They Love My Stops !!!

From working with so many traders, over the years, it’s clear that one of the biggest problems in trading is: trade management. For various reasons, mostly fear of loss, or fear of losing a small open profit, traders are inclined to move their stop far too early, or too tight, get stopped to then see price continue its merry way to the original target price, bemoaning “they love my stops”.

As a general rule, we buy dips and sell rallies – the corrective moves following impulsive moves, the end of waves 2 and 4 (on current or higher timeframes) in an ideal world.  Waves 1,3 and 5 always contain 5 waves for which we have some basic Elliott Wave rules to work with: -
Wave 2 never goes beyond the start of Wave 1.
Wave 4 doesn’t go beyond the end of Wave 1 (except in a leading/ending diagonal).

Already, you’ll see, we have two very good rules for managing a trade.  We wait for the Wave 2 to be confirmed, before moving the SL under there.  We then wait for Wave 4 to be confirmed, then move SL there. The SL stays in its original spot, below the start of Wave 1, until the Wave 2 (first SL move) and 4 (next SL move) have been identified; that will often mean price closes above and tests (to a lesser or greater degree) those Waves 1 and 3, for the confirmation.

With those simple rules in mind, I thought it’d be a good idea to write a stop loss indicator, to help traders better-manage their trades.  It’s called “TLMS” – you can figure out what that stands for, from the blog title.  What started as a simple idea turned into a more complex wave counting indi, with target prices plotted for Waves 3 and 5 – rather like eWavesHarmonics (or old eWaves) already does for the Wave 5.  The advantage of TLMS is that you can use it for bigger or smaller waves and it integrates with ATM for automatic SL management, using the T-Cust button.  I’m also testing it with my DOW Bot, to see if it improves performance.
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Here are some recent examples of the TLMS indi in action: -
DOW M15 SHORT TRADE MANAGEMENT

​GOLD D1 LONG TRADE MANAGEMENT – NOTE SL MOVES TO THE BOTTOM OF WAVE 2&4 THEN REGULAR TRADE MANAGEMENT AROUND W5

CABLE H1 SHORT TRADE MANAGEMENT. IN THIS EXAMPLE, I MANUALLY MOVED THE 3 FOR ADJUSTED W5 TARGETS  – THE ORIGINAL W4 SL LEVEL IS SHOWN

​Using the logic from the above charts, we can see how the SL management would have worked on DAX M5 today, until price reached the W5 target …

​As the price action unfolds, the indi will check to see if there’s a better looking W4 to replot the target W5, as it has since the above chart pic was captured …

​And … price eventually gets to the new Target 5 …

The TLMS indi has bar-based SL management, that can be activated when W5 has been reached, to lock profits when you get certain types of bars.  Again, this will work with ATM, for fully hands-off trade management, removing the human factor, that will often cut profits far short of the target.

We’re testing TLMS in our trading group but I’d be happy to share a demo copy for testing, to any of you who already have an ATM licence. Just send me an email, or use the Contact Us form, if you’d like to put TLMS to the test.  I anticipate making plenty more changes in the future, so this will be a time-limited trial for the time being and, I should say again, just for ATM users: please don’t ask if you don’t have ATM.
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The TLMS indi isn’t the perfect wave counting indi and irregular/expanded W4s, for example, might result in a premature stop out – they’re hard enough to work with manually, let alone to code for the computer to work with.  Nevertheless, the indi has proven itself to be extremely useful so far and, as you can tell from the examples, it certainly helps with more logical trade management, finding price targets and often allowing for the near-maximum profit taking in a trade.