The same message goes to you as well, Brad. If the USD starts a long-term rally, don't say you weren't warned.
The first chart posted below is a long-term monthly chart of USD/CHF. The clearest segment of price action, to me, is the area I have outlined in red. That segment of price-action is a clear three-wave rally. Based on that three-wave rally, we can objectively come up with a list of possible wave-counts in which that three-wave rally can be a part. The second chart shows that list of possible wave counts.
The third chart shows that same list of possible counts and includes all of the price action that comes after that three-wave rally. Looking at this chart, we can see that five of the six counts listed are immediately bullish. (In a long-term perspective, that is. Of course price can go down on the smaller degrees of trend.) The only bearish count is the first one which has price still declining in wave (3) of a long-term decline. My preferred long-term counts are the flat and triangle corrections.
You'll notice that the last two counts, the double- and triple-threes, are drawn showing that there is more USD weakness required to complete those patterns. However, you can also count both of those patterns as already complete as of the March 2008 low. That means that those corrective patterns could be complete, indicating that a long-term bull market is beginning there as well.
So while you may be a hard-core bear on the USD, keep in mind that there are plenty of legitimate, bullish counts available. The key is to stay objective.
ah,finally found Justin's chart!
Now,you sit on trade,on a long-term position(not years,say 1 or 2 or 6 months) then near the end,you see your counts is not going to work out...! this is a seruois let-down!
people are changing so does the emotion,especially in supercyle degree correction,humanity might go absulotliy bonkers! (there are already evidances in a major cultural shifts)
then "markets are dynamic and always changing!" aint give $£"^ about our long term count! we might witness lots of black swans in next 1-3 years!
I am seriuosly thinking whehter EW is suitable for long-term traders?
To me,you have the ---iest and simplest charts! well done...
Are you still residing in the Far East?how did you find trading away from home for such long time?
Best,
Hi Mike,
I think that typically the simplest counts make the most sense and are more often proved to be correct. The more complicated a wave-count gets, the more it seems like the analyst is forcing their opinion on the market by trying to get every little wiggle into a perfect pattern. For my analysis, if I can't readily identify a segment of market action as either a definite three- or a five-wave move, then I pass on trying to come up with a count for that market and move on to something else.
And yes, I am still hanging out in the Middle East for the time being. I've got a few more weeks left before I head back to the states. The only difference in my trading is that it's all done on a laptop, and that it's crazy-damn-hot. It's 110 degrees here right now! Ridiculous. But other than that it's all good.
Now,you sit on trade,on a long-term position(not years,say 1 or 2 or 6 months) then near the end,you see your counts is not going to work out...! this is a seruois let-down!
people are changing so does the emotion,especially in supercyle degree correction,humanity might go absulotliy bonkers! (there are already evidances in a major cultural shifts)
then "markets are dynamic and always changing!" aint give $£"^ about our long term count! we might witness lots of black swans in next 1-3 years!
I am seriuosly thinking whehter EW is suitable for long-term traders?
Please watch this short clip.note how many people watched this,nearly 8 millions! and 15500 comments! sign of fear among the mass so sign of sentiment shift!
All causes of 21 Dec 2012 chaos is natural and sort of cosmic affairs like sun activity,earth rotate cycles,planetray adjustments! etc some of them occur once every 30 thousand years!
and effects as shwon in the clip,are natural too! like earthquick,drought,Global warming,flood,volcanos!
isnt all these cause & effect drama coincide with our beloved wave C of 4?!
(EWP Prechter says: "C where the devastation happens" and this is C of a supercycle degree)
now,back to my argument,How we can go long-term in this funny environment,relying on EW long term counts?(long term Imean from 2-3 months to 2 years)
in times,when expanding triangles and Ending diagnoals might deform and new Elliott waves pattern might emerge! (remember the sociaties(the setiment) is going to have a MAJOR SHIFT!)
Now,you sit on trade,on long-term position(say 1 or 2 or 6 months) then you see your counts didnt work out...! this is s seruios let-down!
markets are dynamic and always changing! aint give $£"^ about our long term count!
I am seriuosly thinking whehter EW is suitable for long-term traders?:confused
Elliott Wave works just as well with long-term trades as it does with the shorter-term trades. The key to holding a position for several weeks or months is patience. You have to understand that the little wiggles on a 60-minute chart really don't matter that much to the longer-term perspective, so you have to be able to keep a cool head and to stay focused on the degree of trend that you are analyzing.
There is no difference in analyzing a market based on long-term price action than there is when looking at a markets' shorter-term price changes. You are going to analyze a long-term chart just the same as you would a short-term chart. The rules and guidelines of wave formation apply to all degrees of trend.
I think the phrase "Markets are dynamic and always changing" is mis-understood and mis-used. It is true that the markets are always moving. Every day that a market is open for trading, it fluctuates up and down to accomodate the order flow, but there is one major thing to remember: These fluctuations will always unfold according to the Elliott Wave Theory. The markets will always continue to trace out the six basic Elliott Wave patterns regardless of what's going on in the world. If you can truly understand and accept this, then you will realize that news and fundamentals and world events are completely meaningless in the markets. All you have to do is keep yourself focused on identifying the Elliott Wave patterns. I think that a lot of people have the idea that since markets are "dynamic and always changing," that somehow it's possible that the Elliott patterns may not continue to unfold, or that a world event may happen which would completely disrupt the Elliott Wave patterns, or something to that effect. But in the real world of trading, we know that is certainly not the case. The Elliott Wave patterns persist no matter what. So markets are "dynamic and they change." So what? Just remember that the "dynamism and change" will always occur according to the Elliott Wave Theory and you'll be fine.
My question, the corrective waves in my chart are not belongs to any of 4 types of correctives wave listed in EWP books. So is it alright to count it the way i counted? If its incorrect, how to count it in other/right way?
Hey BB, your chart caught my attention cause I have a LONG order initiated Friday on a different (bullish) count. I took the long because I think we could be in a bullish wave 3/C, your chart is missing a previous first impuslive wave which usually means that we'll see another impulse following.
IF wave (1) is a first impulsive wave then everything else should be clear imo. Of course the market will do what it wants anyway and will prove/disprove this count by tomorrow.
Elliott Wave works just as well with long-term trades as it does with the shorter-term trades. The key to holding a position for several weeks or months is patience. You have to understand that the little wiggles on a 60-minute chart really don't matter that much to the longer-term perspective, so you have to be able to keep a cool head and to stay focused on the degree of trend that you are analyzing.
There is no difference in analyzing a market based on long-term price action than there is when looking at a markets' shorter-term price changes. You are going to analyze a long-term chart just the same as you would a short-term chart. The rules and guidelines of wave formation apply to all degrees of trend.
I think the phrase "Markets are dynamic and always changing" is mis-understood and mis-used. It is true that the markets are always moving. Every day that a market is open for trading, it fluctuates up and down to accomodate the order flow, but there is one major thing to remember: These fluctuations will always unfold according to the Elliott Wave Theory. The markets will always continue to trace out the six basic Elliott Wave patterns regardless of what's going on in the world. If you can truly understand and accept this, then you will realize that news and fundamentals and world events are completely meaningless in the markets. All you have to do is keep yourself focused on identifying the Elliott Wave patterns. I think that a lot of people have the idea that since markets are "dynamic and always changing," that somehow it's possible that the Elliott patterns may not continue to unfold, or that a world event may happen which would completely disrupt the Elliott Wave patterns, or something to that effect. But in the real world of trading, we know that is certainly not the case. The Elliott Wave patterns persist no matter what. So markets are "dynamic and they change." So what? Just remember that the "dynamism and change" will always occur according to the Elliott Wave Theory and you'll be fine.
Speaking of Elliott Charts...
I am in a hotel room and this @%$% computer has a very small memory. Cannot post any charts nor read PMs. Anyway, I was thinking anout your Dow chart from yesterday and the only reason I can think of in EW terms, that this latest move is not a wave 1 and could be a flat is....wave 3 is never the shortest wave.
Since the market already retraced 54% about 8000 points, where is wave 3 going to go? It doesn't have to be the longest wave, but a wave 5 of less than 1/4 of wave 1 doesn't fit in the "ideal" picture either.
So, alternately, you can say that this move is an expanded flat, Wave C has retraced beyond the origin of wave A, textbook, and we can have a swift move down even below the current low, like in your chart, but then that should be it.
Elliott Wave works just as well with long-term trades as it does with the shorter-term trades. The key to holding a position for several weeks or months is patience. You have to understand that the little wiggles on a 60-minute chart really don't matter that much to the longer-term perspective, so you have to be able to keep a cool head and to stay focused on the degree of trend that you are analyzing.
There is no difference in analyzing a market based on long-term price action than there is when looking at a markets' shorter-term price changes. You are going to analyze a long-term chart just the same as you would a short-term chart. The rules and guidelines of wave formation apply to all degrees of trend.
Justin,That is fair enough that EW rules work in all degrees of trend and there is no difference between analysing long or short term pattern,
but this is NOT my arguement,I am talking about the law of probability (law of averages) that if you're long term trader and made wrong counts like for instance EURUSD is still going UP to area of 1.4800,a triangle with Ending Diagonal on daily EURUSD in camparison with 10-20 wrong counts on 15m or H1 chart!
the money you loss there,is equivalant to 10-20 times as you might take as a short term position...
like EURCHF on weekly,monthly chart other day,me and you and qsx have 3 oponion on the long-term count.like if go for my own count then 2 months down the line then see Justin's count is unfolding!)
now,I understand why italm was saying you need capital to play long -term because one wrong count=big loss(mainly time and capital tided up)wherese as a short or medium trader you might take lots of little losses but still have money and confidence to carry on.
Hoping I make sense here....I see it like this: for each time frame I have certain stake(bet) like 10...for Example,on 15m,if I miss one count...
I am a losser 1 out 10,again wrong,2 out of 10,agian wrong 3 out of 10...
but for long term if I have 10 bets and untill Law Of Averages turned in my favor(which will certainly will) I will be few years years older and still challenging the ambiguity of WHICH EW PATTERNS IS GOING UNFOLD?
I am seriuosly thinking whehter EW is suitable for long-term traders?
Well Im sure alot of people will diagree with me here but I actually beleive Elliott Wave is BETTER suited for long-term counts. I don't think scalpers should be messing with Elliot. Swing traders can get away with it provided they are patient...but for the investor looking to park his money somewhere for a while, aint nothing better than EW.
Speaking of Elliott Charts...
I am in a hotel room and this @%$% computer has a very small memory. Cannot post any charts nor read PMs. Anyway, I was thinking anout your Dow chart from yesterday and the only reason I can think of in EW terms, that this latest move is not a wave 1 and could be a flat is....wave 3 is never the shortest wave.
Since the market already retraced 54% about 8000 points, where is wave 3 going to go? It doesn't have to be the longest wave, but a wave 5 of less than 1/4 of wave 1 doesn't fit in the "ideal" picture either.
So, alternately, you can say that this move is an expanded flat, Wave C has retraced beyond the origin of wave A, textbook, and we can have a swift move down even below the current low, like in your chart, but then that should be it.
Hi Pippin,
One more low in the DOW is what I'm looking for. I went through the individual component stocks that make up the DOW today, and I see that a few of them are already showing signs of recovery. The two individual stocks that stick out are KFT and KO. These two stocks have both completed five-wave rallies and are setting up for their corrective declines (which will coincide with the broader index moving lower). There is also another stock, MCD, which has just completed a triangle and is awaiting a bullish breakout. And while not a DOW component, the other stock I like to the upside is Ford (F). It has traced out an idealized five-wave rally and is also setting up for a corrective decline.
So the takeaway from all of these bullish stocks is that it looks like the stock market as a whole is in the final stages of it's bear market cycle and is already setting up for the new bull market.
Hey BB, your chart caught my attention cause I have a LONG order initiated Friday on a different (bullish) count. I took the long because I think we could be in a bullish wave 3/C, your chart is missing a previous first impuslive wave which usually means that we'll see another impulse following.
IF wave (1) is a first impulsive wave then everything else should be clear imo. Of course the market will do what it wants anyway and will prove/disprove this count by tomorrow.
Cheers!
Just looking at your chart/BB........ Wave 3(Down) looks too short. I think Wave 3 s/b where you have Wave 5. The remaining Wave/s look like a 'complex' Wave 4 retracement going back near your wave 1 (down).
I basicly believe the Euro has more downside this week, which would support my thoughts.
Just my thoughts.
JK.
One more low in the DOW is what I'm looking for. I went through the individual component stocks that make up the DOW today, and I see that a few of them are already showing signs of recovery. The two individual stocks that stick out are KFT and KO. These two stocks have both completed five-wave rallies and are setting up for their corrective declines (which will coincide with the broader index moving lower). There is also another stock, MCD, which has just completed a triangle and is awaiting a bullish breakout. And while not a DOW component, the other stock I like to the upside is Ford (F). It has traced out an idealized five-wave rally and is also setting up for a corrective decline.
So the takeaway from all of these bullish stocks is that it looks like the stock market as a whole is in the final stages of it's bear market cycle and is already setting up for the new bull market.
is this what you meant by one more leg down?cheers
And while not a DOW component, the other stock I like to the upside is Ford (F). It has traced out an idealized five-wave rally and is also setting up for a corrective decline.
Wow...what a beauty! I would love to have gotten Ford for a buck! I actually drive a Ford so I glad to see the bullish spin on it.
That is a convincing argument for one more decline in stocks Justy. However, should that happen, I personally believe that stocks, and/or specifically the Dow once new highs are made, the dangers for another crash would be eminent. I don't get the flat theory you spoke of in the Dow however. If you wouldn't mind posting a longer term count illustrating this, it would be greatly appreciated.
Wow...what a beauty! I would love to have gotten Ford for a buck! I actually drive a Ford so I glad to see the bullish spin on it.
That is a convincing argument for one more decline in stocks Justy. However, should that happen, I personally believe that stocks, and/or specifically the Dow once new highs are made, the dangers for another crash would be eminent. I don't get the flat theory you spoke of in the Dow however. If you wouldn't mind posting a longer term count illustrating this, it would be greatly appreciated.
yeah,Justin's intriguing Dow theory,cought my attention too in last couple of days.I think he means the my last Dow chart...
Justin,That is fair enough that EW rules work in all degrees of trend and there is no difference between analysing long or short term pattern,
but this is NOT my arguement,I am talking about the law of probability (law of averages) that if you're long term trader and made wrong counts like for instance EURUSD is still going UP to area of 1.4800,a triangle with Ending Diagonal on daily EURUSD in camparison with 10-20 wrong counts on 15m or H1 chart!
the money you loss there,is equivalant to 10-20 times as you might take as a short term position...
like EURCHF on weekly,monthly chart other day,me and you and qsx have 3 oponion on the long-term count.like if go for my own count then 2 months down the line then see Justin's count is unfolding!)
now,I understand why italm was saying you need capital to play long -term because one wrong count=big loss(mainly time and capital tided up)wherese as a short or medium trader you might take lots of little losses but still have money and confidence to carry on.
Hoping I make sense here....I see it like this: for each time frame I have certain stake(bet) like 10...for Example,on 15m,if I miss one count...
I am a losser 1 out 10,again wrong,2 out of 10,agian wrong 3 out of 10...
but for long term if I have 10 bets and untill Law Of Averages turned in my favor(which will certainly will) I will be few years years older and still challenging the ambiguity of WHICH EW PATTERNS IS GOING UNFOLD?
Please tell me if I dont make sense.cheers
The idea about having to have a massive bank account to trade long-term is incorrect and can easily be rectified by proper position sizing. Let's look at two hypothetical trades, one short-term and one long-term.
Trade #1
Let's say you are a short-term swing trader who is looking to take a trade with a 200 pip target and a 100 pip stop. That's a Risk:Reward of 1:2. Let's also assume that you are trading a currency in which you make $10 USD per pip.
Let's also say you are trading five standard lots per trade. So with those five lots you are looking to make $10,000 and are willing to risk $5,000
Reward - 200pips x $10/pip x 5 lots = $10,000 Risk - 100pips x $10/pip x 5 lots = $5,000
Trade #2
In this situation you are looking to make a long term trade in which you are looking to make 1,000 pips while risking 500. This is also a Risk:Reward of 1:2.
On this trade you have two options. One is that you can trade the same position size that you did on your short-term trade, in which case you'd be looking to make $50,000 while risking $25,000
Reward - 1000pips x $10/pip x 5 lots = $50,000 Risk - 500pips x $10/pip x 5 lots = $25,000
In this case you would indeed need a large bank account to withstand the losses. But there is another way to manage these trades so that they aren't such a big deal.
Let's take the same trade with a 1,000 pip target and a 500 pip stop. But in this trade let's only trade one contract instead of five. Here's the results of this new trade:
Reward - 1,000 pips x $10/pip x 1 lot = $10,000 Risk - 500 pips x $10/pip x 1 lot = $5,000
Now here's the reason why I think this is a better way to manage your trades. You'll notice that your proposed profit and loss, in dollar terms, on the long-term trade with only one lot is exactly the same as the profit/loss, in dollar terms, of your short-term trades with multiple lots. The only difference is that you changed the number of lots that you were trading. You spoke of the Law of Averages earlier. Managing your position sizes in this way truly takes advantage of this principle of averages. Everybody understands that as a trader you lose some trades and you win some trades. For the person who makes both long- and short-term trades, you never know which trades you will win and which trades you will lose. If you win a bunch of small trades and lose one or two big trades, you may end up with a net loss. But, if you manage your trades so that your dollar profit and loss is exactly the same for short-term trades as it is for long-term trades, then it doesn't matter which trades you win and which trades you lose. Based on the Law of Averages, if you win more trades than you lose, then you will always come out profitable if you have proper position sizing.
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Originally Posted by justy10125 
