Plan the Trade

When trading such timescales as above, can we be sure of any one count? is the recent abc pullback from the spike up, merely corrective, (as a further x wave)? the fresh low suggests trend change to short, but how do we know the indicated x? wave has finished as one double set? maybe that too, will have it's own larger x wave and another set etc etc...

The way i see it, is that the above count is the most likely, (thus another complete abc short underway), but as i say, too many possibilities for me....

This mornings trading - no losses, 3 wins, 26 pips, but i vary position size according to size of set up, so it becomes more about Risk vs Reward;



I got sidetracked Monday and had a terrible day. I was trying to tweak when the patterns i need did not present themselves. I'm finding this is common on Mondays and i do not think that i will continue to trade them for this reason, but will see...

There really is no need to tweak. For years i have been trying to identify powerful 3rd waves, before the event, but subwaves 1&2, are always mixed in amongst the prior corrective wave and difficult to determine.

I have highlighted the C&H trade as the best tool to both identify this and also to enable entry with minimal risk and maximum probability, both at the start and also once the trend is underway. If the trend is really strong, any 123 should be traded after a pullback into trend, as it will likely be, only the major corrective waves that will produce a double abc. Failing an obvious 123, the next best idea is to buy each fresh high, (or sell each fresh low if short) after any discernible pullback. Stop goes at high (or low) of the pullback...

But my favourite method is when we have chop. The UJ seems to trend this way most London am sessions, so i am sticking with it for now. I switch to the Dow for the afternoon session.

From the chart above (and countless others recently), you will see why it takes a blend of patience, discipline and confidence for this method to work.
Ignore a simple abc, it could be all the pullback that you get. Ignore the ensuing pullback as an X wave UNLESS it is really easy to spot the end. If fib levels and/or a visual abc look, breaking down the c wave into 5 subwaves present themselves, i will trade the following 'a' wave, but generally, i am trying to identify the end of the 'b' wave and entering on prior S/R level, (hopefully) straight into the 'c' wave. Get it right and the patience is all worthwhile. Get it wrong and the risk is skewed in your favour in any case. I cleared excess of 6 times my risk in those three trades...

thank you cableguy

No worries!

Does anyone else have methods to combat the stress that comes hand in hand with trading?!

Harold, as we know, likes to Vape during the trading session. I have not come across anyone else ever discussing it. I wrote elsewhere a long time ago, that i consider mountain biking and weight training part and parcel of trading, for this very reason. Cardio is a natural stress reliever and supresses cortisol.

I have my own gym in my house, but due to a badly broken wrist a few months ago, (the result of a mountain bike accident!), i have not been able to do much, (as yet!), since...

I think if you are trading longer timescales, it does not really apply so much, but if you are actively day trading, we all know that over-coming these stresses is part and parcel of the game.

There are so many aspects to being (and staying) successful. You have to find that blend that i spoke of above. Being fluid, but without over-trading, maintaining discipline, but not freezing as a result.

My way of viewing PA is always as an Elliott Waver and it almost became a curse. I would always see reasons NOT to take a trade and yet, that led to missing countless set-ups, that always looked obvious after the event (hindsight), this leads to frustrations and the tendency to take a bad trade next. If you let that affect you, you then put yourself in the wrong state of mind.

I have uncovered many different methods for trading, but they all have the basic same common theme - find a trend, trade the pullback, but of course, we all know that the biggest single question is; how long will the trend continue? Harold's trade management is second to none. It takes considerable experience to achieve such...

In a video of his a couple of days ago, he was in a trade which went against him and had formed a 123 in the counter-trend direction, from minus 8/9 ticks back to -2 and i felt that if it were me, i would have taken it right there and then... but here's the thing, it skipped straight back to minus 8 and i know that human nature would suggest that you now take this worse loss, because it becomes a pain threshold... my pain threshold to such is very low, thus i would more than likely have taken the bigger loss. It came back and i think (from memory) it was a minus 5 for Harold, but my point is, that overcoming what we are hardwired to feel, shows an incredible control...

To counter this, my approach is to use EW to determine what i believe is a point that should not get broken, thus my wave counts suggest another high to come ('c' wave) and also that i no longer have to worry about my stop point. If it gets broken, my analysis was wrong and i already know how much i will lose (my predetermined risk).

Anyway, soon i will be back on the bike again, but just wondered if anyone else has opinions on this subject. Marijuana perhaps?! )

A slightly different take on the QQQ's;

Dow;

Gonna do a comparison post between my take on a set-up and the way H will likely view it.

This was from the UJ on Friday, so candles will look different to the Q's, but principle is the same;



We have a 123 formed which triggers and thus the following pullback is sold. You can also see that there was a smaller 123 beforehand, thus potential two bites of the cherry, for me, that would be a little dangerous as if the pullback thus far was merely abc formation, it would be back to the prior uptrend;



So in my mind, this is how i would view it in EW terms. A double abc correction as a minimum was underway, with abc X and 'a' of the following set printed, thus i too, would be looking to sell the pullback and hold down to a fresh low.

Another way of looking at it, would be that you are selling the end of the handle of a C&H, but these are more appropriate after a more shallow 'bowl' like appearance or after a definite 3w pullback (abc);



The important thing from my view is that we have had 3 peaks/troughs for a trend to be underway. I will try to find a better example of the C&H set-up...

Ok so here was a perfect example of my 'buy the handle' trade...



For this, it is the appearance of the pullback which is key. It has to have a definite abc look to it - (blue count).
Notice from the low we have minimum 3 peaks as per above. There was no crossover, thus it is a 5w impulse move (either a wave 'a' or a wave 1 of a degree), we now know that we should have a minimum of 5 waves to follow, so when we make a HH and confirm it in 3w, it is highly likely that at least one more further high will follow, thus we buy the pullback at previous Res point. Look how if we had bought the fresh high, we would barely have seen a profit, whereas buying the pullback, armed with the above info, means little to no heat and straight into $'s of profit.

Again, this has taken 10 minutes to print, but in real time you need to be able to be sharp and fluid enough to evaluate and take these set-ups as and when they print...

hey CG you got it. there was another 123 to the right that broke pullback misses but then made another HH and you would have caught the ride up

It's like i said before H, i've put countless thousands of hours over several years into studying EW and how to apply it, so that it works time and time again, as opposed to just drawing some letters on a chart and hoping it is right...

Well, you know more than anyone how much trial and error and how much testing needs to be done, with regards to timescales, patterns, formations, triggers, liquidity etc and that is before tackling the psychological aspect of it all.

But to find that we both discovered better profit from buying the pullback of a 123, but by different approaches, was an interesting fact for me. Yours is a more simplistic approach. I still try to wait for a few things to line up, but only because when i am right and i am buying the end of a 'b' wave of a second abc set, i know that the minimum will be a fresh high, thus if the set-up is big enough, just one of these a day will suffice.

I have even learnt a little more from you recently, regarding candles and if i can not find a pullback to a prior minor subwave, i am already looking at doji's!

Well, you know that i am grateful that i stumbled across your flag trading method so many years ago now! I owe a lot of my success to you sir!

well CG its just one beggar showing another beggar where he found some bread nothing more than that just discovery

Another example of a C&H 'buy/sell the handle' trade;



It's hindsight, but i would be selling the indicated X wave at prior Res, whereas, i think H, i'm right in saying that you would also have sold my marked 'd' on the chart for a handful beforehand?!

in middle of screen you have a D marked off heres what I see prior to that a LL LH not a LL not a HH so it formed a 123 to get back into the down trend then once it broke the pullback to the D area is the short zone that's the place it shot down from and it correspondes the the 3 point see what I mean?

Yes, for sure, it's basically a smaller bowl taken off of 'A' within my overall chart, thus wave 'c' (of overall C) makes the fresh low (the 123 trigger) and wave 'd' is the pullback. At this stage though, i would be fearing that it was a smaller ABC and potential for return to upside, hence the overall fresh Low ('e') in ABC to confirm back to downtrend was (imo) safer. But of course, i do see your style working more frequently... it's just subtle differences and also why i wrote earlier in the week, that sometimes my EW view can be a curse. Still, it keeps me out of trouble sometimes too, so rough with the smooth, i guess!

heres 1 thing I have observed over the years when price forms these patterns and they break a majority of the times there is a retest of it. In futures it happens because not all the orders got filled there so they take profit and then that creates the natural pullback to area where they reload and take it further

Most comparisons are the same story as above...



Even though this is a hindsight chart, the ending diagonal (wave 'v' of first wave 'c'), after the obvious wave 'iii' (strong thrust), is easy to read in real time.

So i would view it, at that stage, as one abc set complete. You could buy the pullback at prior Demand zone (end of X wave), but it is not until wave 'a' of the next set makes a fresh HH, that i would expect more to come, thus i would buy the pullback of second wave 'b' at indicated lower red line for second wave 'c' (in 5w) - view it as buying the handle of a small C&H trade...

So again, there is actually a trade before the second 'b' wave, but another example that my EW approach bears the same result

It's Sunday and i'm currently back in UK, away from my family. I thought i would go through one of H's videos just for comparison purposes.

I stopped the vid and took a screen print when i saw this, because it is exactly what i look for;



We have a HH and then a pullback. The pullback prints an abc, but then another pullback (X) and a further low (wave 'a' of second set), thus i too would be short from a similar position, expecting it to be wave 'b' end thus my stop would be a tick above the X wave. Target is a fresh low (below wave 'a') but not expect an overall LL beyond start of move, because we can not have a single 5w move on it's own (unless it is a 'c' wave), thus we should expect a fresh HH thereafter for either wave C or much higher in a wave 3.

The result;



I genuinely stopped the video and applied the labelling, before resuming the video, as this is exactly how one must view things in realtime. This is as close to trading live for me that i can do over a weekend!

Compare the above with my post of last night;





Top one is the UJ, lower one the Q's, different times...

This happens time and time again, on every chart, on every timescale, but again, it is why i wait for the double abc to present itself, as the first 123 (abc) might be all you get (simple correction) and a return to the prior trend, thus putting you in the wrong direction...

I'm planning on doing a little tweaking this week. The plan is to spend less time in front of the screens. For this, i need to work on increasing volume of possible trades.

There are two options that i believe can enable this. The first is dropping down to micro tick scale, but the spread along with Spreadbets makes this impossible. It is unfeasible to take targets of 5 pips or less and lose 0.8/1 pip in spreads... Trading Futures might be the answer to this, with a fixed commission cost.

However, i am unsure of options regarding Forex pairs, as i understand it, there are emini forex options out there, but still with some kind of spread, (at least moreso than index's), but i admit to having little experience outside of my Spreadbetting account, so i expect there is lots to uncover over the following few weeks regarding this matter.

It is natural for me to be trading around about now, (after London open), but the FTSE seldom trends the way i need, so that is out of the window.

The more i watch Harold's videos and observe the movements of the Q's, the more i like it. So it would mean me switching to trading the Q's mid afternoon and perhaps again in the evening, for an hour (morning open and early afternoon US time).

This would also enable the second option for me, that is to trade all pullbacks of valid 123's (with trend), but to utilise stops closer to the way H does.
I am so impressed with the way he manages a, how should i say, 'bad' trade to come away with minimal loss, whereas, my stoploss method means a stopout and definite loss. The way the Nasdaq trends, enables this. It seldom seems to break and run, without revsiting prior Supply/Demand zones and i really like that.

The UJ has it's moments, but it can be an animal too. One minute it can trend beautifully according to EW and respect fibs, the next, it causes fake reactions at key fib levels and then blatently makes one more (stop run) peak/trough... It's true that millions of traders around the world will also have bought/sold at these levels, but the insties know how to use that to hoover up more positions for themselves, thus fibs can be both deadly accurate and also just plain deadly, if they are not consistently accurate, they become a headache instead.

Again, that is the appeal of becoming more fluid and taking many more trades. using S/D areas in the way that they should. I can not use such a simplistic approach with forex, unless i switched to something a little calmer, like the AudJpy or similar, however, my provider has close to 3 pip spread on any of these and thus scalping is out of the question.

All in all, i will now look into switching to trading Futures and then look to adapt my trading style to suit.

JT wrote last week, something about having a video or whatever it was on, in the background to stave off boredom whilst trading all day. I can only think of my own experience and that is, trading for such long hours is counter-productive. It is virtually impossible to stay 'in the zone' all day (imo).

It is far too easy to be side-tracked, on social media, or watching youtube clips, with charts open on another screen bank, only to realise that you've just missed a set-up and trade. Time and time again. Unless you are 'in the zone' and constantly trading, you are likely to keep making a bit and then giving it back... I have long struggled with the discipline req'd to sit on your hands when needed and then take a trade without hesitation when you consider a set-up valid. The patterns i uncover here, happen with reasonable frequency, but not to the extent H takes trades and i have to admit, i would far rather dedicate an hour in the morning, perhaps an hour in the afternoon or evening and actively trade each and every pullback...

Not been at the races this morning at all. Missed so many pips on the UJ. This is a beautiful chart and trend;