Methodology

There are four key concepts underlying our trading methodology.

  1. Price-Action: The first is that we use price-action, not indicators. Because actual indicators lag but price-action does not, the latter is essentially the most reliable real-time indicator you could theoretically have. If you know how to read price-action, you can analytically place high probability trades, plain and simple.
  2. Confluence: We look for a confluence of price patterns (you can read more about the types of patterns on our confluence page) that coincide at the same price point where a trade at the price point is consistent with the flow of the market. The higher the confluence, the greater the probability that the price point is a volatility point off which the market will react. With
    price-action in agreement, a confluence of 2 is a minimum, 3 can be a good trade, and 4 or more quite often can be a gift from the Trading Gods.
  3. Precision Entry: Our trade setups define precision entry points, where the trade has a high probability of success and the risk is controlled, limited to failure of the pattern we are trading.
  4. Flow of the Market: WaveTracker identifies key points of market geometry and market structure. Significant trading moves in the market often start from such WaveTracker identified points that are consistent with the flow of the market. Those that are not consistent with the flow of the market, we stay away from.
  5. Read “The AWEsome Way to Trade Elliott Waves

An Important Message for Elliott Wave Traders

For the trader, the real power of Elliott Wave is the principle that all waves of similar degree relate in geometric form. The most common geometric wave relationship is the equality of alternate waves. Therefore, it is not surprising that the key component of market structure in price-action is the Elliott Alternate Wave Equality (AWE) pattern. When alternate waves of similar degree reach equality, the market reaction has significant meaning for either a reversal or continuation. Market reversals off of Elliott AWE patterns occur 3-5 times daily in the S&P EMini, sometimes even more. Learn the power of the Elliott AWE pattern and your trading results will improve immensely. They are nothing short of amazing to watch, day in and day out. When they coincide with Fibonacci retracements/extensions or other patterns, you are often offered a trade setup that is a gift from heaven. The WaveTracker study for eSignal automatically computes and graphically displays all Elliott AWE patterns of alternate wave equality for any timeframe chart.