and emphasised if accompanied by a small body or spread. Especially in the other direction. By this I mean a large wick on the top and then the bar closing red would have emphasis on bearish sentiment – however, a small red body would show little buying interest but no real intent to the downside.
The candles can tell a story, often on their own. However various formations give more detail and can be used to identify events prior to a major move.
This is especially powerful when used with some other methods, that can zone in on areas of interest.
Did you know?
Inside @TradingView indicator tab; there is a sub section for candlestick patterns – to automate the recognition.
This feature has several scripts for Doji, Engulfing, Hammers, Spinning tops and many more.
This was only a quick dive into candlesticks – nothing major and not much depth, but as usual, I hope this helps even with the appreciation of what a candle represents.
Some additional educational posts;
Disclaimer
This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
💨𝙀𝙡𝙡𝙞𝙤𝙩𝙩 𝙒𝙖𝙫𝙚 𝙋𝙖𝙩𝙩𝙚𝙧𝙣: 𝘿𝙞𝙖𝙜𝙤𝙣𝙖𝙡🌊●●● 𝘿𝙞𝙖𝙜𝙤𝙣𝙖𝙡 (D)
❗❗ 𝙂𝙚𝙣𝙚𝙧𝙖𝙡 𝙧𝙪𝙡𝙚𝙨
● A diagonal always subdivides into five waves.
● Wave 2 never goes beyond the start of wave 1 .
● Wave 3 always goes beyond the end of wave 1 .
● Wave 4 never moves beyond the end of wave 2 .
● Wave 4 always ends within the price territory of wave 1 (overlap).
● An ending diagonal always appears as wave 5 of an impulse or wave C of a zigzag or flat .
● A leading diagonal always appears as wave 1 of an impulse or wave A of a zigzag.
● Waves 1 , 2 , 3 , 4 and 5 of an ending diagonal, and waves 2 and 4 of a leading diagonal, always subdivide into zigzags.
● In a leading diagonal, wave 5 always ends beyond the end of wave 3 .
❗ 𝙂𝙚𝙣𝙚𝙧𝙖𝙡 𝙜𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨
● Waves 1 , 3 and 5 of a leading diagonal usually subdivide into zigzags but sometimes appear to be impulses (all zigzags or all impulses ).
● Within an impulse , if wave 1 is a diagonal, wave 3 is likely to be extended.
● Within an impulse , wave 5 is unlikely to be a diagonal if wave 3 is not extended.
● A leading diagonal in the wave one position is typically followed by a zigzag retracement of 78.6 %.
●● 𝘾𝙤𝙣𝙩𝙧𝙖𝙘𝙩𝙞𝙣𝙜 𝘿𝙞𝙖𝙜𝙤𝙣𝙖𝙡 (Contr.D)
❗❗ 𝙍𝙪𝙡𝙚𝙨
● In the contracting variety, wave 3 is always shorter than wave 1 , wave 4 is always shorter than wave 2 , and wave 5 is always shorter than wave 3 .
● Going forward in time, a line connecting the ends of waves 2 and 4 converges towards with the line connecting the ends of waves 1 and 3 .
❗ 𝙂𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨
● In the contracting variety, wave 5 usually ends beyond the end of wave 3 . (Failure to do so is called a truncation.)
● In the contracting variety, wave 5 usually ends at or slightly beyond a line that connects the ends of waves 1 and 3 . (Ending beyond that line is called a throw-over.
● In the contracting variety, wave 3 may be equal .618 to .786 the length of wave 1 , and wave 5 may be equal .618 to .786 the length of wave 3 .
●● 𝙀𝙭𝙥𝙖𝙣𝙙𝙞𝙣𝙜 𝘿𝙞𝙖𝙜𝙤𝙣𝙖𝙡 (Exp.D)
❗❗ 𝙍𝙪𝙡𝙚𝙨
● In the expanding variety, wave 3 is always longer than wave 1 , wave 4 is always longer than wave 2 , and wave 5 is always longer than wave 3 .
● Going forward in time, a line connecting the ends of waves 2 and 4 diverges from with the line connecting the ends of waves 1 and 3 .
● Wave 5 always goes beyond the end of wave 3 .
❗ 𝙂𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨
● Waves 2 and 4 each usually retrace .66 to .81 of the preceding wave.
● In the expanding variety, wave 3 may be equal to 1.618 the length of wave 1 , and wave 5 may be equal to 1.618 the length of wave 3 .
● In the expanding variety, wave 5 usually ends slightly before reaching a line that connects the ends of waves 1 and 3 .
Elliott Wave Principal 2005 and Q&A EWI .
Elliott Corrective & Impulse Waves Understanding Impulsive and Corrective Waves
We need to review some basics around price movement before moving into the exact mechanics of the Elliott Wave Theory. Each price chart has three basic types of price action phases. Elliott Wave (EW) price patterns are divided into: impulsive, corrective, and consolidation.
Impulsive waves (momentum/motive waves)
An impulsive wave is price movement that initiates progress in one direction, which is called the trend. Price usually moves more distance (in pips) and quicker (less time) when trending. This makes trending moves more appealing for trade setups. The waves are split into 5 impulsive waves with the trend and 3 corrective waves against the trend.
Corrective waves (correction)
Corrective waves are against the trend (price movements that are reactionary in relation to the previous trend-setting move). They essentially attempt to revert or undo the movement that was initiated by the preceding motive wave. Price usually moves less distance (in pips) and slower (more time), although fast corrections can occur as well (zigzags). This makes corrective moves less appealing for trade setups. If the trend is bullish, then the correction of the trend would be bearish. If the trend is bearish, then the correction of the trend would be bullish.
Main Elliott Wave Rules
The Elliott Wave Principle has three core rules. Your wave analysis must match these Elliott Wave rules, otherwise the wave count is incorrect.
1. Wave 2 never retraces more than 100% of wave 1.
2. Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3, and 5.
3. Wave 4 does not overlap with the price territory of wave 1, except in the rare case of a diagonal triangle formation.
Elliott waves will keep you trading on the right side of waves and not against the big banks and traders, keep your trading as easy as possible.
Trading - Expectations VS RealityHey Traders,
In this post we will aim to clear some of common misconceptions of trading and how we can help you go further in your trading career by giving you all the tools you need to better understand the market and kill the game.
____________________________________________________________
1. Trading is easy.
Trading is relatively easy IF you know the rules of the market and use certain analytical techniques. Once you have a full arsenal of technical tools, you can easily understand the market and figure out where it may go next.
2. Market moves in one direction.
That can be true to a certain extent where we have trending markets. However, within that trend there are various types of pullbacks. Once you understand the different market phases, you can make money whether it's a trending or ranging market. Opportunities are endless!
3. Buy when low. Sell when high.
If only things were that straight forward, right? Sometimes the lows aren't really the lows and the highs push higher and higher. This is when you need to understand the different patterns and structure of the market to help you figure out where the best possible place is to buy or sell.
Once we understand the market, we need a trading plan. How do we enter? Where do we enter? Where is the stop loss? This is where having rigid checklist really helps! You can tick things off the list and grade the trade setup from good to bad and then enter accordingly using various entry methods.
It may sound like a lot of but once broken down into little bits, you can learn this EASILY and know exactly how to analyse and enter trades!
____________________________________________________________
What we will be covering:
- Market structure: Impulse & Corrections
- Using Index charts to correlate your trades (Very important Topic!)
- Drawing a trendline and levels correctly – There’s a hack to it!
- Using Moving Averages Correctly
- Combining higher timeframe & lower timeframe
- Different patterns and how to trade them
- More topics to come!
Comment below on what other topics you would like to see!
I hope this post help clarify some of the misconceptions of trading and the different elements involved.
See the links below for information on how we can help you!
Elliot Waves Complete Guide | Chapter 4.4 - "Fibonacci Ratios"Hello Traders. Welcome to Chapter 4.4, where we will be learning about the "Fibonacci Ratios" in Elliott Waves, a very important aspect of understanding the major points of entries, exits, and predictions of wave counts; furthermore, the Fibonacci Ratio is an extremely useful tool to measure the target of a wave's move within an Elliott Wave structure. Different waves in an Elliott Wave structure relate to one another with other Fibonacci Ratio points.
📚 Chapter 4 Glossary:
4.1 Alternation
4.2 Channeling
4.3 Psychology
📖 4.4 Fib-Ratio
4.5 Motive Wave Multiples
4.6 Corrective Wave Multiples
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The actual practical application of Fibonacci (abbreviated fib) levels and Elliott Waves can be divided into two separate categories:
• Retracement (indicated in the yellow) = identifies probable targets for a corrective wave
• Extensions (indicated in the purple) = identifies probable targets for the next impulsive wave
The Retracement measures how far the correction retraces the previous wave via the Fibonacci Retracement tool located on the left side of your list on the TradingView platform.
Fib guidelines for retracement on all of the waves:
• Wave 2 = 50%, 61.8%, 76.4%, 85.4% of wave 1
• Wave 3 = 161.8%, 261.8% only of wave 2
• Wave 4 = 38.2% to 61.8% of wave 3
• Wave 5 = 61.8%, 100%, or 123.6% of wave 4
Invalidation points:
• Wave 2 retracement cannot exceed 100% of wave 1.
• Wave 3 cannot be the shortest wave.
• Wave 4 will NEVER go into wave 1 price territory.
❗ If you refer to chapter 4.1 on the "Alternation" theory, the guideline for waves 2 and 4 is more reliable for retracements than fib levels alone; however, wave 2 generally corrects deeply (61.8%), while wave 4 is shallow, it only reaches the 38.2%. If the daily price action candlestick signals occur, most of the time a retest and entry at the 50% level is possible.
mastering elliot waves. whats lean cattle doing?Lean cattle, given the selection of m1 that I have chosen to focus my attention on, is showing Rule 7, condition c.
This is an unfortunate selection for the lazy-hearted. Rule 7 Condition c has a lot of extensions, and given the different circumstances could be labeled with an F3, L3, L5, or sL3. I still don't know what those mean, but I can draw some conclusions based off of how the author is writing that an "Irregular Failure Flat" is linked to L5's, "Contracting Triangles" are linked to L3's, "Expanding Terminal Impulses" are linked with :sL3, and "Running Corrections" are also linked to L5's somehow. Furthermore, I don't know what those terms mean, but I am confident that I haven't drawn any false conclusions. Why doesn't this book come with flashcards?
I can't label m1 all of these things. I will now choose the description that I think fits it most closely:
I selected ":F3" because -- if m1 takes the same amount of time (or less) as m0 or m1 takes the same amount of time (or more) as m2, despite any other circumstances, ":F3" is a good possibility; place ":F3" at the end of m1.
The other choices all needed too many things to be true for them to be the proper designation.
The next closest was an ":L3" designation. I discarded this idea because m2 was supposed to be sharper than m2 and it is not. m0 was very sharp on this one. This was the contracting triangle one, which I don't know what that means exactly, but it does break out of a triangle to the casual viewer.
What do you think would you place an F3 or an L3 at the end of m1?
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Wow, this was a ton of work to come up with a shaky conclusion. Looks like I need to read ahead a little because I have no idea how F3 fits into anything anyways.
Here is the definition of (F3):
This structure label is the abbreviation for "First three (3)." An ":F3" either starts a series, occurs after an "x:c3" or is found between two ":5's" (all variations). If you find two ":F3's" next to each other, a new pattern (of a smaller magnitude) begins with the second ":F3." Circle the start of both ":F3's", but do not attempt to connect the two until the second ":F3" can become part of a polywave pattern using waves which proceed it (a polywave is an Elliot pattern composed of three or more monowaves).
It goes on to give a couple lists of how an F3 would fit into a sequence. An example of that would be
1. ? - F3 - c3 - L5 (circle start of F3).
...And so on.
This is mostly just to say none of this really makes sense to me right now, but I have to keep trying to shape these ideas or else I won't be able to use any of this info. I don't really like this book. I have to read every passage several times to make it stick :/ ... Not nearly as enjoyable as looking for simple patterns.
I was going to give more accurate take on live cattle vs feeder cattle, but now I'm kind of bummed so I'll do that another time perhaps.
EDUCATION - Moving Average Trading Tutorial ⚡⚡What is a Moving Average?
In technical analysis, there’s an indicator called moving average which calculates the average closing price over a set period of time. If the market is too choppy, often a moving average can help smooth things out and provide a clearer visual of what’s going on in the market and an indication as to where the momentum is whether it’s a bear market or a bull market.
How is moving average calculated?
A moving average is calculated by calculating the closing prices and then divided by the set number of days e.g. 100 day moving average takes into account the closing prices for the last 100 days and then divides it by 100 to give you the moving average. Once you have enough data, you will be able to plot a smooth line which you can use to help with your analysis.
How do you use moving average?
In very simple terms: if the price is above the moving average, you can assume that the market is bullish. If price is below the moving average, you can assume that the market is bearish.
The way we use the moving average is that we see it as dynamic resistance/support.
Dynamic support – When price is above the moving average and approaches it, the moving average will act as a support base where price could potentially bounce off.
Dynamic resistance – when price is below the moving average, price may come up to reject the moving average before moving lower.
Transition from bearish to bullish (vice versa)
We found that one of the most probable moments where the moving average acts as a dynamic support/resistance is when price impulses through the moving average and then retests it. It is possible to gain an entry on the retest provided there are other confluences playing a part such as previous structure or price action.
What moving average do we use?
100 and 200 moving average.
Examples
EDUCATION - Moving Average Trading Tutorial ⚡⚡What is a Moving Average?
In technical analysis, there’s an indicator called moving average which calculates the average closing price over a set period of time. If the market is too choppy, often a moving average can help smooth things out and provide a clearer visual of what’s going on in the market and an indication as to where the momentum is whether it’s a bear market or a bull market.
How is moving average calculated?
A moving average is calculated by calculating the closing prices and then divided by the set number of days e.g. 100 day moving average takes into account the closing prices for the last 100 days and then divides it by 100 to give you the moving average. Once you have enough data, you will be able to plot a smooth line which you can use to help with your analysis.
How do you use moving average?
In very simple terms: if the price is above the moving average, you can assume that the market is bullish. If price is below the moving average, you can assume that the market is bearish.
The way we use the moving average is that we see it as dynamic resistance/support.
Dynamic support – When price is above the moving average and approaches it, the moving average will act as a support base where price could potentially bounce off.
Dynamic resistance – when price is below the moving average, price may come up to reject the moving average before moving lower.
Transition from bearish to bullish (vice versa)
We found that one of the most probable moments where the moving average acts as a dynamic support/resistance is when price impulses through the moving average and then retests it. It is possible to gain an entry on the retest provided there are other confluences playing a part such as previous structure or price action.
What moving average do we use?
100 and 200 moving average.
Examples
CAD/JPY Short - 01 June 2021 | Hybrid Move Result: +3.00%Hey all,
Another quick breakdown of a Hybrid setup taken this month..
The trade initiated from a Sr. Daily Zone which was created all the way back in January 2018, where price showed a beautiful trendline break and a huge crash in price. Overall the monthly time-frame was sitting at major value as well together with the weekly chart being in need of a reversal after the strong 2020 and 2021 volatility in the markets.
The 4hour started to top out here after the daily showed a clearly over-extended run. When the double top formed at the 4hour chart, price confirmed the bearish bias with a clean 4hour star formation to the downside and a clean move later on. The orange candles at my chart are from our unique entry indicator developed to be optimal for our supply and demand zones.
If you have any questions, feel free to comment below!
Kind regards,
Max Nieveld
