Evaluating Individual Stocks, Bob Prechter says : "The best approach seems to be to avoid trying to analyze each issue on an Elliott basis unless a clear, unmistakable wave pattern unfolds before your eyes and commands attention. Decisive action is best taken only then."

Whether you're trying to short stocks in a bear market or buy them in a bull market, your additional criteria beyond wave structure could be sentiment, momentum, and relative strength versus the sector and market. Other indicators [p/e, p/b, roe] are not always reliable. For example, the P/E ratio has been shown to have little, if any, technical merit. The ratio may be useful for annual reports, but its correlation to anticipating stock performance has been inconsistent.
 

Diagonal Triangle is a terminal or ending wave pattern. It is found at the end of impulsive waves, at the end of wave 5 or at the C position of an A-B-C formation. It’s a five-wave overlapping move most of the time found with converging trendlines. Each wave of the pattern subdivides into three smaller waves. Whenever a diagonal triangle ends, it typically leads to a very sharp or swift movement to the origin of the price and then some. click for more...

 

It’s a very easy wave pattern to identify. It’s a very high-probability pattern. It’s a wave pattern that – when it forms – a sharp reversal of price typically occurs. Plus, the parameters of the pattern lend themselves well to formulating a trade plan, i.e. protective stops, risk and targets.

Essentially all five-wave overlapping structures are diagonal triangles. Not in all cases, but more often than not, it will be a diagonal triangle. Either the terminal or leading variety.

 

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Bob Prechter's Six Secrets of a Successful Trader

1. Find a method. 2. Be disciplined. 3. Get experience.

4. Accept responsibility. 5. Accommodate losses. 6. Accept huge gains.

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Confidence in an investment choice should not flow from how you "feel" about it. Instead, confidence should be grounded in a ruthless analysis of what your method tells you. In other words, a "high-confidence" forecast refers not to an emotional "high," but to what the data says about probabilities.

In Elliott wave analysis, the highest confidence comes when the pattern is clear at several degrees of trend: The clearer the pattern and the more degrees of trend, the greater the probability that the forecast will come to pass.

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What is "Cluster"

Time after time, individual Fibonacci multiples and retracements identify important levels of support and resistance. However, when multiple Fibonacci relationships fall closely together, they create a "cluster" that is even more significant than a single relationship. Think of it this way: One Fibonacci relationship represents a brick. Several Fibonacci relationships together act like a brick wall that prices won't easily penetrate.

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Phenomenon in Elliott Wave Principle:

"Third waves are wonders to behold… [They] usually generate the greatest volume and price movement and are most often the extended wave in a series. It follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence." ~ Bob Prechter ~

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How To Trade with Waves & 0.618

 

Who was Fibonacci and why is his mathematical sequence so important?

Leonardo of Pisa was the son of a successful merchant named Bonacci, thus "fi" for "son of" Bonacci. Fibonacci introduced the Arabic number system to the Western world and was the most famous mathematician of his time. In the 13^th century, he would entertain royal courts with mathematical problems. One of those problems was the famous rabbit problem [How will a pair of rabbits multiply?] the answer to which is the sequence named after him: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, and so on. Start with one and add the preceding number to it to get the next number in the sequence. Actually, Fibonacci re-discovered the sequence and the ratio which governs it, which had been known by the Greeks and as far back as the ancient Egyptians. It has been treated as a very special thing by mathematicians and scientists that far back, and to this day.

How does this sequence relate to the market? 

In the stock market, the simplest description of a bear market is a straight line down, one wave. The simplest description of a bull market is a straight line up. R.N. Elliott found that bear markets most often subdivide into three waves: down, up, down. Bull markets subdivide into five: up, down, up, down, up. It takes one complete bear market and one bull market to make a cycle. At the simplest level, that is 1 rise and 1 fall, for a total of 2 waves. the bear market subdivides into 3 waves, the bull market into 5, and the total is 8. When you drop to the next subdivision, you find that a bear market has 13 waves, a bull market has 21, and the total is 34. And so on to infinity: each new number is the sum of the previous two. That is the Fibonacci sequence.

Can you explain what the Fibonacci ratio is?

As the Fibonacci sequence progresses, the ratio between adjacent numbers is always 0.618, called phi [pronounced "fie"], which has an inverse of 1.618; that is, .618 times 1.618 equals 1. So, for instance, take 34 and divide by its adjacent number, 55. You get 0.618 – the golden ratio.

So how do you use the ratio in markets?

One example of the use of the Fibonacci ratio in the Elliott Wave Principle is to establish targets based upon common relationships among waves. Elliott pointed out one example of when an impulse was likely to display a Fibonacci relationship among its components. I have catalogued a whole lot more.

 

Elliott Wave Count and Fibonacci Summation Series.  If we combine the numbers of the Fibonacci summation series with the findings of Elliott, we can count out Elliott waves in the first bull-market cycle seen in Fig.2.1 below:       5 + 3 + 5 + 3 + 5 = 21    .... 21 is a numbers in the Fibonacci summation series. The core principle is that a move in a particular direction should continue up to a point where a time frame - part of and consistent with the Fibonacci summation series - is completed. The smallest number to work with from the Fibonacci summation series is 8. A move the extends itself beyond 8 days should not reverse until 13 days are reached. A move over 13 days should extent itself to 21 days, and so on. This does not mean that trend changes will always occur at the precalculated points (8,13,21,34,55,...), but research shows that it happens too often to be ignored. 

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Why use the Wave Principle to study the markets? 

Elliott wave analysis identifies the trend.

Elliott wave analysis is based upon two types of wave development: impulsive and corrective. An impulsive wave, or five-wave move, identifies the direction of the larger trend. For example, a five-wave advance identifies the trend as up. Conversely, a five-wave decline determines that the trend is down. We always want to look in the direction of the trend; we want the wind at our backs. Why? Moving in the direction of the trend is like taking the path of least resistance. Simply put, the probability of success is much greater if you are long Corn (or any other commodity) and the daily and weekly trends are up.

Elliott wave analysis identifies countertrend moves within the trend.

A corrective wave is a response to the preceding impulse wave and goes against the trend. Corrective waves typically subdivide into only three waves. As traders, these countertrend moves or corrections present an opportunity to position ourselves in the direction of the overall trend of a market.

Elliott wave analysis also identifies upcoming changes in trend.

Elliott waves are fractal in nature: the impulsive legs of a five-wave move comprise smaller five-wave moves. Knowing this enables a trader to identify the maturity of the current progression. For example, if prices are advancing in wave 5 of a five-wave advance, and wave 5 has already completed three or four smaller waves, we know that this is not the time to be adding long positions. Instead, this information would let us know that some profit taking is in order or that protective stops need to be raised.

Elliott wave analysis confirms the resumption of the trend.

Typically, countertrend moves unfold in three waves, A-B-C. When price action exceeds the extreme of wave B, the previous pattern is confirmed as a three-wave structure, implying that the larger trend has resumed. A move past the extreme of wave D of a contracting triangle also confirms the resumption of the uptrend.

Elliott wave analysis provides high probability objectives.

When R.N. Elliott wrote Nature’s Law, he specifically stated that the Fibonacci sequence was the mathematical basis for the Wave Principle. And as time has proved, he was right. Elliott waves, both impulsive moves and corrections, adhere to specific Fibonacci proportions.

Elliott wave analysis provides a built-in mechanism for changing one’s mind.

Where are you wrong? This seems to be the eternal question for traders. At what price is a stock or commodity bullish or bearish? Is a move through 1500 bullish in Cocoa? If so, what about 1501 or 1499? I am aware of very few analytical methodologies that can tell you to the tick when a trade has gone awry or if a new trend is beginning. The three cardinal rules of the Wave Principle (listed below) provide such guidance.

Cardinal Rule 1: Wave 2 can never retrace more than 100% of wave 1.

Cardinal Rule 2: Wave 4 may never end in the price territory of wave 1.

Cardinal Rule 3: Out of the three impulse waves 1, 3 and 5, wave 3 can never be the shortest.

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How to use MACD to count Elliott waves...

There are three:

1. Wave three normally corresponds to an extreme reading in MACD.

2. Wave four accompanies a test of zero.

3. Wave five pushes prices to a new extreme while MACD yields a lower reading than what occurred in wave three.

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FUNDAMENTAL OR TECHNICAL.....Fundamental research and technical analysis can work well together.  While the fundamental factors move prices in the long run, technical help us time entries and exits. Having a grasp of the key fundamentals allows you to make a strategic decision – to position long or short.  Then you can switch to technical analysis for precision timing.

Awareness of news and fundamental events that may have a (sometimes severe) impact on any given market should be given credence. In fact, it can enhance technical study and ultimately lead to a greater level of trade preparedness and conviction.

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Cycles are found in EVERYTHING, including price behavior, they can provide futures and commodity traders with an edge in timing trades.  How can Cycles give a trader the edge?.... If a trader is able to determine with accuracy beginning of a new trend or perhaps end of a trend correction, the trader can then enter the market at a price that presents low risk exposure with excellent opportunity for gain. One reason many are unable to profit from trading is that they have been entering trades too early or too late as well as not knowing where to place their protective stops. If a trader had a very good idea as to where the market was likely to reverse, there would be little question as to where to place the protective stop and where to enter the trade. more info...

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Trading is like any other business. To be successful you need to:

1. Be well capitalized.
2. Have a good trading plan.
3. Be objective.
4. Have a long-term view.
5. Conquer hope, fear and greed.
6. Be able to trade with the odds in your favor.

In other words, you need a trading system.

The key elements of a Profitable Long Term Trading System are:

1. Choosing the right market to trade.
2. Choosing the right price data to reduce noise.
3. Choosing a reliable long-term indicator to find the major trend.
4. Applying a simple filter to stay with the major trend.
5. Using more filtering algorithms to improve the performance.
6. Incorporating genetic algorithms to sell near the top and buy near the bottom.
7. Using functions to keep drawdown to a minimum, reduce the number of losing trades, and lower risk.

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一个刚入市的投资者往往会对证券投资充满信心，期望在股市中大捞一把，可是，随着对股市介入的深入，以及投资经验的丰富，心里即反而越来越没有底，信心也变得越来越不足。事实上，如果你也有同样的感觉的话，也就是随着投资经验的丰富，心里反而感觉越来越不踏实，好像对市场越来越把握不准的时候，不要灰心丧气，因为有这种感觉，正是表示了你对这个市场的理解在进步；初入股市的人，就像人们说的是“初生牛犊不怕虎”，刚刚看了几本书或是学了几招钱龙的指标分析方法，便感觉赚钱良机已说在手，于是兴冲冲地就要入市显一下身手，其实是有相当的盲目性，在经历几次失败经过几次痛心疾首后，才开始体会到，股市实在不是如他所想象的那样简单，而是有太多地无法体会，不能理解的地方。股市投资策略真有点琳琅满目，目不暇接的感觉，不过不管有多少变化，证券投资的基本策略其实并不如看上去那么繁杂，各种各样的指标，方法仅仅是其演变，延伸罢了.

投资策略与指数基金 双底形态的判断与操作 红派息前后的投资技巧

中短期最佳投资策略 利用双重底选择黑马 股市操作策略——平衡市的操作   股市操作策略——牛市的操作   股市操作策略——怎样把握反弹机会   多头市场投资的技巧

股市操作策略——如何判断顶部   股市操作策略——熊市的操作   股市操作策略——解套的操作

• 股市发展阶段与成长周期理论

• 股票价值理论 - 道氏股价波动理论 - 波浪理论

• 证券市场分析论 - 亚当理论 -信心理论 - 相反理论 -随机漫步理论

• 技术分析的定义及特点 - 技术分析的操作原则 - 黄金分割率理论

• 相对强弱指标（ＲＳＩ） /   相对强弱指标RSI信号

• 如何应用 DMI 技术指标

• 抄底逃顶信号之四--技术指标 MACD

•  随机指数（ＫＤ线）

• 对技术指标的疑问

• 炒股绝技

There are no trading secrets and no easy paths to quick success in trading markets. One of the biggest obstacles to success in trading markets is a lack of knowledge and understanding of the process of trading. The "process of trading" includes understanding financial leverage, market behavior and trader psychology. Understanding the process of trading can be achieved with perseverance and a willingness to continue to learn.  How can you be in this business and not know what markets are going to do? How can you be a successful trader and not know where market prices are going?

Whenever you plan a trade, three factors must be crystal-clear in your mind – where to get in, where to take profits, and where to bail out in case of an emergency. Planning for an exit must begin before you enter a trade.  One of the first things we must do when looking at a stock or a futures contract is measure to the width of its channel.  If a channel is 20 points wide, even a 10% gain will give us some money, but if the channel is only 5 points wide, then 10% will bring us peanuts, not worth the risk.

Support and resistance are curbs in prices or barriers outlining a road. Calculating support and resistance using specific Fibonacci measurements, can help us to know where prices should (and should not) go.  Clusters are when you have a lot of support and resistance levels near one another. Clusters of support and resistance represent a fence or even a wall. These areas are more difficult to overcome than the usual single support and resistance levels.

Identifying stops is the hardest thing we do with regard to our analysis!  If you’re trading, you want a stop that limits your risk without limiting your gains. You need a price point that protects you in case a trade goes against you. It’s natural to want a tight stop to reduce your losses. However, if you set your stop too close, it might be triggered by intraday noise, and you can end up getting bumped out of a move that was going to go your way.  Elliott wave analysis can help you to determine where to set the stops. If you follow the rules and act on what they say, you can set a stop based on logic rather than emotion. (Refer to the Tip at the bottom). So if you think you are in wave two, you know the market cannot take out the origin of wave one. You can place your stop just beyond the origin of wave one, knowing that if the market goes past that point; your wave count has been proven wrong. Elliott offers a lot more than just a forecast of the market’s direction. It also helps you objectively identify and limit your risk.

Choppy Price Action is something Elliott wave analysts recognize as normally corrective, which means the next move is going to be impulsive and therefore should present a good opportunity. 

To be good traders, we should never stop learning - reading books, doing courses and seminars.  About 90% of people will take a profit as soon as it is there even though leaving it exposed in the market promises that it will grow further. Similarly about 90% of people will ride a losing investment even though leaving it promises that the loss will probably get worse.  Most are fearful of losing profits, but are quite at ease with losses. Good traders know that we should do the opposite - we should cut losses short while they are still small, but allow profits to run for us.

An amateur enters a trade as if buying a lottery ticket. He waits for the wheel of fortune to decide whether he wins or loses. Professionals, on the other hand, have iron-clad plans for getting out, either with a profit or a small loss. A key difference between professionals and amateurs is their planning for exits. Beginners dream of profits but are always ready to give a trade "more time to work out."

You may move your stops only one way - in the direction of the trade. If you start giving your trade "more room to breathe," that extra slack will swing and hurt you. Even if the market rewards you for breaking the rules on one trade, it will lay an even bigger trap for you on the next trade.

The best time to make decisions is before you enter a trade. Your money is not at risk, and you can weigh benefits and risks. Once you put on a trade, you begin to form an emotional attachment to it. The market will do its best to hypnotize you and lure you into making emotional decisions. Write down an exit plan and follow it!

Turning a losing trade into an "investment" is a disease of small private traders. If you are losing in the beginning, you'll lose in the end.