Many traders love to throw around meaningless terms that they’ve picked up from useless forum threads / scammers / mega-bucks courses / etc. and think they’re clever; but are they really? I feel it’s time to get some things off my chest about how irritating the commonly used terms can be …
Let’s start with the word ‘trend’. It is extremely subjective – where one person sees the trend as being up (because they’re looking at, say, 100 bars), another might see it as being down (because they’re looking at 300 bars). Unless you’re going to be specific about the timeframe, the word ‘trend’ is meaningless, so don’t use it. As I type, the trend on Gold on the D1 timeframe, since 7th August 2020 is down (it’s actually in a corrective swing). The trend on Gold on the D1 timeframe since 15th August 2018 is very much up. The trend on Gold H1 since the start of 2021 is very much down. You get my point? You must give a reference timeframe when you use the word ‘trend’ or ‘trending’.
Overbought and oversold – I never ever use those terms. What do they really mean? Something has been bought or sold too much? Who is sufficiently qualified to define what is ‘too much’. Many will refer to (what I consider to be) completely useless indicators like RSI (which is just price in another form) for the definition; but how many times does price just continue rallying up in the ‘overbought’ zone. Sure, you might get a correction when wave 3 and 5 have reached their targets but it doesn’t mean price is overbought or oversold. Rather think about when a correction might be coming in a move that clearly has upside or downside momentum, then look to buy the dips/sell the rallies. Plain old common sense and reading of price action will give you a clue that a correction should come at some point. No doubt the OB OS RSI fans will have plenty of examples of where price corrected from the OB OS levels but then look at DOW D1 during Jan 2018 where price was supposedly overbought for the whole month and climbed about 2000 points – would you have stayed away from taking longs during that time???
Noise!!!! “The lower timeframes are just noise” Aaaargh!!!! That really annoys me. There is no such thing as noise when it comes to price action. The lowest timeframes give the best RR trading opportunities when trading the higher timeframes, so don’t ignore them because some so-called-guru says they’re just noise It’s offensive to price action and completely ignorant. The lower timeframes create the ‘butterfly effect’, so pay attention to them, regardless of the timeframe that you are trading.
While I’m having a rant, let’s talk about candlestick names that some well-known traders (at least they would have you believe they are traders) have made a lot of money writing books about and selling courses. There’s a module in my course about this and guess how many candlestick types I have: 3 ! You don’t need to remember obscure Japanese words and ridiculous names like ‘Pin Bar’ (named after a fictional wooden puppet) – just see what the price bar is telling you in relation to previous bars and key levels (ref the last blog post). Save yourself a lot of wasted effort and money in learning what you do not need to learn to trade.
That’s it – rant over. Feel free to rant back if you disagree 😊
For the purposes of this exercise, put to the back of your mind everything that you have read about trading and technical analysis. Your best approach to technical analysis will be what you discover for yourself: it will be more meaningful to you, more enduring and easier to trade. If what you discover rings bells with what you’ve previously learned, then great! That reinforces things and makes them real to you.
Find some time that you can focus undisturbed, without phone calls or text messages, etc. This is allocated as “time that you own” and really is your own time in every sense.
Load a random chart (any timeframe will do) from your preferred instruments. Remove all indicators, any grids or lines, so you only see time and price candlesticks (about 150 bars to the chart screen should do it).
Now go to the start of your chart history, and begin the process by scrolling through, one bar at a time, from history to today and allowing a reasonable amount of time for each bar
This exercise is obviously all about reading price action – really reading it. When you become competent at it and can start predicting where price will go to, using no indicators and just price bars and previous levels, along with some Fib’ tools, you’re becoming a good technical analyst and well on the road to becoming a professional trader. The hard part though, after mastering the reading of price action, is to master yourself – but that’s another story.
Most of you will have already done something like the above exercise; perhaps whilst testing every indicator and combination of indicators that you can fit on to your chart. It will be so much more rewarding when you can analyse naked charts and make your own predictions from what the history of price has told you.
You do not need any indicators to be able to trade. eWavesHarmonics just removes a lot of the manual process that you should be doing yourself and helps to remind you of what is important, where the key levels are and where price might go to. Nothing will ever beat what the human brain can interpret from reading price action; especially the brain of a seasoned trader who has studied decades of price action, from back-testing as per the above exercise and live trading.
The Trader Training Course teaches how to read price action if you need some help along the way but see what you can find for yourself.
That was an interesting year! I'll not mention the 'C' word but I will say that despite the horrible stressful times, that too many of us suffered, the markets gave us something to be very happy about
I wish you all a very merry festive season, as much as the lock-downs in many countries allow. Thank you most sincerely for all your support, kind words and success stories (please keep those coming) this past year.
I've no doubt that 2021 will be ever more successful for us traders; and hopefully the 'C' word will soon be behind us.
Stay safe, keep well and may Santa bring all that you desire :)
It's been far too long since my last post - moving to a new country leaves little time for such things but most of the personal tasks have been taken care of now; we just need to move into our new 'forever' home by the sea next month.
Despite my international move, there will always be time for trading and this month has delivered some terrific trades on DAX and DOW, following the announcement of the COVID vaccine trials. DOW has made a new all time high, despite the economic doom-and-gloom and ever-increasing deaths from the virus; too sad for words. Mr Biden seems to have won the US elections (the fat lady has yet to sing on that one, so I say 'seems' until Mr Trump concedes) for which the indices also reacted well. The Euro is looking strong; the Dollar looks due for a correction; the pound is bouncing around clutching on to fading hopes of a trade deal with Europe.
With good news for the indices often comes bad times for the safe-haven gold. Whilst DOW shot up on the vaccine news, gold crashed. as can be seen in the above and below charts.
It would be reasonable to expect a second leg down from here (although we have yet to see the second leg down that everyone was expecting on the indices for this year's PA). Using eWH and the ABC123 indi (ref the first chart) , we can see that gold has done an ABC FE100 42% correction. Looking below we have an area of confluence for Target Zone 1, so if the most recent high holds and we get the secondary TLB, that's the area that I'll be looking to. Anything can happen, of course, but for now it's looking like another second leg down to the TZ1 or even the TZ2 would be the most likely outcome.
ATM has now been upgraded to cater for the USA FIFO rules, where the first trade opened has to be the first trade closed. This will only be useful for our friends in America using in-country brokers.
Thanks to Greg for bringing the problem to my attention and testing the changes.
This short video explains more ...
In case you missed the email or Facebook updates, we had quite a disaster yesterday after our web-hosting company completely cocked-up their overnight migration. Not only did it kill this website but it also destroyed the licence manager for the most important programs.
I'm very happy to report that all has now been resolved. The licence manager is on a completely different server, away from the unreliable hosting company, and seems to be working 100%. If you are having any problems with eWH / ATM / News Trader reporting 'Bad Agent', please run the installation program from the appropriate page.
Drop me an email if you're still having issues and I'll reply as quickly as possible - I'm on standby.
1000 apologies for the inconvenience caused by those web-hosting idiots.
I had a request from Kumar, during the week ...
"Thanks for the Elliot Wave labels for Mt4. They are awesome. Could you pls enable option to move the main X? It is always on the right side bottom corner and it becomes difficult to use labels after clicking on the X and showing all the labels as the price is moving towards the right side of the screen. It would be helpful to move the main X to desired location. (left bottom corner, top left corner,etc)"
That change has now been made. See this blog post for more information about the indi.
Go to the eWaveHarmonics page to download - still free :)
A special mention and big congratulations to Michal, from our Skype Trading Group, who, just yesterday, did his best M1 trade to date - making 21% profit in less than an hour. Incredible stuff!
How did he do it? He simply waited for a very low pip-risk entry (using a strong supply zone drawn by eWavesHarmonics) with an obvious price magnet for his target and some shrewd trade management. Patience - discipline - let the trade run.
It's easy when you have the knowledge of price action, tools and discipline - all of which, Michal has mastered and demonstrates time and time again.
Trading doesn't have to be complicated to be very profitable; nor do your charts need to be cluttered with useless indicators. Buy the dips, sell the rallies, rinse and repeat.
A trader friend recently asked me whether or not I trade during August – the month where many of the northern hemisphere traders are supposed to be on holiday (less likely during these strange times of Covid-19 lockdowns) and, according to rumour, it’s supposed to be the quietest month for trading.
I treat August like any other month, for trading purposes: if the price action is good, on any given day, then I’ll trade it. The question, however, inspired some more statistical analysis, just to see if August really is as bad as many so-called ‘trading experts’ would have you believe.
One simple approach is to just look at the monthly charts to see how the August bars compare to the rest of the year. A quick glance at a few charts suggested there was no noticeable difference. Visuals are one thing but nothing beats hard statistics; so I wrote a quick program to export the monthly data (using all available data from my broker – mostly back to 1997) for some of the main instruments, to CSV files. There are two values that seem like logical candidates for this exercise: the monthly price range (high-low) and the tick volume. If you’ve read my blog post ‘Tick Volume a Waste of Bits’, you’ll know that I have little regard for that data, it is however useful for the purposes of comparison. With the data averaged for each month, I was able to make the following summary table (click to enlarge):
If we take the first column, for DAX, you can see that May (month five) had the lowest average price range and October (month ten) had the highest. August was 11th (with 12th being the highest). Similarly, using the average tick volume, February was the lowest and October was the highest. Again, August was second from the top. Therefore, it’s plain to see, August is definitely not a quiet month in terms of trading; quite the contrary. The data for the other instruments show that August is also just as good a month as most others, for trading, although the tick volume on GBPUSD and GBPJPY is quite low then.
I would have thought that December would rank lowest for most instruments but, surprisingly, that isn’t so – although we don’t need stats to tell us that trading between Christmas and New Year is a dumb idea.
If you find yourself stuck at home this August, trade what the price action gives you.
Another crazy week on the markets but, as traders, we like crazy markets. We've had some terrific RR trades already this week and it's only Wednesday morning. There was a more than 30R opportunity on DAX M1 this morning but, sadly (and due to poor SL management on my part), the max gained was just short of 10R - still not bad.
Just in case you have no idea what an 'R' is: it's an abbreviation for Risk:Reward. A 10R trade is 1 risk for 10 reward, which could be 1% risk for 10% gain; or 2% risk for 20% gain.
Yesterday morning gave us a very simple, set-and-forget, 15R trade:, as you can see in the above picture. As I often get questions about how I do higher timeframe analysis and find the low risk trades, I made a video that talks about this trade in particular, looking at the pre-market analysis and the news events that were driving price up; along with how I identified the entry. This is available for viewing in the Trader Training Course.