Catching Trends

[Wide Tailz]

This is a follow-on journal to "Catching Tails", and I will show quarterly performance for a method based on buying a trend pullback. The setup is basically Elliot Wave "ABC-12" and the buying the breakout after that.

Been trading for 9 years and 2013 (small cap stocks) & 2019 (penny stocks) were the only profitable years. The other years were modestly negative, especially in the beginning when I was long options only.

The method itself has shown potential and it worked if the main trend of the stock was strong enough. Another discovery was the "popcorn" pattern, which is when the stock is in a long "B" wave and the waves overlap in a huge range, with powerful spikes to the upside. The 2013 equity curve with the huge gain was when I found this out, but they fail spectacularly as can be seen in the 2019 equity curve. Caught a good spike right at the end and it is continuing so far, but for 2020 I need a smoother result. Also the popcorn pattern is seen in down trending stocks only, so it's no longer under consideration.

Now it's large cap trending stocks only, same entry signal, just some fundamental "bottom up" requirements to possibly retain the long term trend more reliably after entry. My performance seems to go up when I stop buying junk.

 

[SunTrader]

This is a follow-on journal to "Catching Tails", and I will show quarterly performance for a method based on buying a trend pullback. The setup is basically Elliot Wave "ABC-12" and the buying the breakout after that.
...

Which is what exactly?

All I know is 5's and 3's, impulses and various types of corrections. Either ABC or ABCDE but no 12.

 

[Wide Tailz]

I showed a few examples in the beginning of my other journal, but it is essentially waiting out the corrective wave and the next two impulse waves of the next smaller order. It forms what looks like horizontal triangles, cup & handles, consolidation breakouts, etc. But experience has taught me that the buy signal is the least important part.

 

[SunTrader]

I showed a few examples in the beginning of my other journal, but it is essentially waiting out the corrective wave and the next two impulse waves of the next smaller order. It forms what looks like horizontal triangles, cup & handles, consolidation breakouts, etc. But experience has taught me that the buy signal is the least important part.

So you are waiting for wave 2 of 5 that forms a triangle etc. Ok.

IMO timing not price or pattern is what is the most important.

 

[richDude]

you will never be profitable if you keep thinking 'waves'.

 

[Wide Tailz]

I think you're right. This year I want to put some real money in this account and it will probably change the psychological component, which brings me to the most important part of a trading plan (in my opinion):

Risk Management

Second is the long term trend of the stock and market itself, which is driven by micro and macro fundamentals.

Never thought I would think like an investor but all the waves and buy signals I ever thought to test ended up being worthless without these two things.

First day of the year, beating the market but could just be noise

 

[SunTrader]

As for using or not using something, use it if you understand it - or not.

I do use elliott waves as part of my setup. Have for a long time.

 

[Zodiac4u]

you will never be profitable if you keep thinking 'waves'.

Price moves in waves or ebbs and flows. But as far as counting them before you get on? that's another story, just not one i'd want to talk about.

 

[Wide Tailz]

So you are waiting for wave 2 of 5 that forms a triangle etc. Ok.

Example (MSFT last year):

 

[SunTrader]

Example (MSFT last year):

That is a basic abc zigzag.