# Wave Trading



## jtrader83 (27 March 2014)

Hello,

First time poster here, be kind. I thought I would start a thread about a geometry trading strategy I stumbled across and apply it to the Australian Stock Exchange, The strategy consists of 3 price patterns. I will go through each as I find the setups. But the first stock I looked at was Bendigo Bank (I'm from Bendigo). Initially I thought the chances of finding one these 3 patterns would be slim, but I found one that resulted in a decline in the stock from the start of the year. Looking at this pattern it appears to be alot like a wolfe wave or an ending diagonal yet the pattern uses channels to gauge the end point of wave 5. Here is the chart. 




Still lots of backtesting to do...more to come as I investigate some more...

Cheers,

jtrader


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## jtrader83 (27 March 2014)

Ok, I've found a "live" one! This is a BUY for AGO


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## Porper (27 March 2014)

jtrader83 said:


> Hello,
> 
> First time poster here, be kind. I thought I would start a thread about a geometry trading strategy I stumbled across and apply it to the Australian Stock Exchange, The strategy consists of 3 price patterns. I will go through each as I find the setups. But the first stock I looked at was Bendigo Bank (I'm from Bendigo). Initially I thought the chances of finding one these 3 patterns would be slim, but I found one that resulted in a decline in the stock from the start of the year. Looking at this pattern it appears to be alot like a wolfe wave or an ending diagonal yet the pattern uses channels to gauge the end point of wave 5. Here is the chart.
> 
> ...




Hi jtrader, so what is the strategy...you don't really say. How do you recognise the pattern, how do you know when to enter and exit and do you draw the channel yourself?


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## jtrader83 (27 March 2014)

Hi Porper,

Sorry about that, it was late last night when I posted. Here are the 3 patterns, you do draw the channels yourself, it involves drawing a channel then duplicating it to find reversal areas. There is no documentation on where to exit your positions. There is a video showing you how to draw the lines, but I'm not sure how to link that without endorsing the website.








I'm new to the strategy, so please bear with me.

Cheers,


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## Porper (27 March 2014)

jtrader83 said:


> There is a video showing you how to draw the lines, but I'm not sure how to link that without endorsing the website.




No, you wouldn't want to endorse the website would you.

 Still no idea how you pick the entry or exit...or deduce the risk/reward...if there is one.

 Maybe forget the website and just show us an example of a trade start to finish. I know you say you are learning but you must have a logical entry/exit point?


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## jtrader83 (28 March 2014)

No, sorry I cannot mention the website here.

I'm a bit time stricken, off to Anglesea for a week or so, so lets just stick with the AGO example for the time being, let's hypothetically say the entry was at .92, the stop was at .85 and the target is 1.10. So we are risking 7 for a gain of 18, roughly a 1:3 trade. 

Will try an find some more examples tonight, but it appears the patterns are pretty rare and do not occur often.

Cheers,


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## Porper (28 March 2014)

jtrader83 said:


> No, sorry I cannot mention the website here.
> 
> I'm a bit time stricken, off to Anglesea for a week or so, so lets just stick with the AGO example for the time being, let's hypothetically say the entry was at .92, the stop was at .85 and the target is 1.10. So we are risking 7 for a gain of 18, roughly a 1:3 trade.
> 
> ...




Forget the website, nobody is interested in that as it's irrelevant.

But I am interested in how you pick the pivot high to start the lower boundary of the channel? Is there a logical reason behind which pivot high you use...just looks random to me...as in you need the next pivot low to complete the channel/entry point. All seems to be done in hindsight?


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## jtrader83 (28 March 2014)

Just finished scanning the ASX200 and I have found a pattern on SKT, this one I think is similar to an ending diagonal. But is using the channels to estimate D. So the first Channel is drawn from X to B then dragged to A, the channel is then duplicated and moved so A's position is in C's position. Make sense?


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## Porper (28 March 2014)

jtrader83 said:


> Just finished scanning the ASX200 and I have found a pattern on SKT, this one I think is similar to an ending diagonal. But is using the channels to estimate D. So the first Channel is drawn from X to B then dragged to A, the channel is then duplicated and moved so A's position is in C's position. Make sense?
> 
> View attachment 57390




So it's basically trading channels then. Ok thanks, clear now.


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## jtrader83 (28 March 2014)

Yep, that's correct. No problem.


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## jtrader83 (8 April 2014)

Found 2 new patterns to monitor.
HVN


IGO


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## Sean K (14 April 2014)

jtrader83 said:


> Found 2 new patterns to monitor.
> HVN
> View attachment 57501
> 
> ...



I like the non retrospective nature of this. Good work. Would be nice to see  a follow up of how the trades went, or what criteria you use to get out if it turns to pie.


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## jtrader83 (14 April 2014)

Sure, I understand what you mean. But as it stands the trades are in limbo as in they haven't met their targets nor have been stopped out. As soon as they fail or succeed I will post a screenshot. It's just the slow nature of the stock market. And I do not want to flood the thread with interim updates. Just basically a fail/succeed approach.


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## jtrader83 (12 May 2014)

**Update**
AGO Fail


IGO Fail


HVN Suceeding


SKT Fail
Can't seem to get data from Yahoo finance, but looks to be failing.

Well that just about rounds up the thread, 1/4 is pretty terrible, I'm not one to disregard the theory, but obviously it's very raw and needs a bit of work.

Happy Trading


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## Porper (12 May 2014)

jtrader83 said:


> **Update**
> AGO Fail
> View attachment 57931
> 
> ...




Trading within channels can be successful but over the years I have found that concentrating on stocks within long term channels...in other words strong trends to be much more profitable. Often simple is best. Go with the trend.


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## Wysiwyg (13 May 2014)

jtrader83 said:


> Found 2 new patterns to monitor.



Looks like two standard deviation lines from a linear regression line.


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