Favorite Posts on Getting Started

Post by Avi on 5/19/13 on "Respect"

 * R-E-S-P-E-C-T


 * As many of you that have come to know me, you know I am not a ranter, nor am I a table pounder when it comes to the market. I simply read what I see, and adjust accordingly if I am wrong.  In fact, I am ALWAYS looking for how I can be wrong, and am always questioning myself, as I know that I, nor any other analyst on the face of this earth, will ever be right 100% of the time.


 * However, there is only one issue upon which I have composed rants in the past, and will continue to do so in the future, when needed. That issue is the respect that each member must show other members, administrators and analysts in this room.


 * I do not believe that there is another Elliott Wave site around that not just provides the underlying analysis, but also allows for feedback and discussion with the analysts and members. Since Elliott Wave analysis is very complex, most will not attempt to provide very small time frame charts and analysis as we strive to do here.  Furthermore, we open the analysis up to critique and discussion, which does make the analysts’ job that much harder.   But, the MAIN and MOST IMPORTANT reason we do so is so that the members here can learn from such give and take discussion of the counts.   This is the main reason this site has been built, and it is to foster learning of Elliott Wave analysis through openness and questioning.


 * Along with this openness we want to encourage in the room, there are many members that post their analysis and thoughts about the markets. We have, in my humble opinion, the most amazing collection of Elliotticians and technical analysts assembled in one location on the entire planet.  Many are not even Elliotticians, but have shown an incredible ability to analyze these markets based upon very different disciplines.


 * AND I WILL CONTINUALLY ENCOURAGE SUCH INFORMATION SHARING!!


 * However, there have been times when some members may become less respectful to others who are of a different opinion, who have taken a different position in the market as they have, or who have a different style of conveying information.  THIS is an unacceptable posture for one to take on this site.  This not only insults members, but it could also have the undesired effect of stifling analysis that would otherwise be very insightful to all.


 * So, at this time, I am going to ask each and every person who posts on this site to ask themselves one question before they hit the post button:


 * “CAN THIS POST POTENTIALLY INSULT SOMEONE BY ANYTHING THAT I HAVE WRITTEN?”


 * I know that this may seem like a bit much to some, but it is something that always runs through my mind when I post a comment, as I am always mindful of the greater and grander perspective of the manner in which man must act towards his fellow man. I do not have to go into the underlying religious reasons that I have also learned, but I am simply posing this challenge to everyone on this site as a perspective of common decency and respect that we all must have towards each other.  And, since we are all adults, I also will not post a list of “unacceptable adjectives,” as we are all mature enough to know what type of words may insult someone else.


 * I have seen members of this community come together in the most meaningful of ways to assist other members in their times of need. In my own time of distress during my wife’s illness and death, I have personally been the beneficiary of such benevolence from the members here, which has touched me in ways I will never forget or can ever describe.   But, rather than simply come together during times of need, I want to implore everyone to always maintain other’s feelings in the forefront of their minds BEFORE they hit that post button.


 * Thank you for reading my “rant,” and I wish each and everyone one of you a successful trading and personal life, with respect abound!! J

Post by Avi on 12/31/12 "5 Rules to Remember"

 * This game is all about price improvement, that clearly has to be our goal, but in a low risk, and safe manner. So, for all the new traders, please ALWAYS remember several things:


 * First, you do not always have to be in the market. The best traders only are trading a fraction of the time.  So, patience is a VERY important part of trading.


 * Second, you only buy at low risk buy points and in good set ups. Again, you need to patience to wait for these set ups.


 * Third, you ALWAYS have a trade plan about where you enter, where your stop loss is set and where you take your profits – and without these items already planned out in advance, you don’t enter the trade.


 * Fourth, you NEVER risk more than 5% of your trade capital on ANY trade. A better target is 2-3%.  And, if you are using options, it is a fraction of that percentage due to the additional leverage you are using.


 * And, if you have questions, please do not hesitate posting them in the room, as that is the only way you are going to learn, other than reading what all the really good traders in the room have to say. We are blessed to have some incredible talent and experience in this room.  PLEASE open your minds and read all you can from them, as there is much you can learn here.

Post by Garrett on 12/8/12 "Integrating the Site's Range of Info into Your Trading"

 * Members who are new to the community may notice that there is a lot of different input and contributions in the trading room on a day to day basis, some of which is conflicting regarding direction, timing, etc concerning specific stocks or indices. For some, this may initially prove to be a distracting and confusing. It may even cause you to second guess yourself on a trade and lead you to either miss out on profits or even lose money because you took a trade you may normally not take. Afterwards, this will often leave you bitter, maybe even wishing that the person who caused you to second guess yourself hadn't posted at all in the first place. This is of course understandable, and a number of people have requested that members only post when they have a very strong conviction for the call or are putting money behind the call they are making.


 * Let me first respond by saying nobody here is posting random conflicting calls without any basis just for the sake of playing devils advocate. All of us are here to make money and learn about EW and other TA. The second part of which is the most important and one you must always keep in mind. No member should ever feel discouraged from posting a chart offering a different EW count or other TA. This is the best way for them to learn the theory and the techniques that Avi uses.


 * Second, not every comment or chart posted is an invitation to trade based on that information! I cannot stress this one enough. I am guilty of posting a lot of charts here daily, and I often get responses asking where I would advise an entry based on what I just posted. Please understand that sometimes I am posting counts that others requested or for the sake of someone already in a trade. That does not mean that I have a strong conviction for the accuracy of the count nor any trade setup that you might see on the chart. If I do not feel strongly about a particular count that I post, I will always add some sort of cautionary note. Same goes for when I actually DO see a trade setup in a chart, I will always make that clear.


 * The most important part of trading is having a proper trading plan and strategy. You can have amazing accuracy in your calls and still lose money because you are not managing your trades properly. Before even considering a trade, you must know your entry point, target, and stop, as well as your predicted timing for the trade and other variables. You must have a plan for if the trade goes against you or isn't not behaving according to your expectations. You must also know the best way to execute your trade, when to use options and when not to, and when to use leverage and when to stay away. You will quickly notice that options are used by this community very frequently, and it may lead you to believe they are the best vehicle for trading. There are numerous advantages to options, but also numerous disadvantages. They arguably the most difficult trading vehicle, and require a lot of practice and knowledge to be successful with. For example, the cheapest option is not always the best choice, nor is buying OTM expecting a 5x trade. I really believe this is what is hurting members the most. They may be correct in their trade, but end up losing money because of their choice in options.


 * All of the different input and contributions here from various members, regardless of their sometimes conflicting outlooks, is what makes this community so great. There is a vast amount of knowledge and experience here that you will be hard pressed to find anywhere else. Even with this in mind however, PLEASE do not blindly follow someone on a trade! It must agree with your own outlook and plan and not violate any rules in your trading strategy. You must first make sure that you have a complete understanding of every aspect of the trade before you pull the trigger, like where you should enter, what target you are looking for, where your stop should be, and how long the trade is expected to take. Have a plan if the trade turns on you and always practice proper money management. Never risk more than 3% of your account on any trade, even if you think it is a "sure thing".


 * There are a number of different personalities on this board and an equal number of different trading strategies. You may take the same trade as someone else and come out with a loss when they were successful simply because you both had different strategies. It takes time to learn the different personalities and strategies of the various members here, but once you do, you will find which members to pay attention to the most because they agree with your own trading style and outlook. That is why I love the idea of the Profile page for each member, as I think it will help with this immensely. Always feel free to ask questions whenever you are unsure about someone's post or when you would like more details. Again, we are all here to learn and make money, and you will find that camaraderie and generosity here are first class!

Post by Avi on 12/8/12 "Determining the Type of Trader You Are"

 * I want to take a moment to address a concern a number of people have had about being able to trade this market in a confident manner. I know it has not at all been easy, and no one ever said trading is easy, but I want to make several points to be able to assist you in doing so and hopefully increasing your trading success.


 * First, we must ALWAYS remember that we are likely within a Grand Super Cycle 4th wave. Since 4th waves do not have any shape or pattern that MUST play out, and is considered the most variable of all 5 waves, this clearly makes trading within this larger degree 4th wave exceedingly difficult.  In fact, the wave up that we have experienced since the March 2009 low will likely be the most complex wave within this 4th wave pattern, as there is always one very complex wave within a 4th wave.


 * Second, you must determine the type of trader you are. Are you a very short term/day trader, are you an intermediate trader (days to weeks), or are you a very long term trader (weeks to months)?  It took me some time to learn what type of trader I was, but it is worth it for you to make that distinction, as it will likely lead to less stress in your trading.  But with so many different types of traders in the room, I am unable to appropriately guide everyone exactly according to their trading proclivities, so I give you blue boxes within a larger pattern perspective, and allow you to make your own personal choices on how to trade it.


 * For example, if you are a long term trader, and you followed my analysis back in June, you would have bought the 1270 region with a target of the 1420-1440 region, as I know many did from the emails I have received about that set up.


 * Currently, if are following my analysis in suggesting that we still have much higher targets to see in the market, then you would have stopped out when the recent uptrend broke support in the 1420 region, and then bought back an initial position when we hit the first lower blue box in the 1340ES region, with a stop just below the bottom of the box at 1327. This could have been an initial position for the bigger trade to the upside.


 * For those that have been day trading these moves, there have been multiple sets ups every week for you to take advantage, especially when you are trading off the Fib levels we provide.


 * The traders who are probably having toughest time with this market are the intermediate traders. For these traders, the market, especially since June, has not offered as many really good trading opportunities as it has for the other types of traders due to the larger up/down/corrective nature of even the rallies.  For example, even within the June rallies, all wave structures occurred as sets of 3’s, and all trading felt like it was very choppy, even though we were able to identify the twists and turns better than most.  So, while our blue boxes during the rally since June provided both topping and pullback targets very accurately, it was not what I would consider easy trading due to the overall pattern.


 * But, fear not. Based upon almost all counts I can come up with, we are setting up for a nice 5 wave impulsive conclusion to this larger wave structure from the 2009 March low.  Under almost every wave count I can come up with, the last move into new highs must be a 5 wave event.  This means that we will need to see a 5 wave structure that adheres to Fibonacci Pinball almost to the penny.  For those that have been with us for a while, you know what that means as it relates to the high level accuracy we are able to attain in predicting and trading.


 * However, I do want to caution you. While I did say under “almost every wave count” as it relates to this final rally to new highs, there is the “possibility” that we wind up with an ending diagonal, which, again, is more likely to be completed in waves of 3.   That is the one way it will make this last wave much more challenging.  But, I will say that while it will make it more challenging and it may take us a little longer to identify it as the final wave higher, about 40% of the way through the pattern it will provide us with high probability trades for the next 40-50% of the pattern, which should relate to a minimum of 100-150 points of trading to the upside in a safe manner.  And, this would likely be the worst case scenario.


 * But one thing that such a pattern would set up would be the highest probability short trade you may take in your trading career near the conclusion of this pattern. So, like with every pattern, there is both good and bad associated with it.


 * Another suggestion that I have offered to many of our members is that one need not always trade the index. When we have 3 potential counts on an ES chart, I do not consider that a tradable chart from anything other than a day trading perspective.  Therefore, my suggestion would be to focus on other charts rather than the ES.  In fact, there are many chart patterns being presented on the site all the time with much better pattern potential which you may choose from.  So, remember, you DO NOT have to be trading the index all the time.  You are best off picking and choosing when to trade the index charts, and should be focusing on other charts as well.


 * So, ultimately, what I would suggest to everyone is to determine the type of trader that best fits your personality and risk appetite, and trade the wave degree that fits that trader profile. Additionally, if the chart offers too many options – meaning 3 or more – then that is not a chart to trade.  PERIOD!!  Rather, when we have a primary count, with a single alternative, that is the type of trade many would want to follow.  And, it seems we are now moving into that perspective on our ES charts right now.


 * And, as always, if you have a question, please do not hesitate to put it out into the forum, as I can GUARANTEE you that others would have the same question (assuming, of course, the question has not been answered in our “Getting Started on Elliottwavetrader” section).


 * We have all types of traders in our room, from novices through professional traders, who are actually EXTREMELY impressive. So, PLEASE do not be intimidated by the professional traders, as they have all shown a true willingness to help the novices among us.  So, PLEASE make sure you post your questions, as I am sure that others would have the exact same question, and it may even prompt the more experienced traders into seeing something that they did not see before.  Having hundreds of eyes looking at the same pattern and providing input and asking questions always forces analysts and traders into developing a much tighter trading strategy.  So, EVERYONE’s input is HIGHLY valued here!!  “A rising tide raises all ships.”

Post by Avi on 9/16/13 on Why to Use the Emini S&P 500

 * Why I Use S&P500 Futures


 * I want to clarify why I use the futures in the ES as opposed to the cash market, and when I revert back to the cash market.


 * We often see large gaps in the cash market, and are left guessing as to what the wave structure is within the gap. This causes a lot of uncertainty in our counts, as we can only make educated guesses as to the internal wave structure.


 * Therefore, I primary count waves in the futures, since the waves in the cash market gaps are often prominently displayed in the futures. While there are still gaps in the futures on occasion, such as on Sunday nights, it does leave us playing the “guessing game” with internal wave structure at times, but, much less often than in the cash markets.


 * However, problems crop up when there are spikes in the futures which seem to invalidate a pattern, which is then reversed before the cash markets open. In such a case, especially when such a spike in the futures is rather immediately reversed, we can often discount such moves due to their occurrences upon low volume.  Remember, the more buying and selling volume you have, the more reliable your wave count will be.


 * So, this is the reason I am still looking towards the cash index for invalidation purposes of the yellow wave (2), rather than relying on the futures. It is when we have an invalidation of a pattern in the cash index that we can absolutely rule out the yellow wave (2) potential on our charts.


 * While this may seem a bit confusing, try to remember it like this: we use the futures in order to avoid gaps in our wave structure as much as possible, but the cash market is still the KING when it comes to pattern validation and invalidation.