Marko23

EUR/USD in 5th wave down, should not become larger than 3rd wave.

Recovered more than half of the loss from Long

EW rule of thumb: when the 3rd part doesn't make it past 100%, chances for a 5th wave up deteriorate. ADD: Long stopped.

First Long chance with EUR/USD ADD: Only a measured move up.

EUR/USD now below December low

EUR/USD first bounce

38% correction with EUR/USD

EUR/USD: almost nothing happens when there is no trading in the U.S.

EUR/USD remains undecided.

I went thru similar experiences, but decided to solve it on my own. For me the main problem was that I am a successful programmer. As blowfish already wrote, this is a curse. Programmers who want to become traders must be brainwashed until they no longer want to be in control of the market during trading.

It was a bit of a challenge and not without self-interest to read a 17 year old reprint of a pork belly chart. Usually it helps me if I can help.

The "b24x" rule is another rule of thumb from the back of a paper napkin, nothing carved in stone. The following drawings are from Prechter's EW booklet: Normally I would not put on a trade in one of the waves marked in red.

Glad to help you. They say "80% of trading is waiting." As a rule of thumb how long it may take, please look at your example 9 bars later The orange lines are a guess of the time to the first target. The movement down has three parts. The third part took about the same time as parts one and two together. This sum is just a guess, which worked quite well in this example. Please don't try it in a 5m chart. The longer the time frame, the better. If the market wait for news release during the day, these guesses are complete nonsense. All my "calculations" in the chart are rules of thumb or guesses, one draws a vertical or horizontal bar and moves it to a new place. They are not exact and I can easily give them up if the market decides otherwise. I do not have to be right with these guesses and am (more or less) free to perceive what the market does. The 1st target is reached and the stop can be lowered to break even. A new upmove is always possible. After another 10 bars price drops under the 1st target and the stop may be lowered again. It took 28 bars to get to a mentionable profit, more than 5 weeks of trading on a daily chart. After another 10 bars price finally fell below the 2nd target. Thanks for your patience with these rather lengthy comments.

Thanks! I'll come back to "b24x" and scaling shortly, but want to continue with rcossey's example first. This is of course hindsight! Anyway, it should be my thinking, when I'm fully aware of PA, which is the case sometimes. Price now displayes two moves of same degree, size shown on the right. If I trade short now, I trade this degree. Therefore the stop has to be at the top of the upmove not at rcossey's "2". Only after price crosses that point, I know for sure price didn't make it downwards. If I set the stop a bit above rcossey's "2", I'm an easy prey. So if I can take this risk, my target is the beginning of the upmove, about 1.3R, and I have to be very patient. If I choose not to take this risk, I wait. Six bars later, the early "2" has been taken out and a chop zone may develop. The green comment is still vaild. Price made two attempts for a new high with no success. When it breaks support now, I'll perceive the beginning of a downtrend and can short with a slightly lower stop (visible) and a better chance (assumed!) to get to the beginning of the upmove. 8 bars later, support is broken, I traded short and am by no means save now. A measured move down is visible and price could very easily stop on its way down. Therefore the stop must remain at point "2". Risk cannot be reduced in this situation even after 7 bars in the trade. To be continued....

If you could explain that, you would have no difficulties to spot them... The chart is a good example, because it also shows, that the 123-heuristic does not always work, I'll come to that later. First: the following explanation is my way to sync with the trend; perhaps it can help When I see this break of trendline, I assume to correction to the upmove. A correction normally retraces from 25% to 80%. A standard guess (for me) is 1/3 to 2/3, the fibs have 38% to 62%, Gann has 3/8 to 5/8. If the market gives me an unconfirmed support in above range, I that it as the market's guess for a retracement and give preference to the market's guess. Next I assume that the correction will take some form of a three part movement, "abc" in EW terms. Now I observe the market with two very loose assumptions a) retracement because of broken trend b) three part movement and absolulely no ego. I do not want to be right about these assumptions. Anything can happen with the following bars. Two bars later I observe a small upmove and confirmed support and do not trade it, because this may be part "b" of an abc down. I have the "b24x" rule against going long. Another three bars later price is at confirmed support again. If I trade short, this would be the continuation of the "abc" correction, which could come to an end at any bar before or at my 2/3 guess. Since this correction is the "b" of an "abc" movement in the direction of the upmove, I would violate my "b24x" rule. Therefore I wait again. To be continued...

Last picture for EUR/USD this week I prefer this way to label it. The numbers are aligned in the direction of the anticipated trade.

EUR/USD waiting for 3 ADD: Reset (new 3-day low) for EUR/USD. FDAX was a much better Short than EUR/USD today.

Great job Thales!! Thanks a lot.

EUR/USD waiting for 3 ADD: Reset

ADD: may become a 2b ADD: 3m timescale

Another 3-day low, but the Short signal was only visible in the 3m chart and I decided to trade the 15m-chart for this training period.

That was quite clear. Thanks for your clarification. PDP-8e with DECtape&TTY was my first hw, when I was 14.

EUR/USD in 15m and 3m chart. Short in 3m chart

EUR/USD Short stopped at break even.

You may be right, but it is not for me. I have some limitations with non-technical English, so my comments may sometimes sound rude. This is not my intention. I began trading to find out, whether more than 30 years of software development (quite successful) could give me an edge in trading. I still love programming! But to become a good trader, I had to brainwash myself completely. My experience in programming was more an obstacle than help. Mark Douglas' Zone book has many good reasons, why a market cannot be controlled. HFT is another matter, but I have no resources to do that.