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HollywoodTrader's Elliott Wave TST Combine w/ Live Analysis
Goal: To pass the combine in which I will put on all trades solely on my own, real-time Elliott Wave analysis. I will post my live analysis on StockTwits in the $CL_F room or I can be followed under the handle HollywoodTrader.
Purpose: Threefold...
1. To enhance my Elliott Wave analysis by having to post most of it real-time for everyone to see.
2. To become more diligent in my trading by strictly taking the best EW setups -- those being the 3rd Wave, 5th Wave and C wave, with only a few other setups mixed in under the right circumstances.
3. Hopefully display that Elliott Wave is a very effective trading methodology if one is willing to put in the hard work to understand it properly and wholly -- which this process should aid me in doing.
So, here we go! But first, how I got to this point: After passing a combine several months ago, and being taken to the "live prep" level and even being offered to go live, reality set in and I told them I didn't think I was actually ready to go live. The method that I used to pass the combine felt more or less like a gimmick that finally hit a lucky streak and I was in no hurry to bust a live account -- I want to go live once and only once. (My previous result is recorded in this post:
So, after about a year of trying, on-and-off, to pass the TST combine I finally have -- just barely, the target was $3,500 profit. I first started my combine journey with /ES but a friend got me into /CL and I have been trading that exclusively for about …
).
Since last passing the combine I have been on quite a journey of finding a methodology that spoke to me and that I enjoyed as well. At first I found Harmonics and spent several months with that, even to the point of going to a "live prep" yet again in which I wasn't able to meet the standards. Then somehow all the stars aligned and I decided to try and tackle Elliott Wave just as a perfect EW Impulse was playing out in Crude and I couldn't believe the accuracy. If this had happened during a Corrective Wave I probably would have thought EW didn't work because Corrective Waves are notoriously tricky and don't need to have any Fibonacci relationships, luckily that wasn't the case. That was only about 3 months ago, so, while all I have been doing is studying EW, it's still not a lot of time under my belt. Anyway, I started posting in StockTwits a little over a month ago (and have become one of the top $CL_F posters in that time) and it has helped tremendously, thus, I thought I would take it to the next level with this journal as well.
So, there it is. I might be taking on more than I can chew because I'm also knees deep in a film project but destiny waits for no man -- or something like that. I wanted to get this journal started over the weekend but just couldn't find the time so I start today with the results of my first day in the comebine:
I will try to answer any questions that people may have but I'm short on time so it might take a day or two to give a proper response.
After a nice start yesterday, today I was totally consistent -- consistently stupid. Part of my rules are that I shouldn't trade pre-market unless one of my top setups is triggering (Wave 5 entry preferred). Another rule is, after learning it the hard way, that I shouldn't try to play a triangle before Wave E. So, what did I do? I tried to enter a triangle before wave E in pre-market!!! Long story short, it turned out to not be a triangle and I started off the day down roughly $500.
Regrouping, I decided to take a step back and let the market form a pattern that I could trade profitably. It wasn't long -- although it felt that way -- before I noticed a that we were forming a Terminal Wave C that was fitting nicely within a channel. I have been posting for a couple of days that we are in a correction in which I idenified the A, B and was waiting for the right opportunity to play the C which is always a 5 wave pattern. Well, there it finally was and I posted this chart at the time.
I entered short at point 4 at a price of 103.14 -- it topped at 103.17 -- and would be playing for price to go to 102.64 first, and then finally 102 where I would close the position and get long. I put my order to cover at 102.67, and before I knew it I had covered and was out of the position and in the black up around $160. This is the one move that I should have just waited for but I always try and get cute and make smaller move trades before the big one that I'm expecting comes along -- this is my main hurdle as a trader, I'm constantly outsmarting myself. So, here is the continuation of that chart along with what I was looking to play.
Anyway, I'm please with my reading of the Elliott Wave action today and just wish I had been more patient. I ended the day in the black, after getting back in the red once or twice, and just shut everything down after just creeping into the black again around 10:00am PDT. Even though I was convinced we were going higher, and posted as much, I just didn't want to end the day in the red.
So, my Elliott read is that we could be in the 5th Wave but I believe that we are just in the B Wave of the correction still and we will test today's lows before going higher -- or something like that. Either way, I'll be posting live!
As an added note I just realized that a triangle formed on the larger timeframe and is what I should really have been paying attention to more than I was. As many probably know, Elliott Waves are fractal and form waves within waves etc (although people seem to think this happens all the time, but, for example, the extended wave of an impulse pattern DOES NOT need to be fractal or segmented as most people have been told. Anyway, this is a variation of that because it is one pattern forming on one degree -- the A, B, C correction of my last post -- but that is all happening within a larger pattern in a larger degree. Here is the triangle and I have left the white markers of the smaller pattern and the larger triangle is marked in red.
Another step in the right direction; I love this stuff.
So today another pre-market opportunity presented itself but this time it was my favorite setup -- and the one I have now vowed to be the only one that I will take pre-market. It was less than an hour before the Crude pit open so I don't have as much of a problem with that as well.
Anyway, what the pic shows is that Crude was forming the 5th of a 5th Wave and one can enter at point 4 with a high degree of accuracy and confidence. So much so, that I entered with a couple of contracts at 105.04 and price bottomed at 105.02 before quickly swinging back higher. Not only does Elliott show you the perfect price at which to enter, it also shows the perfect time as the cyan time line shows (although this isn't the exact line because it's on a tick chart but I added it here to roughly display what was showing on my time based chart on which it was plotted). So it is at this intersection of time (5:15am PDT) and price (105.01) that was the ideal entry for this trade, per Elliott Wave rules, and is where I jumped aboard with not a worry in the world as to if the trade was going to go in my favor. Also, the same trade had worked just hours earlier as can be seen further to the left with price bouncing off of the 104.32 time-marker area. Those lines are an Elliott Wave code that I wrote myself and has been absolutely invaluable to my understanding and trading of Elliott. I'm sure it might look like noise but very few of those lines are in-play at any given time -- and since I wrote the code I know which ones -- and the solid white line that price bounces off just before the 104.32 price-marker is Elliott Wave working to the tick -- which gave me even further confidence in the later move that I traded.
Lastly, Elliott also offers targets and I scaled out of the position with a nice profit and the day had just barely started. I took a few more trades that I didn't document and were mostly scratch trades anyway. So, after an off day yesterday, I have gotten things back on track.
Since I got smoked today, because I was being stupid and creating trades that didn't exist, I thought I would post an example of how Elliott is misinterpreted, even by "professionals". I'll try and make it quick and un-rant-ish. So, in my twitter feed I noticed an Elliott Wave prediction from a company fishing for clients. Here is their "interpretation:"
As you can see they have a very large Wave 1 and a very sharp Wave 2 correction. The problem is, and many people get this wrong, Wave 1 should take less time to form than Wave 2. This is because Wave 1 is Impulsive in nature -- quick and fast -- and a Wave 2 is Corrective -- slower and more wandering -- and one can clearly tell that Wave 1 here takes much more time to form than Wave 2 does. Here is their interpretation on my charts with all the same numbering:
So, while they have almost everything correct in their Wave 3, all of the ratios for future reactions are based off of having the correct Wave 1 and Wave 2. If you don't you are in for trouble down the road and there is evidence that this is wrong because there are no reactions beyond Wave 2, in Wave 3, at critical fibonacci levels derived form the Wave 1,2 relationship. So, one must make sure that Wave 2 takes as long or longer to form than Wave 1 to be a valid count.
It is kind of tricky, although it shouldn't be for a professional looking to have people pay for his service, but here is how I have it and I believe to be the correct count because of the unmistakable reactions at critical fibonacci levels derived from the correct Wave 1 and Wave 2. Here it must be noted that Wave 1 and Wave 2 do not have to stop and start at the same point. There can be a correction inbetween and in this example there is. It's an a,b,c correction which has Wave 1 ending much earlier and not as high. The correct high point is a Wave b that has corrected higher than the end of Wave 1. This also allows Wave 2 to complete way after the required equity or 100% in time mark that it would need to to be a valid count. Here is how I have it:
So this is just one reason that Elliott has a bad wrap. Even the pros get it wrong because they either haven't taken the time to learn it properly or are just aren't through in their evaluation.
I replied to their tweet about this issue but didn't hear back.
First lets get the pain out of the way. I got crushed today, but, not because of Elliott but because I am the all time greatest trade inventor. I can create a trade where there isn't one at a moments notice -- everyone else is just second best. It's sad because that's even written down in my trading rules: "Don't create trades that aren't there!" I was also victim to trying to trade several Elliott Triangles that just didn't pan out and this is something that I shouldn't be doing because Triangles are the last piece that I really need to learn, and I know this. So here are the results:
There was also the matter that I was bitter at missing the big overnight move which I was expecting but wanted to be diligent and not trade overnight because that is by far the time that I have the worst results. So I had the perfect confluence of mistakes: 1. trading patterns that are currently my weak point and 2. bitterness over missing a move; not a good combination. Or let me amend that, not a good combination for an amateur, a professional would realize that the market is an endless steam of opportunity and start searching for his next high probability trade -- I'm working on it!
Here is the chart of the sell-off that started overnight and my target zone just as I had it. For the record the backend of my target zone had a time stamp of 6:02am PDT, so I was sure that the market would wait for the open to sell-off and that is what I was going to wait for, it didn't pan-out that way. But the good news it that my Elliott analysis seems spot on and that's what really matters at this point.
Finally, I have really been paying much more attention to my analysis now that I am sharing it here and already this exercise has proven to be much more valuable than I thought it was going to be. I can't wait to see what the following weeks have to offer.
Here's the updated and unmanipulated progess update from my prediction in chart 3 from post #7 yesterday. I just wish I had traded this way but that's another story. Yesterdays chart first:
Got crushed again today but at least this time I felt as though I was doing the right thing. I was fairly patient in playing an emerging triangle -- although I have since found a method to be even more patient with them and let them come to me instead of trying to guess where and when they are going to break. Then later I thought I was into a runner and started campaigning -- added to the position -- but I read the move wrong at went from being up about $1500 to being all the way down. I was just so convinced that I was right that I wasn't willing to get out of the position for fear that the moment I did it would go my way. Anyway, here are the results and I'll post a chart and get more into detail about how thing went down.
So, here is how I have the action labeled for the past couple of days since we started selling off. Friday starts with at the end of the triangle in which Wave-E also created a Triangle. I would later come to learn, after everything didn't work out, that when that happens it usually creates an Unlimited Triangle where price can go much farther than the 23.6%-max of the longest leg that a normal Limiting Triangle would go. At first it did go the expected 23.6% and right into the short zone that I was waiting for it but the first mistake that I made, since it was the first time that I have traded it, was to only get one position on and then start adding once it had gone way too far in my bias. I should have loaded up early and started pealing contracts off which is my usual modus operandi. But it was at that point that I was convinced that we were in a new Impulse leg down and I had a target around 103.50 or something. Anyway, what it looks I ran into was the most rare: Terminal Zigzag, that looks very much like an Impulse pattern at first and is most often mistaken for an Impulse pattern. And not only that, I had loaded up so that I had a go-for-broke mentality because if it had worked in my favor I would have been in Funded Trader territory after only a week. So, here is what it all looked like:
Anyway, I learned a ton this first week and by far learned the most during my losing days. I have really been studying this stuff day-and-night for well over a month but this exercise has really turned it up a notch.
HollywoodTrader
Oh, and I have to work Comic Con this week so I'm not sure if I will get any trading days in, so, if you don't hear from me that's what's up.
