Better Trader

In the end Elliott wave analysis wins

In the past when I said that the stock market would crash, I was referring to the Elliott wave pattern. If you study this pattern you will know that a major correction is due. I don't know with certainty that the current correction is the start of the crash, we will see. However because this crash is due, it is possible that the coronavirus was the catalyst.

Studying Elliott wave is a big advantage, when an impulse wave up is complete you know something bad is about to happen. After an impulse wave the next move is a correction. The thing is, Elliott wave does not tell us what the problem is, it just tells us the stock market will correct. And because the stock market does not correct for no reason, you can tell something bad will happen, like a pandemic.

One of the features of corrections is the larger the wave up the larger the correction. If the wave under observation is of supercycle degree (large in time and magnitude), the correction will be large too. For example if we take the wave up in the Dow Jones since the crash of 1929 to the recent high, it is in five waves. If this wave is complete the current correction will extend. According to the guidelines, it should be larger in time and magnitude. The decline could take the Dow Jones below 2000 within ten years.

In a bear market the Fed will always find a way to boost the markets. These Fed induced rallies can hurt you if you are short, therefore it is not recommend to go short early in the bounce. You will recall the 5% rally in the S&P 500 in one day last week. Applying Elliott wave analysis gives us some clues about the levels where the rally will end. While these rallies are powerful, they will fail, in fact these rallies will provide opportunities to short the market.

Without central bank intervention the markets would crash immediately. If the Fed or the government intervene with monetary stimulus or any form of stimulus, in the short term markets will rally, but longer term markets will crash anyway. In the end Elliott wave wins. Why? Because that is the way the markets move, they follow the Elliott wave pattern.

Remember, whatever Trump or the Fed do will be temporary, the decline will resume. DO NOT believe what they say, their objective is to maintain stability in the financial markets, they will never scare you. They will always say that everything is fine or under control. IT IS NOT FINE, the Fed is losing control, believe me, I have studied Elliott wave for more than twenty years. I have seen this pattern repeat itself many times.

Once the bear market starts nothing will stop it, because what happens is a change of investors behaviour. The mood changes, from euphoria to fear. The more the market declines the more fearful they become. the more fearful they become the more they lose confidence in the Fed and Trump. At this stage they will follow their own instinct, and they will sell, sell sell. The Fed will no longer control the market. Trump and the Fed can only manipulate the markets when investors are in the right state of mind, when they trust the government and the Fed. This trust will disappear, then investors will scratch their head whether to buy or sell.

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EUR/USD on target

I issued a sell on EUR/USD earlier this month, here is the chart :

Now we are near the bottom.

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How to Build Consistent Trading Success

EWI's senior analyst Jeffrey Kennedy shares with you practical advice on what it takes to improve the quality of your trades.

By Elliott Wave International

You've heard it all before:

• If you want to trade using Elliott wave analysis, to succeed you first need to understand its rules and guidelines.
• You need a clearly defined trading strategy (what? when? how? etc.) and the discipline to follow it.
• Additionally, your long-term success depends on adequate capitalization, money management skills and emotional self-control.

Do you meet these qualifications, yet still struggle in the markets? If so, you may find some helpful advice in this quick trading lesson from Trader's Classroom editor, Jeffrey Kennedy:

We all know that the Elliott Wave Principle categorizes 3-wave moves as corrections and, as such, countertrend moves. We also know that corrective moves demonstrate a stronger tendency to stay within parallel lines, and that within A-B-C corrections the most common relationship between waves C and A is equality. Furthermore, we know that the .618 retracement of wave 1 is the most common retracement for 2nd waves, and that the .382 retracement of wave 3 is the most common retracement for 4th waves.

Knowing that all of these are traits of countertrend moves, why do traders take positions when a pattern demonstrates only one or two of these traits? We do it because we lack patience. We lack the patience to wait for opportunities that meet all of our criteria, be it from an Elliott wave or another technical perspective.

What is the source of this impatience? It could be from not having a clearly defined trading methodology, or not being able to control emotions. However, I think impatience stems more from a sense of not wanting to miss anything. And because we're afraid of missing the next big move, or perhaps because we want to pick up some lost ground, we act on less-than-ideal trade setups.

Another reason traders lack patience is boredom. That's because -- and this may sound odd at first -- "textbook" Elliott wave patterns and ideal, high-confidence trade setups don't occur all that often. In fact, I have always gone by the rule of thumb that for any given market there are only 2-3 tradable moves in your chosen time frame. For example, during a normal trading day, there are typically only two or three trades that warrant attention from day traders. In a given week, short-term traders will usually find only two or three good opportunities worth participating in, while long-term traders will most likely find only two or three viable trade setups in a given month, or even a year.

So as traders wait for these "textbook" Elliott wave patterns and ideal, high-confidence trade setups to occur, boredom sets in. Too often, we get itchy fingers and want to trade any chart pattern that comes along that looks even remotely like a high-confidence trade setup.

The big question then is, "How do you overcome the tendency to be impatient?" Understand the triggers that cause it: fear of missing out, and boredom.

The first step in overcoming impatience is to consciously define the minimum requirements of an acceptable trade setup and vow to accept nothing less. Next, feel comfortable in knowing that the markets will be around tomorrow, next week, next year and beyond, so there is plenty of time to wait for the ideal opportunity. Remember, trading is not a race, and over-trading does little to improve your bottom line.

If there is one piece of advice I can offer that will improve your trading skills, it is simply to be patient. Be patient and wait for only those textbook wave patterns and ideal, high-confidence trade setups to act. Because when it comes to being a consistently successful trader, it's all about the quality of your trades, not the quantity.

Developing patience isn't easy -- yet, if you are serious about improving the quality of your trades, it is vital.

How much more successful would you be if you could develop the patience to act only on high-confidence trade setups?

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Want more? How about 14 more trading lessons like these -- 100% free? Get 14 more lessons in Jeffrey Kennedy's popular Best of Trader's Classroom eBook. You'll get 14 of the best lessons from his 6-volume Trader's Classroom Collection eBooks. Free Club EWI members, log in to download your free 45-page eBook now >> Need a free login? Get it now -- and immediately access your free Best of Trader's Classroom eBook >>

This article was syndicated by Elliott Wave International and was originally published under the headline How to Build Consistent Trading Success. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

2015, the trigger and it's coming

We continue to cash in regularly on the indexes, latest profit +165 points on the FTSE 100 June. We are short on Gold and long the euro. More to come soon...

We have consistently beaten the market this year, and it's just the beginning. When the calls are accurate it's really fun to trade. The next major move in the stock market is about to start, stay tuned...

Here is the FTSE 100 forecast prior to the rally on April 8th

Start making regular profits from the FTSE 100, S&P 500, EUR/USD and gold, subscribe to Better Trader Premium:

http://www.bettertrader.co.uk/blog/premium-content.html

(Video) Want a Sure-Fire Forex Trade Setup? Look for a Triangle

By Elliott Wave International

Watch this quick educational video from an Elliott wave forex expert, Jim Martens.
Last fall, the editor of Elliott Wave International's Currency Pro Service, Jim Martens, observed a beautiful pattern in the chart of the Japanese yen. Upon its completion, this pattern offers a very clear outlook for the market. Read more.

EWI's FOREX FreeWeek is Now on: Get Free, Live Forecasts for USD, EUR, JPY and more

Our friends at Elliott Wave International have just announced the start of a rare, free event for forex traders at elliottwave.com:

Forex FreeWeek, Feb. 11-19

Now through noon on Feb. 19, test-drive their trader-focused Currency Pro Service -- at no cost to you.

You get 100% free access to all the charts, forecasts (intraday and daily), and video updates. This Currency Pro Service combination sells for $494/month, but you get it free for one week only! No catch, no obligation, no credit card needed.

Today, you need to be paying attention to forex because of:

    Several high-probability Elliott wave trade setups in EUR/USD and USD/JPY
    The emerging currency crisis and its implications
    The new Fed chief and potential changes to the QE

Want to know where FX markets are headed in the next few hours, days and weeks?

Elliott wave patterns are telling you now where the next major opportunities are. Find out now during EWI's Forex FreeWeek!

Learn more and get free, instant access to EWI's FreeWeek of FOREX analysis and forecasts now

How To Choose a Reputable Trading Signal Service

Plagiarism is described in Wikipedia as the “wrongful appropriation” and “purloining and publication” of another author's “language, thoughts, ideas, or expressions,” and the representation of them as one's own original work.

Sadly the Internet has provided a platform for unscrupulous people to launch trading signal services, these people have little or no experience and their services should be avoided at all costs. Their plagiaristic process is simple: set up a website, copy content and ideas from legitimate competitors, provide bogus analysis, do some clever online marketing and voila! Unfortunately these people are so savvy with their marketing that it is difficult to ascertain immediately if their system is legitimate.

As a victim of plagiarism, e-Yield which is one of the leading trading signal providers in the UK, is fighting this injustice. I have already caught a few people who copied my research, thanks to the public who alerted me and I am currently monitoring a few websites for more.

7 ways to Spot Plagiarism and Scammers

Before subscribing to any trading signal service, make sure the published content is from a reputable company or individual. Here are 7 signs to look out for:

1. Website

Check the domain name, do they have a proper named website address or is it a free website template? If it’s a free website template, like Google blogspot or weebly, be cautious. A serious professional business would never use a free website template.

Do you know how long the website has existed – is it a new service or an established one? Scammers don’t stay around for long, if the website has suddenly appeared and is new, be cautious.

2. Who is behind the website?

Any reputable website will have the name of the analyst or trader providing the trading alerts. By name I mean their full name including their first and last name. If there is no name or just the first name, be cautious. If a full name is supplied, check their credentials, does the person have a profile on LinkedIn? This is a good place to find out about the person’s past experience and qualifications and to measure their integrity. If the person has no LinkedIn profile, be cautious.

3. Authority

Has the person appeared on financial TV? Do they write regularly for financial websites or do they speak at trading seminars and events? Is the person a member of any professional organisation like the Society of Technical Analysts? A quick Google search using their name will reveal if they are well-known and reputable and in particular if the person has any authority in the field of trading.  If you don’t find anything relevant, be cautious.

4. Contact details

They should supply a contact email address, not a personal one but a corporate email with the website domain name in it. A published telephone number is a plus, it means the person is happy to speak with you if necessary. If no telephone number is available, be cautious.

5. Trading performance

If the trading performance is too good to be true, it’s probably not true. In this case be very cautious. Websites that claim large monthly profits with little or no drawdown are seriously misleading investors. Chances are you won’t replicate their performance and you will probably lose money. For example making 400 points per month is equivalent to turning £1,000 into £3.2 million in just two years (assuming someone trades 1 FTSE 100 contract per £1,000 in the account). This is unrealistic. Some websites use “a good run” of a few months to annualise the result so that they look good, but the truth is a high-number performance is misleading. It’s the same scenario for websites that show profits month-after-month without any negative months whatsoever. This is unrealistic and not based on truth and you should be very cautious.

6. Method of payment

If the website does not accept well known payment methods like Paypal or Worldpay it’s probably because they have a bad reputation and have been barred from having an account, be very cautious in this case. Or it could be that they simply want to avoid refunds. Please note and remember that credit card companies provide some protection against fraud, they can often recover payments and refund your money from the vendors account. It is always preferable to use a credit card for online payments.

7. Other things to consider

A measure of healthy skepticism should always be applied regarding claims made on the internet. Be cautious of the following signs, they are not a clear-cut indication of a person’s integrity:

Appearing at the top of Google does not mean the website provides a good service. Any website that has been optimised for search engines can rank high on Google.

Do not choose a provider simply because they have a large number of Twitter followers or Facebook likes. It is very easy to buy followers and there are many social media tools designed to increase the number of followers, in most case those followers are not real followers or real people.

Money back guarantees are a plus but if the website is run by a scammer chances are you won’t get your money back. Take these claims with a pinch of salt!

I have written this article because I have seen first-hand the tricks unscrupulous people play with other peoples hard work and ideas. For some it’s because they want to create something they are incapable of doing themselves and pass it off as their own. This will not gain any long-term respect nor garner success and they usually disappear as fast as they appeared! So always be cautious.

If you are looking to learn more about trading from a reliable service run by a professional trader with integrity and experience then visit my website www.e-yield.com and get your first month subscription for half price.  If however you decide to choose a different service provider make sure you read the above guidelines.

Thierry Laduguie is FTSE 100 Trading Strategist at www.e-yield.com