DAX H4....nice set up.... imo
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{quote} Folks, Perfect patterns are hard to come by. In general with trading, close is close enough. There are many occasions in Bill Wolfe's book where he fudges the start point of the pattern to fit by placing it horizontal to point 3 when it actually has no business being there. Maybe it was a case of curve-fitting after the event to show trades that work. To be honest, there are loads of set ups every day that fail so it is a matter of trying to read the chart. I would suggest looking at whatever setup you find and analysing it objectively....
Good advises
. would you please elaborate more on the mathematical reason behind 50%.
{quote} Thanks a lot sir: Good advises
OK the mathematical rationale for a 50% retracement is very simple, but I shall go into a little more detail.
Risk, reward and PROBABILITY.
In order for a trade to make mathematical sense the following must be true:
P(Success)*Reward - P(Failure)*Risk > 0
Probability is the concept that never gets mentioned when traders talk about a trade. In general they only say 'it's got great risk-reward' and maybe they are right, but only if the probabilities stack up. With any trade, someone (an institution) has to take the other side of it. They are not going to take the other side of your trade if they have a tiny probability of winning, and you trade could be buy OR sell. Therefore, we have to assume that trading survives in a constant fog of probability between say 40 and 60% ie. If you are confident something will happen, then you may have a 60% chance of it occurring. Traders always want Low risk, High probability, massive reward trades. They cannot exist! There are fleeting moments throughout the day when probability may approach 70-80% (I wish I could spot them in time!) but the market quickly moves to close this down and probability once again hovers somewhere around the 50% mark ie 50% probability of moving x ticks before an x tick stop is hit.
So, lets take a bull case. The market has had a strong bull leg and you are impressed with it; impressed enough to think you want to buy a pullback. The implication is that you feel that the market may be trending and you want to get in on the move. Trending would then imply that you think the market will make a higher high, at least by a small amount. As you think the market is trending and the market tends to keep doing what it has been doing then we can surmise that we have a 60% probability of making a new high. A 50% pullback on the move means that you are midway between where the market is telling you that you need your stop and the high of the move. Therefore it is the point where Risk (R) = Reward (R). So taking probability into account P(success = 0.6)*R - P(Failure = 0.4)*R = 0.2R > 0 so it is mathematically logical to take the trade or as Al Brooks would say 'it has a positive traders' equation'. If we ignore the concept of probability then we can just say that a 50% pullback is the point at which our potential reward is equal to our risk.
Quite long-winded, but I hope that explains it thoroughly.
- #589
- Edited 10:05pm Mar 29, 2017 1:58am | Edited 10:05pm
- Joined Jun 2010 | Status: Trader | 1,085 Posts
No one wants to be defeated~
- #598
- Mar 29, 2017 9:42pm Mar 29, 2017 9:42pm
- Joined Jun 2010 | Status: Trader | 1,085 Posts
{quote} patterns are important.but we should regard to elliot wave and trend etc..
Not good at english, picture will show everything:
using AB-CD wave, stopped out
using fibo with CWW together...win
No one wants to be defeated~
- #599
- Mar 29, 2017 9:53pm Mar 29, 2017 9:53pm
- Joined Jun 2010 | Status: Trader | 1,085 Posts
No one wants to be defeated~
