Upwards movement was expected for Tuesday, which is exactly what has happened.
Yesterday’s analysis expected downwards movement.
Price has moved sideways, to complete a small doji candlestick, and remains below the invalidation point on the Elliott wave count.
A red daily candlestick was expected for Tuesday’s session, which is exactly what happened.
The short term target was at 2,145. The low for the day was 2,141.93.
Upwards movement was expected for Thursday’s session.
Your survival as a trader depends on how you manage risk. The single most important aspect of trading is risk management.
Risk management is boring, overlooked by newbies, and ignored by the greedy. Greed without risk management will wipe out your account. The fact is traders have losses, even the most experienced traders. The difference between newbies and experienced traders is how they manage those losses.
If you are new to trading and you read only one thing on this website, then it should be this. The importance cannot be overstated.
Here’s a Fibonacci 5 risk management techniques:
1. Never ever risk more than 3-5% of equity on any one trade.
This rule ensures that with a series of 10 losses in a row a traders account will still have sufficient equity to be able to continue trading. While a series of 10 losses in a row is never expected and never a goal, it is a worst case scenario that must be considered. Would your account survive it?
2. Always use a stop loss.
What would the market have to do to prove you wrong? What is it that you think the market cannot do? Set your stop loss accordingly. Stops could be set just beyond Elliott wave invalidation points, just beyond an important prior high or low, using a trend line or a moving average.
Stop losses should be an order but may also be mental. If using a mental stop loss, the trader must have exceptional discipline to execute it at exactly the time emotion will be against you.
3. Exit a trade as soon as you recognise it has gone wrong.
Sometimes this happens before a stop loss is triggered. Sometimes market behaviour is not what you expected. This may be in terms of wave structure, volatility or anything that looks wrong. If it looks wrong and isn’t what you expected, then exit the trade promptly.
4. Don’t meet margin calls.
Experienced traders view margin calls as an objective indication that the trade has gone wrong. It it gets this bad, stop throwing good money at it!
5. Adjust position size to meet rule 1.
The importance of rule 1 cannot be overstated. Rule 5 really is a repeat of rule 1. Never ever risk more than 3-5% of your equity on any one trade. In order to keep this rule then of course a stop loss order must be used, otherwise potential risk is 100% of your equity. So really, rules 1, 2 and 5 are all the same.
When calculating equity take the value of your account minus all potential losses on all open positions. That is available equity for the next trade. Calculate 3-5% of this number and you have the amount which may be risked on the next trade.
Calculate the potential loss for a trade from the open price to the stop loss price (most trading platforms will do this for you). To keep this potential loss within 3-5% of equity adjust the size of your position.
Finally, one extra tip which is one of my personal favourites. When a position becomes reasonably profitable move your stop loss to break even or just beyond to protect a very small profit. In this way I have turned a series of potential losses into a series of tiny profits, finally getting a position that “sticks” to ride a trend. It may mean I have more tries at entering a trend than traders who can handle the pain of holding a losing trade for longer, but it does mean I sleep easier at night.
Experienced members are encouraged to add their own tips in comments below. Maybe you think there’s a really great tip I’ve not mentioned? Or maybe you think one of these tips could be said differently?
The short term target on yesterday’s hourly chart was 2,103. This target was met.
The high for the session was 2,104.05, just 1.05 points above the target.
Upwards movement was expected but did not happen.
Downwards movement remains above the invalidation point.
Sale starts Monday, March 21st and ends Midnight EST Monday, March 28th.
Elliott Wave Stock Market will be closed for two weeks during the Christmas and New Year holiday.
Holiday dates are from Monday 21st December to Friday 1st January.
Last analysis of the year will be after market close of Friday 18th December.
First analysis of the new year will be done after market close for Monday, 4th January, 2016, and will include a video update.
During the two week holiday, markets will be closed for two and a half days and there will be seven and a half days when markets will be open but which will not be analysed.
May all members have a very Merry Christmas and a Happy New Year.
May we all look forward to great profits next year!
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MotiveWave has the most advanced Elliott Wave Software and Elliott Wave Tools available. Elliott Wave Tools range from manual to semi-automatic to automatic Elliott Wave to suit your preference. Elliott Wave labels are always automatically added for you, cutting down your analysis time significantly. Manual Elliott Wave tools let you plot your own wave counts easily. Our Auto Elliott Wave tool will fill in Elliott Wave counts automatically on one chart based on a selected area of a chart. Our Auto Analyze Elliott Wave tool will automatically plot Elliott Waves over a specified range of data to a specified level of decomposition on one chart. The Elliott Wave Scanner (pattern recognition tool) allows you to search for specific Elliott Wave Patterns across multiple symbols/instruments based on options you choose. All wave counts can be moved or adjusted after being placed on the chart and can be decomposed as many levels as you want.
MotiveWave is having a Hot Days of Summer Sale for 8 DAYS ONLY starting Thursday, July 23rd, 2015, with 20% off most products.*
Summer sale means 20% off Lifetime Licenses*, 20% off Leases, and 20% off Add-On Modules.
This special 20% off hot days of summer sale starts Thursday, July 23rd and ends Thursday, July 30th at Midnight EST.
Make sure you take advantage of this sale before it’s gone!
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