Catching Tails

Quote from Wide Tailz:

10. DECISION - EW and the third wave are it ......
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you're missing out on a LOT of signals...what about the Fourth wave?.....

..think about it...you have more confirmation since you now have more confidence that Wave 1A, Wave 2B, and Wave 3C are in place......certain ratios, angles, and personalities can give you more confidence....something to think about....


btw...what is this "Infinite Source"?....
 
Thanks for the links. :)

As for "why wave 3"....... about a year ago during step 6, after letting my EW consciousness lapse and just focusing on buy signals, I did a study of all my trades superimposed over the SPY. My win rate with the general market trend (for long option position trades on individual stocks, based on a buy signal I had found) was far greater than against. During this time my buy signals worked without EW. My win rate was in the 80% range.

Then the market got choppy starting March 2011 and my signals stopped producing the wins.

Long story short, the general market was in an extended third wave advance. It also experienced a glorious C wave decline several months later. My account seemed to only be profitable during these times (C wave is the third corrective wave).

Enter the Infinite Source......

It is mentioned in the Carnegie Secret, in various religions, and in our own innocent conscience when we're kids. The brand that I trust instructed the children of Israel to simply call Him "I AM" which translates to "yahveh" - although they considered This Entity so holy they didn't even say that much! I'll leave it at that. :)

Back to the third wave. Technically, the third wave has the most momentum, the largest profit potential, and is easiest to time (since it rests on a double top / bottom or higher low / lower high with momentum divergence), and has a very discrete point of ruin if you're wrong - DECISION TIME when you abort and preserve capital.

Back testing showed me that I can win 45% of the time and still make a fortune if I control risk and catch the tails.

Hence, my name, and the object of my desire...... Tailz....... which are all third waves.
 
Quote from Wide Tailz:

Thanks for the links. :)

As for "why wave 3"....... about a year ago during step 6, after letting my EW consciousness lapse and just focusing on buy signals, I did a study of all my trades superimposed over the SPY. My win rate with the general market trend (for long option position trades on individual stocks, based on a buy signal I had found) was far greater than against. During this time my buy signals worked without EW. My win rate was in the 80% range.

Then the market got choppy starting March 2011 and my signals stopped producing the wins.

Long story short, the general market was in an extended third wave advance. It also experienced a glorious C wave decline several months later. My account seemed to only be profitable during these times (C wave is the third corrective wave).

Enter the Infinite Source......

It is mentioned in the Carnegie Secret, in various religions, and in our own innocent conscience when we're kids. The brand that I trust instructed the children of Israel to simply call Him "I AM" which translates to "yahveh" - although they considered This Entity so holy they didn't even say that much! I'll leave it at that. :)

Back to the third wave. Technically, the third wave has the most momentum, the largest profit potential, and is easiest to time (since it rests on a double top / bottom or higher low / lower high with momentum divergence), and has a very discrete point of ruin if you're wrong - DECISION TIME when you abort and preserve capital.

Back testing showed me that I can win 45% of the time and still make a fortune if I control risk and catch the tails.

Hence, my name, and the object of my desire...... Tailz....... which are all third waves.
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ok....I see your point.....I think however I should also clarify that I was implying that one should enter during the fourth wave in anticipation of riding the fifth wave....maybe even the 5th gets extended....
 
Quote from HurricaneUS:

ok....I see your point.....I think however I should also clarify that I was implying that one should enter during the fourth wave in anticipation of riding the fifth wave....maybe even the 5th gets extended....
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Much lower risk can be realized when entering on the lower order third wave inside that fifth, than fading the preceding fourth.....

I made this mistake on my last trade in this journal: fading the fourth wave. I may need to see a guru on hypnosis and / or meditation to practice visualizing only the third wave, never the first, second, fourth, fifth, a, or b. They must be deleted from my Trading Identity.

:)
 
Quote from Wide Tailz:

Thanks for the links. :)

As for "why wave 3"....... about a year ago during step 6, after letting my EW consciousness lapse and just focusing on buy signals, I did a study of all my trades superimposed over the SPY. My win rate with the general market trend (for long option position trades on individual stocks, based on a buy signal I had found) was far greater than against. During this time my buy signals worked without EW. My win rate was in the 80% range.

Then the market got choppy starting March 2011 and my signals stopped producing the wins.

Long story short, the general market was in an extended third wave advance. It also experienced a glorious C wave decline several months later. My account seemed to only be profitable during these times (C wave is the third corrective wave).

Enter the Infinite Source......

It is mentioned in the Carnegie Secret, in various religions, and in our own innocent conscience when we're kids. The brand that I trust instructed the children of Israel to simply call Him "I AM" which translates to "yahveh" - although they considered This Entity so holy they didn't even say that much! I'll leave it at that. :)

Back to the third wave. Technically, the third wave has the most momentum, the largest profit potential, and is easiest to time (since it rests on a double top / bottom or higher low / lower high with momentum divergence), and has a very discrete point of ruin if you're wrong - DECISION TIME when you abort and preserve capital.

Back testing showed me that I can win 45% of the time and still make a fortune if I control risk and catch the tails.

Hence, my name, and the object of my desire...... Tailz....... which are all third waves.
More...

So, are your entries the tick above or below what you consider the high or low of "wave 2", with stops at the low or high of "wave 2"? I can see that being consistent with a 45% win rate, yet being profitable due to the risk-reward dynamics of the set-up. If more e-wavers took such a disciplined approach, the theory would probably not have such a bad rap. Instead, it seems to attract the worst kind of table-pounding doom and gloomer types.
 
Quote from logic_man:

So, are your entries the tick above or below what you consider the high or low of "wave 2", with stops at the low or high of "wave 2"? I can see that being consistent with a 45% win rate, yet being profitable due to the risk-reward dynamics of the set-up. If more e-wavers took such a disciplined approach, the theory would probably not have such a bad rap. Instead, it seems to attract the worst kind of table-pounding doom and gloomer types.
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This is fairly tricky. I haven't decided yet what exactly is a "buy signal" because good trades just blow through any signal I could concoct, so they are a small matter compared to getting the overall setup correct. Jeffrey Kennedy (The only EWI representative I consider helpful in my education) recommends entering after wave 3 exceeds the b wave of the previous wave 2. I have had good results advancing the timing slightly and using a channel breakout from wave 2, but one of my favorites is a huge green candle going through the 50 SMA or horizontal resistance.

But the buy signal itself is a small part of the art of EW market timing. All you need is something that represents the "aha" moment when The Market decides that wave 3 is on. Breakout traders would mention qualifying volume, and I agree that it helps confirm the herd is now shifting when large numbers are going in that new direction.

My automated buy signal is simply a moving average envelope with an arbitrary breakout threshold. With BAC it's about a percent and a half close above the moving average, on hourly bars. I may eventually just arm the robot after the EW setup has come together and let it run on autopilot, then go out and enjoy the day.

:)
 
Quote from Wide Tailz:

This is fairly tricky. I haven't decided yet what exactly is a "buy signal" because good trades just blow through any signal I could concoct, so they are a small matter compared to getting the overall setup correct. Jeffrey Kennedy (The only EWI representative I consider helpful in my education) recommends entering after wave 3 exceeds the b wave of the previous wave 2. I have had good results advancing the timing slightly and using a channel breakout from wave 2, but one of my favorites is a huge green candle going through the 50 SMA or horizontal resistance.

But the buy signal itself is a small part of the art of EW market timing. All you need is something that represents the "aha" moment when The Market decides that wave 3 is on. Breakout traders would mention qualifying volume, and I agree that it helps confirm the herd is now shifting when large numbers are going in that new direction.

My automated buy signal is simply a moving average envelope with an arbitrary breakout threshold. With BAC it's about a percent and a half close above the moving average, on hourly bars. I may eventually just arm the robot after the EW setup has come together and let it run on autopilot, then go out and enjoy the day.

:)
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Well, however you end up doing the defining, I agree with your approach of focusing on a narrow set of trades, rather than spreading yourself thin counting waves down at the subminuette level and trying to trade those wave counts.
 
I've been playing with the various stock picking tactics to see if I can catch the tails of superstocks as they launch out of consolidation patterns during the third wave.

Surprisingly, many of the things I look for on the chart coincide with the CANSLIM system: cup and handle breakout is just the wave 3 breaking the previous corrective wave of next higher degree, huge volume / candle is the herd rushing in an avalanche of panic, hoping not to miss out, fearing they will get left behind........

And even more surprisingly, many of the fundamental traits of the CANSLIM system match the traits of other stock picking Market Wizards.

There appear to be no secrets to this game. It's all there in books you can buy for $10 on ebay.
 

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Update...

I'm still stalking my prey. RIMM has surprised me with holding the double bottom despite BAC and the rest of The Market puking out longs over the past week. RIMM appears to be ripe, just totally ripe for the upside. Everyone I mention it to is disgusted with the thought of buying it. There doesn't appear to be much selling pressure left, so I'm waiting for it to explode thru the 50 SMA.

Meanwhile, ARSD is looking good but I'm not long. I missed the ideal entry so I'm sitting it out, watching.

BAC is also looking OK but it is probably not very close to the next leg up. I clearly miscounted the wave count last time and the wave 5 I was attempting to catch happened somewhere in the mix, before I even entered.

Good trading, my speculating companions, and "it's the sitting that made me the money" or how about this classic "do nothing, absolutely nothing until there is something to do ... until you know what you're doing"

I keep these insights in mind as I wait for my next Tail....

:D
 
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