How to Find Trading Opportunities in ANY Market
Learn ways to spot trading opportunities using wave analysis and other technical analysis methods
By Elliott Wave International
Senior Analyst Jeffrey Kennedy is the editor of our Elliott Wave Junctures and one of our most popular instructors. Jeffrey's primary analytical method is the Elliott Wave Principle, but he also uses several other technical tools to supplement his analysis.In this trading lesson, Jeffrey demonstrates how to determine when an Elliott wave trade setup becomes a trade.
You can apply these methods across any market and timeframe.
Lesson 1: Ready, Aim ... Fire: Knowing When to Place a Trade
A very important question you need to answer if you are
going to use the Wave Principle to identify high-confidence
trade setups is, "When does a wave count become
a trade?"To answer this question, let me draw upon the steps required to fire a firearm:
Step 1 (Ready) -- Hold the rifle or pistol still...very still.
Step 2 (Aim) -- Focus and align your sights.
Step 3 (Fire) -- Pull the trigger without tensing your hand.
If you follow these steps, you should at least hit what you're aiming at, and, with a little practice, you should hit the target's bull's-eye more often than not.
As an Elliottician and a trader, I employ a similar three-step approach to decide when to place a trade. Figure 1 shows a schematic diagram of a five-wave advance followed by a three-wave decline -- let's call it a Zigzag. The picture these waves illustrate is what I call the Ready stage.
As you probably know, three-wave moves are corrections, according to the Wave Principle, and as such, are destined to be more than fully retraced once complete. An additional bonus of this approach is that it allows me to easily and confidently determine an initial protective stop, the extreme of wave C.
Remember, all markets have a wave count; however, not all wave counts offer a trading opportunity. So the next time you think you have a wave count, rather than just blindly jumping in, first steady yourself, wait while you aim, and then -- if price action does indeed confirm your wave count -- pull the trigger.
Also, it is important to note that this is my way of applying the Wave Principle practically, but it's by no means the only way.
If you are ready for more lessons on how to become a more successful technical trader, get Jeffrey Kennedy's free report, 6 Lessons to Help You Spot Trading Opportunities in Any Market. |
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This
article was syndicated by Elliott Wave International and
was originally published under the headline How to Find Trading Opportunities in ANY Market.
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