Cyclical nature of Trading

OK, now we have had a few very very good days in the US e-minis with some massive profitable trades, we must keep an eye on the Cyclical Nature of Trading.

Too many amateurs wait for a few good trades before they take place their trades, but then a few losses come along so they stop, then they see a few good trades so they start again, then a few losses come round. In other words they do exactly the wrong thing !

Once you understand the Cyclical nature of Trading you will understand that you should be come cautious about trades after a good run, and then get keener to place trades after a run of bad trades. This is what professional do, because they understand that profits and losses come round in cycles.

The amateur tends to do exactly the wrong thing at the wrong time... because they do not understand how markets unfold in the “real-world”. So my advice, is to be slightly more cautious now as we have had a run of very good trades...............

Thanks, Steve

TS4 sell on the 3min YM

OK, now we know that we should be focusing on the sells (and not the buys), the min YM did give us a lovely TS4 sell around 11:00am

The YM then declined nicely, past a potential buy, but we have already determined that the larger degree trend was down, so this buy should have been ignored in preference of the current short trade.

The YM then reached the first projected profit target when (using the standard trade management guidelines) a very nice +4.9R Profit was available (using slippage and commission)

A good end to a very good few days in the US e-minis :)

Thanks, Steve

As usual – larger degree trend first

Hi Everybody,

The trend on the 15min YM on Friday was Still down, with no visible DP or WPT support at all. As such, we should have been focusing on sells on Friday and ignoring Buy setups.

OK, with that in mind, lets now move down to the 3min Chart

Thanks, Steve

DP buy on the 3min Chart

Now we have confidence in the 15min DP support we can consider the 3min DP long trade.

Yes, it was a hard and boring trade, but the NQ did reach the first DP profit target. Using standard trade management guidelines, meant taking profits there as the STF was weak. This added another +2.2R Profit (ignoring slippage and commission) to what was already a brilliant and very profitable day on the NQ.....

Thanks, Steve

Back to the 15min Chart

OK, so what of the 3min DP buy that we saw at the end of the last post. Well, this is where we go back to the 15min Chart and check the “larger degree” position.

When we do that, we can see that the 15min NQ is now at DP support, so this not only the logical place to start to banks profits on the prior DPO short trade, but also look to reverse to a new long trade....

Thanks, Steve

Isolation approach to Elliott Wave Part 2

OK, on the 3min Chart, we got a lovely 3min DP sell setup. As we have seen, we were already anticipating a decline on the 15min Chart, so this was a good 3min sell to consider.

Now comes the important part................. The markets actually declined a lot faster and sharper than a 15min Wave (4) correction would expect............... Sop in “traditional Elliott Wave terms”, the pattern had gone wrong.............. BUT (and this is the really important part). Do we care ? Well, no, because we have a short trade that is now running further and as such making more money than anticipated......

This is so important, and why the Isolation approach to Elliott Wave actually works far better in the “real world” because Elliott Wave patterns fails so many time, BUT when they are obvious, they do give brilliant “trade entries”. And this is the important difference, in that we use the pattern for the trade entry only and then manage accordingly, and do not worry about any “forecasts” !

The result, a lovely +6.8R Profit (ignoring slippage and commission) as a DP comes in

Thanks, Steve

Isolation approach to Elliott Wave

Hi Everybody,

Yesterday was a perfect example of why I invented my unique “isolation approach” to Elliott wave analysis, where we use Elliott Wave patterns “just” for the trade entry and then “do not” try and “forecast” where the market will go next. This is the biggest mistake an traders can do, and is actually not necessary for trading profits, as we will see in this example

Here the 15min NQ was at a Wave (3) high, so normally Elliott wave analysis would expect a Wave (4) type decline. But the point is that a decline was anticipated, so we could look for sells on the 3min Charts.....

OK, onto the 3min Chart , Steve