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thalestrader

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As mentioned, it's always an option to attempt to target the next level of S/R for anticipated areas of extension.

 

But if you wanted to be able to more so mechanize your targets for trading to simplify things, at least at the onset of a path to consistency, does the following example makes sense?

 

The targets are essentially based on the swings price made on its way to your entry, shown by the black lines. This is just an ES example from earlier this morning.

 

The red double arrow is the thrust or sharp move up.

 

The orange double arrow is the depth of the swing into the swing.

 

The blue double arrow is that last move to produce the LH that got you into the trade and also a logical stop.

 

I have project each arrow downwards past the BO point.

 

Are any of these targets more sensible than others in an attempt to mechanize where you'd target your extension to move?

 

attachment.php?attachmentid=16941&stc=1&d=1262110002

Targets.jpg.2b82c2bac1d3de73efd192cb7959409f.jpg

Edited by forrestang

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Questions:

 

 

 

Does this mean that whether you have an intial risk of 15 ticks or 50 ticks, the initial $$ risk is the same?

 

 

 

Did you have any type of formula for this? For example, for every 20% return on the account (compounding), reduce risk as a % of account equity by 0.5%.

 

I'm just trying to get straight what I want to do beginning next week.

 

Thanks,

 

Cory

 

First, nice trading!

 

Second, yes, a proper position sizing approach would mean that whether the initial risk is 15 pips or 50 pips, the $$ amount at risk is the same. For example, if you are trading a 5K account with a 2% risk and you are looking at a trade with a 15 pip intial risk, you could trade 66k on that trade (5000 * 25 = 100/15 = 6.66/pip risk). For another opportunity with a 50 pip risk, you would reduce your position size to 20K (I'll let you do the math).

 

Third, no, we have no formula, and there were a few days where we used super crazy rodeo clown leverage, but those were days like today, i.e. where everything lines up for a 80/20 trade to the short side. We didn't trade today (and she is not at al happy that I have not allowed her a live trade while she is off from school for Christmas break), but if we had been trading, I'd have let her essentially go "all in" on the EURJPY short.

 

Great job! Keep up the hard work.

 

Best Wishes,

 

Thales

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Thales, is there anything that would have had you off the sim trades I made. The first trade I can see why that may have not been the best as I am shorting right into previous R now S. The SAR on the breakout of the H would you have been off that because of the overextended nature of the move and as you said maybe ready for a rest?

 

I was thinking the first short would retrace more...

 

How about the 1.4420 short is that something you would have taken?

 

Thanks...

 

attachment.php?attachmentid=16933&stc=1&d=1262104693

 

I would not have taken the short where you did, as price had rallied in three waves with most of it during that extended third leg. I know Elliot Wave gets a lto of bad press, and I try to keep it to a minimum here as I know there are many who would discount this whole approach based on the introduction of Elliot. But, when you get a large move in either direction with obvious momentum behind it, do not fade that move. Wait for a chopy pullback and then a push to a new high that stalls and presents a clear 123 going the other way.

 

I absolutely would have taken that short at 1.4420-1. If you look at my earlier post about the progress the EU had made since its rally out of the ending diagonal, I had said the rally has reached a point for at least a pause, if not a reversal. The reason I thought that is because the whole rally out of the ending diagonal's low can be counted as five waves, and thus it was high odds (e.g. 80-20) in favor of the short side.

 

I do not use Elliot to predict, but I do use it to identify short term probabilities. The way I trade is I basically am trying to catch, in Elliot terms, a wave 3 or C for my first PT, and a wave 5 for my second PT. Some moves are just three waves, so in those cases, I do not hit my PT2.

 

I posted a basic EW booklet in the thread a while back (I reattached here). It really can help you so long as you do not get sold on the "predictive" powers of wave proponents. Concentrate on the difference between impulsive moves and corrective moves, and the patterns that accompany them. I use EW for pattern recognition, and not for predicting.

 

Best Wishes,

 

Thales

Elliot Wave Basics Booklet.pdf

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You obviously have a crystal ball you are not telling us about.:roll eyes:

 

Funny Forrest, and I also am keeping my special magical indicators under wraps as well!

 

Seriously though, I have held nothing back in this thread. I have shared the books I have found useful, essays I have found useful, patterns, concepts, you name it. There is no private chat going on, no private trading room where we are working on further revisions and editions of the method. This is how I do it. It worked last year. It works this year. It will work next year, no matter how many folks employ this approach. In fact, the more folks who use it, the better this approach should get.

 

You need nothing more than to open your eyes and you can do it too.

 

I have a house full of family today, and my wife just came into tell my daughter and I to pull away from out charts and join the rest. I'll try to pop in later, but don't be surprised if I am MIA for the rest of the day.

 

Best Wishes,

 

Thales

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Seriously though, I have held nothing back in this thread. I have shared the books I have found useful, essays I have found useful, patterns, concepts, you name it. There is no private chat going on, no private trading room where we are working on further revisions and editions of the method. This is how I do it. It worked last year. It works this year. It will work next year, no matter how many folks employ this approach. In fact, the more folks who use it, the better this approach should get.

 

I was just messing around of course...... what are your thoughts on the above picture in looking for targets?

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As mentioned, it's always an option to attempt to target the next level of S/R for anticipated areas of extension ... Are any of these targets more sensible than others in an attempt to mechanize where you'd target your extension to move?

 

 

I was just messing around of course...... what are your thoughts on the above picture in looking for targets?

 

I know you were just kidding.

 

I really have to run, because my wife is not kidding, but in the mean time, take a look at the levels you posted and see how they line up with various fib expansions/retracements and see what comes up.

 

Best Wishes,

 

Thales

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...

In fact, the more folks who use it, the better this approach should get.

...

 

How true! This point is overlooked by many self-declared gurus.

One can only win if more money trades in the same direction.

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...

I use EW for pattern recognition, and not for predicting.

...

 

From my experience (the Neely way), EW is definitely not for predicting, but for analyzing after the fact.

 

My rule of thumb is: don't trade b 2 4 x and differentiate with 62% .

 

The most important and hardest to learn: don't mix degrees.

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From my experience (the Neely way), EW is definitely not for predicting, but for analyzing after the fact.

 

I tried and failed many times to read Neely. And anything that is more useful after the fact is not something I find particularly useful.

 

Here is how I do use EW as PA unfolds. Again, I am not predicting a rally, but odds of a favorable long have definitely increased with the last push down. Of course, anything is possible, including a third push down to complete an ending diagonal, or a collapse to lower targets. The point is that I try to enter when the odds are at least 50/50 in my favor.

 

Best Wishes,

 

Thales

5aa70f8c913f9_EURJPYCountingWavestoDifferentiateOdds1.thumb.jpg.bcf037e7f19256ac6c63210f8842e632.jpg

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Yes, your "Don't buy..." comment resembles my "b24x" rule.

One doesn't want to buy a "4", and in this situation it probably will become a "4".

 

 

"And anything that is more useful after the fact is not something I find particularly useful."

 

But gurus, who never post their trades in real time, like it a lot.

Edited by Marko23

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Yes, your "Don't buy..." comment resembles my "b24x" rule.

One doesn't want to buy a "4", and in this situation it probably will become a "4".

 

I agree completely with your "b24x" rule. If I have anything that "filters" trades, I guess that would be it. It is really a subsumed by the impulse versus corrective distinction I have been making. Whenever I have a loss, it is usually because I made a mistake in making this determination.

 

Best Wishes,

 

Thales

5aa70f8c971ff_EURJPYCountingWavestoDifferentiateOdds2.thumb.jpg.efd4fff0a29a867a9fb7c5d769516bb3.jpg

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Hi Thales,

 

I have also done some EW study from Robert Miner. I actually had this count prior to my trade. It is more visible on the renko chart than on the 15m and it was one of the reasons for the short... With anything I guess it is left up to the interpretation of the trader and here I was just plain wrong lol...

 

Your thoughts on my EW count?

 

Thanks

 

attachment.php?attachmentid=16948&stc=1&d=1262120526

tl5.thumb.jpg.7ba310f4e51bc0e53daf3ac9d7c546ae.jpg

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I tried and failed many times to read Neely. And anything that is more useful after the fact is not something I find particularly useful.

 

Here is how I do use EW as PA unfolds. Again, I am not predicting a rally, but odds of a favorable long have definitely increased with the last push down. Of course, anything is possible, including a third push down to complete an ending diagonal, or a collapse to lower targets. The point is that I try to enter when the odds are at least 50/50 in my favor.

 

Best Wishes,

 

Thales

 

This phenomenon was referred to in that AB thread as '3 pushes' up, or referred to as a wedge, similar to the way you have described it in this thread. Actually, there have been many similarities thus far..... and not just that thread but in many places, in a lot of places in observing various market activity.

 

Thales, you are definitely an UN-original trader.:cool:

 

---question-----

Of course with my hindsight goggles on....Wouldn't it make sense to re number the second push up like in the attached picture with the red numbers? It seems like that first push, even though it was the first move in the correction was really nothing? Or do I have this wrong?

eew.jpg.83ada1c8a71a9cebc70db8db9e20705c.jpg

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This phenomenon was referred to in that AB thread as '3 pushes' up, or referred to as a wedge, similar to the way you have described it in this thread. Actually, there have been many similarities thus far..... and not just that thread but in many places, in a lot of places in observing various market activity.

 

Thales, you are definitely an UN-original trader.:cool:

 

---question-----

Of course with my hindsight goggles on....Wouldn't it make sense to re number the second push up like in the attached picture with the red numbers? It seems like that first push, even though it was the first move in the correction was really nothing? Or do I have this wrong?

 

Yes, indeed, I am as unoriginal as they come. None of what I use has been my own discovery.

 

I do think in this case, however, Forrest, you are mixing "metaphor" so to speak. The "thre pushes" and a "wedge" are not in and of themselves EW structures. The are what an analytic philosopher (the horror) would term "epiphenomena." They are there, but they are not the thing itself. I was intending to label a 5 wave impulsive rally, which was followed by a five wave impulsive decline. The three pushes, when it does occur, is typically the subdivisions of the fifth wave.

 

Best Wishes,

 

Thales

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Hi Thales,

 

I have also done some EW study ... I actually had this count prior to my trade. It is more visible on the renko chart than on the 15m and it was one of the reasons for the short... With anything I guess it is left up to the interpretation of the trader and here I was just plain wrong lol...

 

Your thoughts on my EW count?

 

Thanks

 

The most important and hardest to learn: don't mix degrees.

 

As Marko warns in his post above, when using EW, you need to be careful not to mix degree. You were not plain wrong. You were very good. But you did mix degrees, which is going to cause problems.

 

What you label as waves 1 & 2 are fine. What you label as waves 3 & 5 were one degree lower, i.e. your wave 3 was wave 3 of Wave 3 and your wave 5 was wave 5 of Wave 3. The first advance off of your 2 low was wave 1 of Wave 3 and the small pullback was wave 2 of Wave 3. So you shorted before the Wave 5 advance.

 

Does that make sense?

 

Best Wishes,

 

Thales

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Hi Thales,

 

Thanks, It does make sense as I understand wave subdivisions, but need to freshen up on that part of my trading as I put it away along with trading fib confluences to focus on price.... do you only count subdivisions on the main wave 3 or do you subdivide waves 1, 3, and 5? Why I ask is because if we are subdividing waves, wave 1 doesn't seem like much at all. Again its up to the traders interpretation and hence my confusion w/ this particular count. My question is how do you distinguish wave 3 of 3 as such in real time and not get confused with it being the end of wave 3 as I did?

 

Thanks for your help...

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I find EW, practiced according to the guidelines found in Frost and Prechter, to be much less "open to interpretation," i.e. much less subjective than most folks seem to think it is. Like everything in trading, this is likely because so many seem to think they know something before they know it, or else the practioners are expecting more from the patterns than one should hope to receive in terms of "prediction" or certainty. It is not magical, but it is useful, up to a point.

 

My question is how do you distinguish wave 3 of 3 as such in real time and not get confused with it being the end of wave 3 as I did?

 

 

I have also done some EW study from Robert Miner.

 

Did your guru not cover this? Shocking!

 

I think you could look at my charts and trades and figure this out fairly easily. As I have said many times, I use S/R for my targets and then refine my orders using fibs. The one thing fib's have going for them is that they will keep your analysis of various swings in proportion to one another.

 

Best Wishes,

 

Thales

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Current look at the EURUSD, and futures traders can translate the same opportunity to the 6E.

 

Short opportunity has triggered. Target is 120 pips/ticks, but a sensible trailing stop would be a smart way to play this trade. I would hate to see this go to +40 or +50 and then turn into a -35 trade.

 

Bt the way, we are not trading this, but if goes to target, breakfast with my daughter tomorrow will be a bit uncomfortable (she wanted to trade it, and my wife wanted me to let her).

 

attachment.php?attachmentid=16956&stc=1&d=1262137789

 

attachment.php?attachmentid=16957&stc=1&d=1262137789

 

Best Wishes,

 

Thales

5aa70f8cd0433_12-29-2009EU-6E1.thumb.jpg.d0346adc39911c17a19ed92f1738f8b6.jpg

5aa70f8cd59e4_12-29-2009EU-6E3.thumb.jpg.f6a0e83b6b5a890097fd39652c0cc185.jpg

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... according to the guidelines found in Frost and Prechter, to be much less "open to interpretation," ....

Yes, and Neely is too axiomatic. His methods lacks the flexibility of the markets.

 

Thales, your last posts are full of insights! Everybody here should read them.

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Could you or anyone else give examples of BIASES.

 

Eventhough I understand the meaning of the word, I don't seem to be able to identify it in reality

 

 

This might be of interest List of cognitive biases - Wikipedia, the free encyclopedia a pretty massive list with a large number of cognitive biases that are relevant to trading (or have been to mine!). Click through for more detailed discussion.

Edited by BlowFish

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