Neowave and River Trading Theory

Since it appears that studying neowave in its basic form will not yield profits, as seemingly evidenced by Neely's move to "River Trading Theory", and his findings that forecasting doesn't necessarily lead to profits, does anyone who's studied EW or Neowave want to try and figure out ways to profit from waves that may be along the lines of what Glenn is doing with Neely River Theory (NRT)?

It must encapsulate neowaves somehow, without the need for actually analysing waves.

This may seem that it would rely on more the post-constructive concepts as opposed to the pre-constructive concepts?

Maybe the characteristics of corrections vs the absolute count of corrections?

When trading EW, the key is what?

1. To enter after corrections.
2. To enter in the right direction.
3. To place stops in areas not likely to be hit / or when hit indicating that the analysis was wrong.


Maybe 1 isn't even correct. Maybe it's not about entering after corrections, but entering "in the middle of the river?" Maybe the river is something to do with channels? I know Mastering Elliot Wave (MEW) seemed to talk about the importance of channels.

The following is the sales material from his website, if anyone has any other literature that may give clues to how we can profit from elliott wave / neowave, please post.

If I had the $9,000 to invest in NRT, I'd definitely give it a shot... but maybe the book (MEW) and some creativity we won't need it.

Any how, this is open to anyone interested in brainstorming.

Here's the sales material:

Don't miss this exciting opportunity to learn Glenn Neely's revolutionary trading technology - directly from Glenn Neely!

Are you anxious to learn a proven trading technique - without taking the time to master Wave theory? Or do you invest time to create forecasts, yet your forecasts result in bad trades?

Here's your chance to be among the first people in the world to learn Glenn Neely's revolutionary, proven trading technology. In this private, real-time Trading Class, Glenn Neely will teach you his extraordinary, high-return trading techniques. You'll learn how to make money in the markets without forecasting!

In this 3-month, real-time Trading Class, you'll meet one-on-one with Glenn Neely over the telephone.


You'll learn:

* Glenn Neely's revolutionary trading service, directly from this financial icon.

* The secrets of trading without forecasting.

* How to use bar charts to make ALL your trading decisions. (No need to learn Wave theory!)

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Glenn Neely will coach you on every trade and teach you how to make objective, non-emotional trading decisions on any time frame. Your investment in this class will be well worth it. Once you've mastered these incredibly powerful techniques, you'll turn around your trading.

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Well my best guess on this is that since Neely, in Mastering Elliott Wave, required that 3 monowaves past the current one were required to do an analysis on the current monowave, he was probably not able to get into trades at a great price or at all, as referenced in the River Theory sales material.

As a result, I think that by appyling Neowave, but making some assumptions will allow trades to be made, though they will have to be without the benefit of full confirmation. This may be what he's hinting at. Because it sounds like he's bridging the gap between analysis and trading.

As a trader, I know that I can't get confirmation ahead of time, but maybe as he is coming from an analyst side, he was not comfortable with trading into the unknown, or maybe more specfically as an analyst, you're paid for forecasting, while as a trader, you're paid for making winning bets that pay out larger than the losing bets in between.

Any way, since I seem to be the only one interested in this, and I know that members of the site are bound by non-disclosures, I'll keep on plodding along on my own.

NRT is how to trade within 2 directions and 3 market conditions. NRT is based on logic concepts (chapter 9-11 MEW?) of NEoWave.

Here is some Glenn's answers:


The Three Phases of Market Activity and the Best Trading Strategies to Employ

Do you know the best trading strategy to use in today’s challenging markets? Do you know which phase of market activity we’re in right now? Most traders – including professional investors – don’t know the answers to these questions. In this article, I outline the three phases of market activity, then discuss the best trading strategy to employ for each phase, including Elliott Wave and other techniques. In addition, I recommend specific trading strategies for today’s current, difficult environment.

The three phases of each market are:

Bottoming/Topping,
Accumulation/Distribution, and
Trending (up or down).
First phase of market activity: Bottoming/Topping

A major market top or bottom is rare and, by definition, lasts a long time. Therefore, you can’t have a major top or bottom every few weeks. Recognizing a market top or bottom can be difficult, yet extremely profitable if you’re right.

However, this phase of market activity is one of the most dangerous times to trade, because it can produce repetitive losses if you continually guess incorrectly. For example, in an expanding environment, a market can be in a topping phase, yet make minor new highs over and over without changing the fact that a top is forming. Unfortunately, many people trade as if major market tops or bottoms happen frequently, which is why they can end up losing so much money.

Second phase of market activity: Accumulation/Distribution

Since one is the mirror image of the other, let’s focus on Accumulation: After bottoming, the market may bounce off the low and experience a period of back-and-forth consolidation. This occurs because financially powerful traders are accumulating positions, preparing for the future market advance. While wealthy traders accumulate positions, less experienced, under-capitalized traders are selling into the retest of the market’s bottom, thinking the market will go lower. While a majority of traders are selling into the market’s decline, this “public activity” makes the Accumulation phase possible for a minority of wealthy traders to hoard large, Long positions. In other words, when the majority of traders are selling, the wealthy understand this is an excellent time to buy, and they have the “financial patience” to wait for the demand environment to change, forcing prices higher. In the Distribution phase, the opposite is true.

Third phase of market activity: Trending (up or down)

Continuing our discussion from above, once nearly all positions that can be bought have been purchased, the Accumulation phase is complete. Most traders are committed – they’ve laid their claim – and are now waiting for the market to move their way. During Accumulation, wealthy traders capture nearly all supply in the hope future demand will make their long-term commitment worthwhile. This sets the stage for the Trending phase of market activity. As the economy improves – as it always does – the public realizes the “end of the world” did not occur, so their willingness and ability to invest increases. Over time, growing public demand forces prices upward. (Remember Economics 101: Increasing demand coupled with limited supply creates higher prices.)

In comparison to the prior two phases, the Trending phase lasts the shortest time. Generally, it’s the most difficult phase to profit from, because most traders are uncomfortable entering a market well after the bottom since it’s obvious they’re no longer getting a bargain.

What are the best trading strategies to employ for each phase?

Bottoming/Topping – At market extremes, NEoWave or Elliott Wave trumps all other techniques, leaving little doubt what will happen next and what to do. Wave theory clearly portends market potential, allowing you to catch major market turns. Ironically, at such times, the public (and your friends!) will have the exact opposite market perspective, leaving you a “lone voice in the woods.” Consequently, profiting from Wave theory requires the ability to identify patterns and enter when multiple patterns simultaneously end. Identifying and entering at major market tops or bottoms makes most traders extremely uncomfortable. As a result, placing your trust in Wave theory at this time requires mental fortitude and the personal confidence necessary to buck the majority and take an unpopular position. Though it often appears contrary to “logic or reason,” following NEoWave (or Elliott Wave) during this phase of a market’s development generally offers the greatest possible reward.

Accumulation/Distribution – After a major top or bottom, a market will transition into a choppy period (above its low or below its high). Wave theory can still be useful at such times, but its usefulness starts to diminish. Instead, oversold and overbought indicators tend to be more useful, allowing you to “trade the range,” getting in or out at each market oscillation. The longer the consolidation, the longer you would initiate this strategy.

For example, let’s say you have interest in the Gold market. In this scenario we’ll assume Gold recently began rallying from the $900 level. As one who desires to accumulate Gold, you patiently watch it rally to $1,000, which in hindsight enables you to see the market created an important and obvious low at $900. That observation allows you to objectively implement your accumulation strategy. When Gold begins to pull-back from the $1,000 level, carefully watch your indicators for an oversold condition similar to what occurred near the $900 low. If that oversold condition occurs when Gold is around $950, it’s time to buy. If Gold later exceeds $1,000, you can decide to liquidate some of your position (noting the new high) OR simply wait for the next “oversold” condition to pick up even more Gold. This process can be repeated over and over every time the market exceeds the newly noted high.

Trending (up or down) – As I discussed in my previous interview, this market phase can be random and unpredictable. Here, Wave theory is least useful. During the Trending phase, it’s best to do what most people are afraid to do: buy into market strengths. Keep in mind, strong market trends are not common, especially those in which you can buy into a new high or sell into a new low. When strong market trends happen, they can yield tremendous return in a very short period, far outweighing results you might get from other market phases.

While it’s clear when a market is trending, a safe, low-risk entry may be difficult to identify. So, what do you do? To explain, let’s continue our Gold market example: Gold bottomed at $900, rallied to $1,000, then sold off to $950. If the Accumulation phase has ended, Gold will next move into an uptrend. This is when the “scary” buying-into-highs strategy actually works. In our example, you would place an order to buy Gold at $1,001; if activated, your stop would be just below $950 (say $949). This way, you are “going with the flow” of the market, letting it identify your specific entry and stop points as it progresses. When implemented at the right time, this strategy produces the greatest profit in the shortest period.

(c) Glenn Neely

Enjoy