Animal Farm (Renko system)

In regards to different brick sizes or even time based charts. Here is one I just traded on the USDCAD M5.
I let both lots run to nearly the Reward level and manually closed them. I liked the chart so I did not take profit on
one lot at the Flat, I just let it move along to the Reward. 22 pips thank you.

And how has the EURUSD been doing? Some trades made the Reward level, all made the Flat level.
Pip returns at the Flat and at the Reward are shown. Present Four Trade is still in progress with profit
taken on the first lot, stop needs to be moved now.

HHLLHLHH is still confusing me. In the picture we see left a LL and next a LH then a LL that confirms the LH before, as the price runs further we see now a new fractal above the left LH. but the price did not going up after, instead it made a new LL this confirmed that the left LH goes to the right fractal an makes there the LH and the left LL goes to the right fractal too? am i right or wrong?

Dont pay attention to the next HH, its wrong. the fractal is on a lower level than the last LH.

I did send you 2 PMs




in the next picture we see a HH? and HL? but the HL is not confirmed by a new HH, so how is this situation to handle?




and the last picture there is no fractal but if we use the expansion we see the early entry would be triggert. so this is a loss?
because sometimes the fractal is not ready jet and we go for a entry like in your picture above.

sorry for my english, i hope you understand what i mean.



I did send you 2 PMs

Hi eurix.

Some good questions that will help illustrate some important points. I have been at this for along time and I also have a strong Elliott Wave background, so I tend to not emphasize some things that are not as readily accessible to other people.

Here is your first chart re-visited:



First of all, always zoom way out to get the big picture before you attempt analysis. The HH HL LL LH structure will be more apparent that way. I do not know what happened to the left (yellow line with ? on the top left) so, that leaves me at a disadvantage. The left contains information that is needed for the analysis in the present. Once you can get the big picture, you become better at identifying internal waves inside the large ones.

I have put yellow check marks on what is likely the correct "larger" LL LH count. If you go back and do the HH HL LL LH count on the chart you will soon see that there are little waves inside the big ones, They will will show up and confuse, as happened here. It takes practice until you get a better feel for it. Waves within waves is always a tricky thing and I don't always get it right either.

Inside the yellow circle you identify a LL LH which could have been traded short for a Flat Line profit. Price corrects and rises towards the Teeth line and forms a fractal. However, price did not rise above the Teeth line. It is a more reliable trade when that happens. The second time it corrects price goes above the Teeth line. I placed a yellow Four there ( numbered 1) and it is a good trade to the flat line. As long as you are in synch with the trend, these generally give you at least a Flat Line profit.

We then get two inverted Four patterns, numbered 2 and 3. Price rallies then corrects below the Teeth Line. Both of these are good trades, but I have not told you how to identify these yet as they occur before we get an E line break. I will cover how to find these when I talk about the BF Fork, at a future date.

Do not despair. The HH HL LL LH count takes time to master and is tough to do as it evolves. The HBF chart and the AO help sort out where you are and the Teeth line is really great. After a while you will read it more easily.

If you send me info on which pair and what brick size this first chart was, I will try to build a better picture for you.

In your second two charts, I think that both situations will become more clear as we discuss the BF fork, which is a very good way of predicting and or confirming a trend reversal. Let me know which chart number 1 was and I will do an extensive review of it, before I go on to the BF fork. I hope that will help.

Learning how to do trade from a discussion thread is a bit like learning how to swim, by reading a bunch of instructions and looking at a lot of pictures of people swimming. Not easy when you are actually in deep water.

Good questions.

I have attached some indicators that may be of assistance with the HH HL LL LH thing.
Use with caution.

One is a fractal zigzag which can be helpful.

The other two are also zigzag indicators. The latter two show a higher degree HH HL LL LH and a lower degree HH HL LL LH which occurs inside the larger waves.

As you study these you will see that there are times when they are wrong. That is why I don't really depend on them. However they may be useful to help understand the whole concept of smaller degree HH HL LL LH within larger degree HH HL LL LH counts.

Using the HBF 30 pip bricks is an attempt to do the same thing.

My advice is to learn how to do it yourself. Indicators like this are not that useful, unless you understand what they are attempting to tell you.
Once you understand that, you don't need them anyway.

Kind of like training wheels on a bicycle - who needs those after you learn to ride?

All 3 pictures are from the GBPAUD 10 Pip Bricks.

This is getting very Elliott Wave. Sorry about that, but that is actually how the market works and my FOREX approach is just an attempt to simplify it.

OK here we go - GBPAUD 10 pip bricks

First of all, I like to zoom way out and eyeball the chart. Then I add the waves that I can see. Waves join extreme highs and lows and lows and highs. After a bit of practice this gets easy enough to do. On the chart I used purple lines to show the larger structure.

Next, I add my HH HL LL LH labels on the purple lines. I can see these pretty easily on historical part of the chart.
I identify the E line for the purple structure. That big E line tells me a lot about what to expect after price moves up through it.
It could move up to a big HH. We won't know for sure until it does. It could become a big LH , but that doesn't matter for now.
We are after trades that will occur on the way,

(Note: I should have added a purple LL on that last down move.)

Now we start to focus in on the current wave structure. We have a good idea of what the larger waves are doing and we now get ready to analyze the waves inside of the more recent ones. We can eyeball the HH HL LL LH structure or use fractals to draw this in.

A very sharp eye will notice that there are smaller HH HL LL LH structures in between the fractals. (Hint look just to the left of the last LL.)
If you used smaller bricks on a separate chart, this would show up and be easy to see. That is why I like both a HBF chart and a LBF chart
work with.

We are going to look for trades on this smaller scale but always keep an eye on that bigger E line. It is very powerful.

Now we do our detailed analysis:

This reveals the places that we can trade a Four on this particular structure. Our reversals become easy to find because we
know where to look for them. The red E lines and the Bill Williams Fractals show up and alert us to trend changes. Once we know
the trend direction we look for counter trends that (preferably) cross the Teeth line. Drawing a Four follows.

All market charts do this.

[On one occasion, several years back, I did this exact analysis on the OEX and refined it further and further down until I was right in the M1 charts.
I caught a turn on M1 that evolved all the way up with each wave degree until I was up over $20k in a few hours, on call options. It was a thrilling ride.]



Now, see how many trades you could have done here from the counter trends, just drawing a Figure Four.

Bill Williams uses break out trades as price moves past the latest fractal in the trend. By using Four on the counter trends, we can gain on that by an extra 50% to 61.8% per trade.

I hope all this analysis of the GBPAUD clears up some of the confusion. I still haven't got to the BW Fork. It will help further.

One more thing:

The divergence on the AO tells me that GBPAUD is at the end of wave three and now in wave four. The market is always choppy in a wave four. I expect a trend reversal to the upside will be the next good trading opportunity.

Fascinating thread and excellent system. I am excited to learn more. Please find my attached chart and analysis and provide any comments on identifying potential trading opportunities. Thanks

HI WAB,
i have question about demark indicator what you attached on first post.

is Dot (yellow highlight) repaint / lagging?

Basically the dots are fractals. An up fractal is formed when the two bars before it have lower highs and the two bars after have lower highs.
It looks like your hand, with the middle finger as the peak. A down fractal is the opposite. By their very nature, a fractal appears to re-paint
as it forms. Once it has formed with all five bars it will not repaint.

At present I am not using the Demark indicator but it will soon be in use again, when I introduce the BW fork.

I had to search for some videos that explain what I am leading up to.

(Since I still have traces of a South African Accent, I enjoyed this. If/when I make a video of my own,
it will not have as strong an accent - though people tell me I have a sort of Canadian accent these days, eh.)

I found two videos that I like: (One I have had uploaded to my computer for several years and was delighted to find it is still on line.)

Both of these are worth uploading and keeping in your resources for future reference. Another that I uploaded is no
longer available anywhere. I guess I need to make a video of my own to explain some things, then I don' have to worry about finding
one, that sort of does what I need.

Anyhow, the first gets us started nicely and I urge you to look for the HH HL LL LH price reversal, explained
here in a slightly different manner. It soon becomes a very recognizable pattern. No matter what we call this or
how we decide to trade it, it is pure market behavior and occurs over and over again. Yes, on Renko Charts too.
The second video will follow once you have had a chance to digest this one a bit.

Well I for one feels right at home with all the recognizable accents.

Wab, now that I know more about your background, I like you even more.

While I not yet use everything that you teach....I am more of a scalper type trader at this stage.......I must admit that the MACD(5,34,5), the Alligator Teeth MA and your whole concept of HH,HL, etc with E-line etc have already made a huge difference to my own trading. First time ever that I feel that I can start to sort of see the bigger picture of where the market might probably go. Or have some grasp of market structure.

Baie dankie!

You are welcome ou boet. Doing this thread helps me out too. (If you want to learn something try teaching it.)

Where are you located?

I would assume you can figure out where I am located from these images

I would say Pretoria. How are things these days. Getting more and more like Zim I would think.

Hi Wab,
I just want to say you're really doing a great job; your system opened my mind. This thread is a gold mine...
Go on my friend, I'm on board...

Thank you Jigjen67. Most kind words. I will add more material soon.