Practical use of Elliott Wave analysis

[Chris45]

ELM by Advanced GET

Thanks Tech.

 

[Boggo]

Your software gives two pairs of retracement levels for W4, the first pair for a retracement of W3 and the second pair for a retracement of W0-3.

Which pair, from your experience, has the higher probability of working in this situation?

Of the Fib levels printed, the $2.14 (~$2.11 Feb Hi) and $1.64 (~$1.65 Mar Lo) would seem to be logical support levels.

My very unsophisticated KISS trading approach, if it gets down to $2.14, would be to buy a breakout above a downtrend line from the $3.00 top so I'm interested to hear your thoughts how you would trade it.

Cheers.

Aha, you seem to be on to it Chris, obviously you can see how this theory can be used to create a picture.
By making use of retracements from two points tends to create a better target area and in the ELM case you are correct, the retracements seem to be referred to as W.4, W.1-3 and W.4, W.3.

As a rough "eyeball" point for retracement I look for points that converge or almost converge, the points that Robert Miner refers to as "Target Zones".

In the case of ELM the minimum expectation is around the 38% of W.3 but the target zone is between the two closest lines which would give an initial "eyeball" target of between $1.96 and $1.87 but the channel may be an influence at the 38% level as indicated on tech/a's chart above.
A complex correction may not stay in the channel though.

Trading it, wave 2's are always easier to trade as they tend to form a more symmetrical ABC and the W.3 is the money run.
I look for similiar in the W.4 and either re-enter when it shows signs of turning at an expected level or wait for a confirmation break of the B if it seems to be a simple ABC rather than a complex pattern.
Waiting for a break of the previous W.3 high generally looks good but usually has a limited travel (expectation).

 

[Sean K]

Perhaps I should have titled the thread
MY Practical use of Elliott Wave analysis.
OR better still
Practical use of Elliott Wave analysis which will satisfy Kenna's
In the former I have and will continue to explain if others are deriving benefit.
In the latter I cannot satisfy you Kenna's.
Elliott by your definition has no practical use.
Never has and never will.

Finally the title never was
Trading exclusively with Elliott wave analysis.

OK, I can see where you're coming from.

EW is like support and resistance.

Like heads and shoulders.

Like double tops.

Like Gann.

Really can't be used in isolation at all.

Just another 'tool' in the box.


Now, lets get back to it's 'practical use', except from trying to divert the conversation and make it personal.

Elliott by your definition has no practical use.
Never has and never will.

I haven't provided a definition at all, but just wait to see a trade generated by EW.

You have stated that you sold many positions recently due to the W4 potential top. That to me is 'practical'. Very good! From what I've read here, you are still short or neutral because of that bias generated by Elliot.

I am very happy with that as a practical use of EW even though there are no specifics.

kennas you are driving me nuts.

...

BTW I have seen the market make fools of all EW gurus but then that's what the market is designed to do.

Happy to assist IF.

I really have no motivation here other that to make EW gurus look like gurus.

I'm now just been attacked for asking some pretty simple questions. We've all been around this buoy before and it just ends in EW practitioners taking personal pot shots and/or spitting the dummy.

Back to some practical use of EW perhaps? Like how does it make you money?

 

[tech/a]

I haven't provided a definition at all, but just wait to see a trade generated by EW.

Many trades last week were generated by the position E/W indicated the market to be.
5 Trades were taken out due to my tightening of trailing stops and around 4 trades generated short on indexes.
3 of those failed losing 35 ticks and 1 succeeded gaining 102 ticks.

You have stated that you sold many positions recently due to the W4 potential top. That to me is 'practical'. Very good! From what I've read here, you are still short or neutral because of that bias generated by Elliot.

Some positions.
No current short positions have 3 new buy stop orders in and around 8 open long trades with trailing stops in place.

 

[Chris45]

In the case of ELM the minimum expectation is around the 38% of W.3 but the target zone is between the two closest lines which would give an initial "eyeball" target of between $1.96 and $1.87 but the channel may be an influence at the 38% level as indicated on tech/a's chart above.
A complex correction may not stay in the channel though.

Trading it, wave 2's are always easier to trade as they tend to form a more symmetrical ABC and the W.3 is the money run.
I look for similiar in the W.4 and either re-enter when it shows signs of turning at an expected level or wait for a confirmation break of the B if it seems to be a simple ABC rather than a complex pattern.
Waiting for a break of the previous W.3 high generally looks good but usually has a limited travel (expectation).

Thanks Boggo. ELM seems to be EWaving nicely and could be an interesting test of GET's trading rules.

Back in Dec-10, W1 & W2 were labeled W3 & W4 and W-C = W-A. Apart from the PTI being <35, the rules would have given a good entry.



It will be interesting to see how the rules perform this time.

 

[tech/a]

Short all indexes
SPI DAX and FTSE

 

[tech/a]

The silence is deafening!!

 

[explod]

The silence is deafening!!

Yep, the charts will do what they want to do and one can only follow. A bit like if you are crashing through the jungle if your head was still intact you would soon learn that it is easier to follow behind the elephant

I tried a crystal ball rythmn idea at roulette once, thought I had the holy grail but;

it did not work.

 

[Boggo]

A bit like if you are crashing through the jungle if your head was still intact you would soon learn that it is easier to follow behind the elephant

Agree, especially in this case of the examples above, follow behind the ElephWant as you have a good idea where he might take you

 

[Chris45]

Boggo and Tech, GET has now moved ELM's W4 levels down to $1.96 & $1.64. The Osc (AKA MACD) is nearly back to zero, the PTI >35, and price > blue channel (and Stoch <20) so it's ticking all of the boxes, but the recent top of $3, after such a steep rise, is getting pretty high so do you guys think it is a buy at these levels or has the opportunity passed? I'm still low on the learning curve and maybe this was not the best one to use as an example and from what I understand of Weinstein's system it would not be a candidate. Cheers.

 

[professor_frink]

Short all indexes
SPI DAX and FTSE

The silence is deafening!!

So you are short the SPI from 4840-45(roughly). What about the others?

Where's the stop for this type of trade?

How does it get managed?

 

[wayneL]

The silence is deafening!!

We're all busy buying with ears pinned back!

 

[tech/a]

So you are short the SPI from 4840-45(roughly). What about the others?

Where's the stop for this type of trade?

How does it get managed?

I set a profit stop before I go to bed

FTSE was 5840
DAX was 7060
SPI was 4800

All been and gone.

If they aren't hit overnight I assess in the morning.
I also set a stop loss.
That gets hit more often than not.
If the market isn't clearly in a trend then I will close before I go to bed.
I use VSA for entry.
ALWAYS trade with the trend do not look to pick a change in trend.

One buy in the portfolio today and one sold on trailing stop.
Current portfolio around 1/3rd normal holding (Capital invested).

 

[Sean K]

ALWAYS trade with the trend do not look to pick a change in trend.

Tech, is it EW setting the trend to trade at the moment? I think you indicated that it was a few days ago. ie, bias down. Is that still the case, or are you neutral according to any other signals? Has the larger EW count changed?

 

[tech/a]

Tech, is it EW setting the trend to trade at the moment? I think you indicated that it was a few days ago. ie, bias down. Is that still the case, or are you neutral according to any other signals? Has the larger EW count changed?

I'm talking about short term index trading.
Sorry I take it that people reading this actually understand how I'm trading.
Elliot gave me the initial weakness. So I was looking for it.
When it was displayed in the indexes I took the trade just as I take trades most nights if the trend is clear.
On the XAO thread I mentioned that Bull markets are like trains to pull up and bear markets are like stones falling on concrete. Its the same with extreme moves of 1 day or so down---they bounce.
It was clear that the trend would be up tonight with a strong Asian day and both FTSE and DAX showed very low risk trades.
I open the DAX as soon as the SPI closes.
Im only trading the DAX---didnt trade the SPI long today.--It suprised me to be honest---the depth of the bounce--it really set up tonight.
.
Currently trading DAX only and set stops ready for bed.



The move today was so strong that I would be surprised if we dont see this as the start of the wave 5 move---this will be more complex than a simple "V" move up to the
5000-5050 mark---I think it is likely struggle up there in mid late may so strong moves I dont expect from here on.
Index trading will be more difficult as trend looks laborious but portfolio trades should pick up some losses and provide some opportunity for buyers like Wayne.




Hmm great profit stop on the DAX just taken out
Radges NPST indicator works a treat!

 

[professor_frink]

I set a profit stop before I go to bed

FTSE was 5840
DAX was 7060
SPI was 4800

All been and gone.

If they aren't hit overnight I assess in the morning.
I also set a stop loss.
That gets hit more often than not.
If the market isn't clearly in a trend then I will close before I go to bed.
I use VSA for entry.
ALWAYS trade with the trend do not look to pick a change in trend.

One buy in the portfolio today and one sold on trailing stop.
Current portfolio around 1/3rd normal holding (Capital invested).

ok then, so when you made this comment:

The silence is deafening!!

you were actually flat and not short. Seems like a slightly odd comment then

I'll leave you wavers to it then. Looking forward to seeing the counts updated as they evolve.

 

[tech/a]

The silence is deafening!!

Meaning comments on the practical use of Elliott.

I personally have found it and continue to find it invaluable.
However it appears that my demonstration of MY application
of the analysis is less than helpful to all---hence deafening silence.

Expectation is that Elliott itself would be traded as stand alone.
When in fact its use by myself is trading the analysis of Elliott relative to my portfolio.
Which flows through to short term index positions.

Knowing where we are in the scheme of things makes trading much easier---in my opinion.
Anyway
Think Ive served the purpose well enough here to now leave this thread.
Hope its been helpful--perhaps not?.

 

[wayneL]

I personally have found it and continue to find it invaluable.

I personally have found it and continue to find it nonvaluable.

Horses for courses and all that, but no better or worse than nuanced (IOW non standard) use of any indicator, but a whole lot more complicated and opaque... brilliant for hindsight trading.

 

[Chris45]

The silence is deafening!!

Boggo and Tech, GET has now moved ELM's W4 levels down to $1.96 & $1.64. The Osc (AKA MACD) is nearly back to zero, the PTI >35, and price > blue channel (and Stoch <20) so it's ticking all of the boxes, but the recent top of $3, after such a steep rise, is getting pretty high so do you guys think it is a buy at these levels or has the opportunity passed? I'm still low on the learning curve and maybe this was not the best one to use as an example and from what I understand of Weinstein's system it would not be a candidate. Cheers.

Bump.

Too simplistic or not interested? I thought this would be an interesting example to follow, but maybe not.

 

[tech/a]

Fair enough.
I msee Fundamental analysis as a gross waste of time---subjective and of no use to me.
So can understand your and others views.

Many cant understand why a system could be a good idea.
Or how VSA can be applied.
How to set up an options trade and the associated risks or risk mitigation.

Have a great break.

Chris
Happy to follow it.
Just looks as if its still in wave 4 so no comment.

Will have a look tonight.