Trading with EW needs to be flexible, and the wave count needs to be adjusted in accordance with the actual market behavior. Keep in mind that anything can happen. There are infintely many possible ways of counting waves. There is no definite correct one. It's really like seeing an art work, for you will need to feel to know if it is good or not.
DO NOT short against an explosive wave-5 because:
1. We don't know whether it will have any extension or not.
2. There is no meaningful point that a stop order can be placed to protect your position.
3. It's better to wait after we see a well-defined downside impulsive movement. Then you know to short when it rebounds, and you know where you can stand against.
At any moment, you need to have a backup plan - that is the
alternative count. When the market does not move in favor of your preferred
count, the alternative count may become the preferred one. Trading with EW is a process of constantly
thinking. It's just like playing chess with the
market. I don't mind to share my view every weekend because I will be happy if
readers make money and also share their thoughts with me. More people watch the
game (of chess), more thoughtful the wave count would be.
One more thing is about market correlation. DO NOT worry anything about that because:
X -> A
X -> B
We cannot conclude which one is correct: A -> B or B -> A ?!
Being trading for so many years, I have seen so many times that two markets move from strongly positively correlated to strongly negtively correlated. What I want to say is that you should focus solely on the wave structure of the market that you are trading and NOTHING ELSE.
Where to Place Stop Order?
How Do We Know a Wave Is Ending?
Count Cash Index or Futures Index?
See the Big Picture
Enjoy Being in the Minority
50/50 - 賣一半留一半
To Stop or Not to Stop
How to Follow the Trend?
How to Determine If a Wave Count is Acceptable or Not?
What Waves to Trade?
Wave Alternation or Replication?
Count Grand Super Cycle Wave or Not?
KISS Principle
OCO Order and Trading Wave-3
Learning Elliott Wave - Start From Where?
thanks
ReplyDeleteSnowrider, I have been thinking about your "trade the waves you count, and count the waves you trade". Say, today is the first day I trade in USD/JPY, what is the step you take to ascertain where you are to enable you to trade?
ReplyDeleteHi Arthur - Thanks for commenting! Please see the following post, and hopefully it can help.
Deletehttp://perfectew.blogspot.com/2012/08/from-arthur-snowrider-i-have-been.html
Snowrider, Thank you for your response. May be I did not pick a good example. Say, today is the bottom of the previous (down) wave (before the establishment of wave 1 and 2), then how is one going to ascertain whether this is a 3-wave correction or a 5-wave progressive wave? Or, do you trade wave 1, 2 at all? Or, you will trade through all the 5 waves (in one hit), riding through the wave 2/4 corrections, a swing trade, or do you get out of wave 1, then position for wave 2, and then wave 3 ...... 4, and then 5.
DeleteHi Arthur - Please see my reply at the following post:
Deletehttp://perfectew.blogspot.com/2012/08/kiss-principle.html
Snowrider, Thank you for your 2 responses. particularly, the second one. Since then, I segmented everything, and I can now see how you arrive at your preferred EUR and JPY counts. I should have spotted it yesterday, had I seen your blog then. Good calls!
DeleteYou are welcome! :)
DeleteSnowrider, Is it wise simply to stay off corrections? In another word, trade only the actionary wave. Trade wave 3 upon completion of wave 2, and, wave 5 upon completion of wave 4. Or, if one must trade a correction, trade only wave 3 (and 5) of wave C. And forget about the rest! I know, it is not possible to draw a hard and fast rule, but it seems that, in general, if the corrective waves are avoided, there are less errors?!!!!
DeleteArthur - Please see the post that answers your question:
Deletehttp://perfectew.blogspot.com/2012/08/oco-order-and-trading-wave-3.html
Snowrier, I am digesting your comments, and can you please tell me what do LMT and STP stand for? Thank you
DeleteLMT = Limit Order
DeleteSTP = Stop Order
Snowrider, As you know, I have only started to read your posts recently, and am glad to learn that you do not use indicators. I am in a love-hate situation with indicators. I would like to get rid of them completely, however, they nevertheless give me some indication, even though, at times, they do not work at all, but which I have prepared for. Would you be happy to tell me your view point of indicators, and why you dislike them?
ReplyDelete(Continuing on the above) and how would you be able to notice divergence(s)?
ReplyDeleteArthur - the following post answers your questions:
Deletehttp://perfectew.blogspot.com/2012/08/ta-indicators.html
Snowrider, I wonder if you can be kind enough as to label a monthly chart on EUR/USD from as further back as possible to date. I am trying to understand your way of arriving at where we are today. I am trying to understand how you arrive at your "very old" labelling. Thank you.
ReplyDeleteHi Arthur - I think that this monthly chart will help:
Deletehttp://perfectew.blogspot.com/2012/05/20111231-eur-monthly.html
The high degree timeframe's wave count did not change.
Snowrider, First of all, thank you very much for your speedy response. Most appreciated. If my interpretation is correct, what you are saying is, EUR/USD was (in late April 2008) completing a wave 3 up trend, and then went through a wave 4 in the form of a trangle, before arriving at the (current) final thrust, which will be the terminating wave of this larger degree. Would you mind to advise if this is your perspective? Once again, thank you for your effort. Arthur
ReplyDeleteArthur - Yes, that interpretation is exactly what I meant! From [[A]] to [[E]] is a gigantic triangle. Note that most of the time triangle occurs in wave-4 or wave-b but sometimes wave-2.
DeleteSnowrider, thank you for your confirmation. For me, the unfortunate thing about EUR/USD was, we do not have any "genuine" value of EUR prior to 1992. I appreciate the fact that, DEM was being used to treat as a token EUR prior to that. If you take a look on the monthly chart, you will no doubt find the disproportion of the "larger" wave 4, which is so minute when compare with the wave 3. And that, always remain my concern in the interpretation of EUR. I understand your perspective, and I think you are correct, but the disproportion ..... Unlike GBP, and its existence for such a long time, it would seem easier to establish a continuation of the currency profile.
DeleteHi Arthur - OK. I just took a look the long term chart and found that EUR's gigantic triangle should not be labeled as wave-4. (I haven't opened the long term chart for a long time because short term's wave patterns are more important.)
DeleteI want to make a correction about my previous reply. The wave structure from [[A]] to [[E]] is a triangle corrective wave without doubt, but it is a wave-d (i.e., [[[D]]] in my wave count). The impulsive wave from 2000/2001 to 2008 is a wave-c (i.e., [[[C]]]).
Snowrider, Thank you for your response. I think your idea that the short term chart is more important to us is correct, because whether it is a wave 4 or wave D bears the same end result, that it is the wave preceeding the terminating wave, and wave 5 is currently progressing. As you said, "count the waves one trade, and trade the waves one count". Now that we are in wave 5, count the 5-3-5 a-b-c to complete the "larger" wave pattern.
Delete