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Trading ebook:

How Elliott Wave has changed my way of looking at the markets

By Juan Maldonado, Chief Elliott Wave Strategist, FX Trader’s EDGE

©2014 FX Trader’s EDGE TM All Rights Reservedwww.fxtradersedge.com

Stocks, Options, Forex and Futures trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you cannot afford to lose. This is neither a solicitation nor an offer to buy/sell Stocks, Options, Forex or Futures. The past performance of any trading system or methodology is not necessarily indicative of future results. No guarantee is made that you will be able to replicate the same results.

Disclaimer


In my 7-year career as a trader plus 5 years of financial preparation, I have learned dozens of techniques covering technical and fundamental analysis. I have attended courses and seminars, and invested time and money in order to achieve consistency in my trading and understand financial market moves where at first glance they seem meaningless.

Elliott Wave seemed to be a complicated subject to learn and subjective because there are as many Elliott Wave counts out there as analysts. I had the impression that each analyst labelled these counts at their own discretion as they saw the market, and this kept me away from learning theory in my first year of trading.

Part 1 Introduction


There came a time when I failed to understand the movements of the market despite the fact that I knew how to read charts and learned about candlesticks, various systems of moving averages, bollinger bands with one or two deviations, and other techniques. So I decided to take the next step and immerse myself in Elliott Wave Theory. Learning the rules and guidelines took me 6 months, and when I was already an expert in the theory came the moment of truth to face a blank chart with only price action. At that moment the problems of subjectivity began since applying theory to live charts is the most difficult part of the learning process.

I was close to giving up, until one day when browsing the Web I found the course Elliott Wave -Wavy Tunnel by Jody Samuels, a former institutional trader at JP Morgan. Without hesitation I took the course, and I can say that it changed my life and my trading completely: it is a clear and concise training course with endless resources and I just kept soaking it in. In just 3 months, I was applying the Elliott Wave theory adequately and generating stable profits.

Part 1 Introduction


My passion for research led me to translate Jody’s course into Spanish for our spanish website www.clubdecapitales.com and now, several years later, I can assure you that our course is the best Elliott Wave trading course in the world, thanks to the skills I developed with this training program. I now collaborate with a very prominant Spanish Forex website FXSTREET.ES and thoroughly enjoy my role as Chief Elliott Wave Strategist with the company founded by Jody Samuels, The FX Trader’s EDGE.

Well Elliott Wave not only changed my trading, but it also completely changed my life, and I was finally able to understand the financial markets, predict future levels, operate like a pro and teach my knowledge to other people which I am passionate about. Helping novice and intermediate traders to become professional traders is my passion. I want to invite you to join us on a journey filled with rewarding surprises for your trading during the next 3 months where we will share all our secrets and tricks with you to navigate the Elliott Waves, and I am sure that this will change your life too. (Keep your eyes open for our course offering).

Part 1 Introduction


One of the most common mistakes that I have detected with my students from questions that I receive daily is as follows: Students assume that with the Elliott Wave knowledge one can generate entries in the market through the wave counts and while that thought is logical at first glance, it leads the trader to think that Elliott Wave theory does not work if they cannot find exact market timing for entries.

Elliott Wave is excellent for understanding the market cycles through the counting process, and an Elliott Wave analyst graphically understands the movements of the market and creates possible future scenarios but generating entries to the market using only Elliott Wave is a terrible idea. Find me a trader that achieves returns on their trading using Elliott Wave exclusively.

Part 2 Elliott Wave without a Strategy is Subjective


I don't want to confuse you but one of the recipes of trading success is to have an analysis that provides you with excellent knowledge of the market and a technical strategy with clear entries to remove the human emotions, the discretion of the trader, bad trading habits and the possibility of converting the trading to a betting or Casino activity. To achieve this, you must have clear rules to enter into the trade and the first thing you should ask yourself when developing a trading plan is when not to take trades. When the trader manages to understand when not to be in the market, it increases his chances for the perfect entry; that is to say the strategy is a set of clear technical rules, objective and accurate, and applying them makes the trader disciplined and responsible by only entering the market when certain circumstances are fulfilled. That is what we call "The Perfect Setup" in our training program.



Over the last several years we have improved upon our exclusive strategy called The Wavy Tunnel PLUS, but what is the Wavy Tunnel PLUS? A software? A magic formula? Or something mysterious? Our system is simple and powerful; it is a series of exponential moving averages along with an oscillator that can be set on any trading platform and applied to any financial market. Soon you will know more details about the system, which offers 6 types of market entries within various time frames (daily -4-hour/1-hour/15-min/5-min/1-min) for any type of trader. This strategy also collaborates and confirms the Elliott wave count because it tells you with greater probability which wave the market is in, and most importantly when the wave is about to finish in order to close the trade and open another trade in the opposite direction.

Elliott Wave is essential for implementing the Wavy Tunnel Strategy; combining both creates a synergy and convergence of analysis with strategy which is necessary in navigating today’s markets with precision.



When I write or record videos of my Elliott Wave analysis for FX TRADERS EDGE, FXSTREET.ES, TUTORES FX, and CLUB DE CAPITALES, I try to warn that the analysis is not recommended to trade as a stand-alone system and must be traded with the Wavy Tunnel strategy or you can adapt your own strategy to Elliott Wave if you have sufficient expertise or find a professional that will help you with this process.

I have already stressed that a successful trader uses a good market analysis with a trading strategy. Is it required that its market entry strategy is excellent? Not necessarily, as a strategy is measured by relating the number of hits for every 10 trades, i.e. If your strategy has an average 6 positive trades for each 10 trades the effectiveness is 60%.

Part 3 The Management of the Business


The third pillar of the successful trader is managing the business. This includes managing the risk for each trade, managing market risk, managing open trades, managing the time trading and managing capital properly in diversifying the investment. All these parts will be studied in depth during the Elliott Wave - Wavy Tunnel course but I would like to talk about risk and trade Management now.

Risk management is crucial to keep the trading business afloat; if you risk 1% of your capital per trade and with a strategy at 40% effectiveness that means that with every 10 trades you lose on 6 and win on 4, in terms of performance it means that the negative trades generated a loss of 6% of your trading capital. Now everything depends on the 4 successful trades, and if you manage to win 2% on each trade, the result from the positive trades will be 8% minus 6% of negative trades equals 2% yield. As you can see even a deficient strategy can make money. Now imagine what happens when the efficiency of the strategy goes up to 80% or 90%?

Part 3 The Management of the Business


Every day I receive questions from traders in different parts of the world, with the most common question being about the exact point to enter the market; some have been looking for years for the magic formula without success. I think that magic formula does not exist. What really matters is whether or not the professional or independent trader can achieve stable performance, but how does that trader enter into the market? Does he take trades with the trend, take trades against the trend, and in what time frames does he enter? And what if the market says to buy on the 1-hour time frame but says sell on the 15-minute time frame?

There are several variables that you must learn to coordinate with practice, but there is the most important variable which I call the Lost Element, which is to validate or confirm an idea when you find a trading signal. e.g. a trader who sees a candlestick pattern of a "hammer" on the 4-hour chart and enters without validating is starting up a casino game, even if the chance of success is 60% and the probability of failure is 40%.

Part 4 The Wavy Tunnel and the Lost Element


But that isn't enough to get into a safe trade on the market, unless you add Elliott Wave to that pattern to increase the probability of success to 70% and add the "Lost Element" which is confirmation of the trade with the Wavy Tunnel increases to 85% the probability of success. Therefore your trading efficiency can reach 85% ie. 8 positive trades out of every 10.

Another way to explain the lost element is when you learn the concepts of divergence, the situation that happens when the oscillator is doing the opposite of the Price. In theory when you are in such a situation you should take reversal trades, but it is not true, as the price most of the time continues to move in the direction of the trend ruining your trading capital. The divergence is a very useful element where the trigger (market entry) must be validated, and the Wavy Tunnel and Elliott Wave indicate precisely where and when to enter, and when not to enter the market.

Part 4 The Wavy Tunnel and the Lost Element


The paradigm of the market is such that every analyst sees the market differently. When you ask opinions of analysts you find different points of view among experts on traded instruments -some say it will go up while others say down. As an independent trader you are always wondering whether to buy or sell. To eliminate the paradigm and get to understand the market, I invite you to put on different lenses.

Our training program has made amazing discoveries. Just as there are about 5 new species in the Amazon discovered daily, so too our team with our students were able to observe new details of the Wavy Tunnel when combined with Elliott Wave. It is amazing how whenever we add a new "lens" our students begin to match their forecasts so that they manage to understand and take the high probability trades.

Part 5 Prepare your Lenses – Here We Go!


This exercise starts with a blank chart with only price action. When you bring together 5 "traders" and interview them separately about entering and exiting trades, their answers will vary.

Blank Chart...



With the first lens, some traders will say the "Bearish Engulfing" pattern suggests that the market is entering a pause, some say that it will continue with the trend, and still others highlight a possible reversal. We have to agree that the picture is not clear.

Chart with "Bearish Engulfing“ Japanese Candlestick Pattern



The second lens adds Fibonacci and the Elliott Wave count, and with this additional analysis more traders are looking for a change in the direction of the market, but do not agree in terms of entry points. The more adventurous want to enter immediately and the conservative traders prefer to wait but they are not sure where to enter.

Elliott Wave chart, entry: 102.04 // 93.57 target



The third lens adds the Wavy Tunnel, and everything changes in that moment. All traders see clearly the scenario and depending on your personality and risk tolerance, will determine where, how and when to enter the market. The Wavy Tunnel manages to show the roadmap of the market and fits the personality of each trader.

Wavy Tunnel entrance 1: 102.04 coincides with Elliott Wave // Entry 2: 100.00



As you can see to properly use different lenses you're creating a powerful strategy which will help you to increase the likelihood of success; it is not a magic formula but is the result of a coherent analysis among different lenses, resulting in an accurate, objective entry and high probability of success.

Elliott Wave objective: 93.57 // Wavy Tunnel objective: 93.80



The Wavy Tunnel features 6 different trading strategies for the trend trades and the end of trend trades. 4 of the trades are to capture and ride the trend and 2 are against the trend. Each trade has specific rules and guidelines which serve for any efficient financial market and in any time frame.

I now invite you to join this intensive course using Elliott Wave with the Wavy Tunnel.

We call it Elliott Wave Ultimate! Stay tuned for more information about this intensive program which just might change your life, just like it changed mine.

Part 6 Elliott Wave Ultimate – Here We Come!

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Trading ebook: How Elliott Wave has changed my way of ... Experiences... · Trading ebook: How Elliott Wave has changed my ... generate entries in the market through the wave counts