Robert Prechter’s Elliot Wave International is perhaps the most famous of contemporary wave theoricsts.
The main thrust is 3 impulse, 2 corrective waves.
The corrective phase against the main trend is the a-b-c wave; the one I call the microwave.Â It helps me keep clear what is the main direction we are going next. As a day trader, that is all that matters, try to scalp and position your tradesÂ along with the current momentum.
Some traders say that Elliot wave, although extremely elegant, is only easy to see in hindsight. I continue to study the methodology, but must admit IÂ find it challenging to make the correct count inÂ real time.
Deciphering the geometry of markets is also an art form; leaving a few lines on the chart helps me to remember to look for structure. Combined with the secret code, it’s a one-two punch that’s a knockout.
One of the hardest trades to take is to go long the hard gap up open. Every ounce ofÂ my being wants to short and keep shorting it. If the signal is there,Â I take it long, it’s as simple as that. IfÂ I can’t bring myself to do that, then I try to be patient and do nothing.
Letting the first hour range set up gives me an edge,Â as I can step in from a logical counter-trend play. Intuition and a few major indicators are the key to sensing this situation. This play is deadly because it is infrequently seen; thin volume today helped to make it happen.
Using prudent stop losses ifÂ we get it wrong is a must; never jeopardize our account to a major draw down becauseÂ we are careless.
Another summer Friday that the boys hit it in premarket.
Speaking of waves, summer is rapidly moving along; there’s more to life than just the market; time for some R and RÂ at the beach. See you in a week after vacation.