Whipsaws - A mood spoiler in trading
Hi,
I was discussing about whipsaws with my friend and blaming automated trading for it.I feel that's not the right way to approach it.Check out the following three points and review your trades
1) Just check the kind of stocks or index you are trading ...are you trading Nifty?...or trying to find a trend in sideways trending stocks like NTPC, ITC, HUL..etc If yes then consider switching over to real estate and bank nifty for better trades or use a trading system meant for sideways market using oscillators.
2) Another issue could be a late entry..like entering around the end 3rd wave or during 4th wave as per Elliott wave principle.Now if you are not familiar with Elliot Wave, no problem..find out a way to screen a stock and enter after a sideways consolidation is significantly over...trend channels / Bollinger bands can also be used.
3) Another problem (most likely one) could be that you are placing your stop loss too close to CMP ( Current Market Price )...or trailing your stop loss too aggressively..If you are carrying positions for a couple of days consider placing a trailing stop at least 1 ATR away from recent highs...( is that too much for you?..then probably you should not be a swing or positional trader ...move to day trading )
Whipsaws in trading are part our business, they should not influence your day to day trading.Too much of thought about failed breakouts/whipsaws can result in loss in confidence and delay in decision making thus affecting profitability
Hope this helps
Cheers
Related Post
How do I calculate SAR
I was discussing about whipsaws with my friend and blaming automated trading for it.I feel that's not the right way to approach it.Check out the following three points and review your trades
1) Just check the kind of stocks or index you are trading ...are you trading Nifty?...or trying to find a trend in sideways trending stocks like NTPC, ITC, HUL..etc If yes then consider switching over to real estate and bank nifty for better trades or use a trading system meant for sideways market using oscillators.
2) Another issue could be a late entry..like entering around the end 3rd wave or during 4th wave as per Elliott wave principle.Now if you are not familiar with Elliot Wave, no problem..find out a way to screen a stock and enter after a sideways consolidation is significantly over...trend channels / Bollinger bands can also be used.
3) Another problem (most likely one) could be that you are placing your stop loss too close to CMP ( Current Market Price )...or trailing your stop loss too aggressively..If you are carrying positions for a couple of days consider placing a trailing stop at least 1 ATR away from recent highs...( is that too much for you?..then probably you should not be a swing or positional trader ...move to day trading )
Whipsaws in trading are part our business, they should not influence your day to day trading.Too much of thought about failed breakouts/whipsaws can result in loss in confidence and delay in decision making thus affecting profitability
Hope this helps
Cheers
Related Post
How do I calculate SAR
Inspirational Quotes - For Good And Bad Times
Hi,
I will keep adding various quotes that I find motivational and inspirational from time to time,these will also feature in the "food for thought" section of the blog
I would request all readers to add their own favorites quotes,which they found had profound impact in their life or trading in the comments section
Cheers
********************************************
"... You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody ..."
[Trading for a Living]
- Dr. Alexander Elder
********************************************
"Genius is one percent inspiration, ninety-nine percent perspiration."
– Thomas Alva Edison
********************************************
"The market can stay irrational longer than you can stay solvent."
-John Maynard Keynes
********************************************
“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”
– Jesse Livermore
********************************************
"Chance favors the prepared mind."
- Louis Pasteur
********************************************
I will keep adding various quotes that I find motivational and inspirational from time to time,these will also feature in the "food for thought" section of the blog
I would request all readers to add their own favorites quotes,which they found had profound impact in their life or trading in the comments section
Cheers
********************************************
"... You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody ..."
[Trading for a Living]
- Dr. Alexander Elder
********************************************
"Genius is one percent inspiration, ninety-nine percent perspiration."
– Thomas Alva Edison
********************************************
"The market can stay irrational longer than you can stay solvent."
-John Maynard Keynes
********************************************
“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”
– Jesse Livermore
********************************************
"Chance favors the prepared mind."
- Louis Pasteur
********************************************
Disappointed by the Telecom Sector, how about the Technology Sector ?
Hi,
Yesterday I posted relative performance of the Telecom Sectors majors ,all the three companies (Bharti Airtel ,RCOM ,Idea) underperformed Nifty in all three time frames
So to present a pleasant picture, I am uploading relative performance of Technology Sector majors (Infosys,TCS,Wipro).
Chart Since April 2007 ( before 2008 bear market set in )
Chart Since December 2008 ( before 2009 bull market started)
Chart Since July 2009 ( after election gap up )
Interesting charts (quite colorful as well!!),while technology sector was the under performer of previous bull market,this bull market is dominated by technology stocks.
That is a very important observation, it has been seen so many times in past that the leader of a bull market become laggards of the next bull market.So while this time Realty and Infrastructure Sectors are taking a breather,Technology and Auto Sectors have become trader's favourite
This should cheer up long term investors in the Technology Sector, value investors in meanwhile prepare to take profits....or is there more steam left?...Only time will tell...
Cheers
Yesterday I posted relative performance of the Telecom Sectors majors ,all the three companies (Bharti Airtel ,RCOM ,Idea) underperformed Nifty in all three time frames
So to present a pleasant picture, I am uploading relative performance of Technology Sector majors (Infosys,TCS,Wipro).
Chart Since April 2007 ( before 2008 bear market set in )
Chart Since December 2008 ( before 2009 bull market started)
Chart Since July 2009 ( after election gap up )
Interesting charts (quite colorful as well!!),while technology sector was the under performer of previous bull market,this bull market is dominated by technology stocks.
That is a very important observation, it has been seen so many times in past that the leader of a bull market become laggards of the next bull market.So while this time Realty and Infrastructure Sectors are taking a breather,Technology and Auto Sectors have become trader's favourite
This should cheer up long term investors in the Technology Sector, value investors in meanwhile prepare to take profits....or is there more steam left?...Only time will tell...
Cheers
A picture is worth a thousand words - Telecom Stock Review
Hi all,
Chart Since December 2008 ( before 2009 bull market started)
Chart Since July 2009 ( after election gap up )
As we can see they are all under performing Nifty in all three time frames.That will make long term investor sad....at the same time it should alert a 'value investor' and an in depth company analysis will be required to make that long term bet...is all bad news factored in ?
Shazia wants to know about "big telecom players" (Bharti Airtel, RCOM, Idea)
I am updating charts of their relative performance with Nifty...Interesting charts
Chart Since April 2007 ( before 2008 bear market set in )
Chart Since December 2008 ( before 2009 bull market started)
Chart Since July 2009 ( after election gap up )
As we can see they are all under performing Nifty in all three time frames.That will make long term investor sad....at the same time it should alert a 'value investor' and an in depth company analysis will be required to make that long term bet...is all bad news factored in ?
Time to put on your fundamental analysis cap and make a decision
Cheers
Neglected Essential : Simple Money Management Rules For Online Stock Trading
I have been posting Stop And Reverse (SAR) levels for some time now, its performance has been satisfactory. Recently I reviewed the performance with bank nifty as example. Since we had budget presented in this review period, the returns were impressive. Now as we have entered sideways market conditions for the past few days, we are getting whipsaws in trading, resulting in losses. One such loss was experienced today in trading nifty. So how to deal with such situations and minimize the loss?
The answer to the above question and for overall "good trading discipline" lies in sound money management practices. Money management is perhaps the most neglected idea in trading, psychology is another aspect often ignored by traders. Some people have written very complicated books on money management and related aspects using all sorts of mathematical ratios. But I am going to present it in a simple way (that's what this blog is all about,"the made easy" stuff right?). It will ensure that you keep your trading volumes in check, thus giving you enough liquidity and peace of mind in tense situations.
The answer to the above question and for overall "good trading discipline" lies in sound money management practices. Money management is perhaps the most neglected idea in trading, psychology is another aspect often ignored by traders. Some people have written very complicated books on money management and related aspects using all sorts of mathematical ratios. But I am going to present it in a simple way (that's what this blog is all about,"the made easy" stuff right?). It will ensure that you keep your trading volumes in check, thus giving you enough liquidity and peace of mind in tense situations.
So here is what you need to do:
1) First find out how much is your trading capital? Let me take 1,00,000 (one lakh) as trading capital in this example.
2) Divide this amount by 2, that comes to 50,000
3) Keep 2 lots (of 50,000 each ) one for UP trending stock/index and other for DOWN trending stock/index
4) Now divide 50,000 into two, that comes to 25,000 worth two lots.
5) One of these lots (worth 25,000) is for breakout trade (breach of SAR in intraday trading) and other is for a pull back trade (when the price comes close to "low risk entry" in intraday trading )
That's all about it, money management in trading can't be simpler than this. Now let me list some advantages and disadvantages of this plan.
Advantages :
1)The Plan keeps you in both bullish and bearish trending stocks...so you are automatically hedged.
2)You are diversified, as you will have positions in two different stocks/index
3)You enter into two positions, one at breakout and other at first pullback therefore a lot of confusion in the mind is resolved.
4)You average down your winning trade and not your losing trade (as long as SAR is not breached you assume that you are in a winning trade). Check this how I suffered badly by averaging my losing trade. You should never average a loss making trade.
Disadvantages :
1) Psychologically it's a bit tough. Why? because you have to be long in one trade and short in another, many new traders are not comfortable with the idea of shorting.
2) What will you do if all stocks are going up and you cannot find a single stock to short and vice versa? In that case you let the other half (50,000 for short) lay idle in cash and wait for one of the short trade to appear (you will surely find it in couple of days)
3) Too much capital is required to follow this plan, it may not be not easy for new trader initially. In that case you should follow half the strategy, that is, enter your trade in two tranches one at breakout other at pullback
Above are some pros and cons of this plan. Clearly I can feel that advantages are more in this plan than disadvantages.
That's all about the plan for the time being. I feel it's quite good. I will make necessary changes as per your feedback and suggestions. Please share your experiences with money management practices and also try to highlight some more advantages and disadvantages of this simple plan.
I hope it will help a lot of traders. It is certainly going to help me :)
Online Stock Trading Made Easy - Lazy Trader...Crazy Returns
Hi,
I don't know from where to start...ok..let me start by saying a BIG thanks to Sriganeshh, yesterday he asked me how I calculate SAR for my trades.You can check the comment section here,for details of conversation.
He also asked me what is my success rato in SAR.I had no clue about that,so after a reply to his question,I thought let me go back and check the performance of SAR.Although I am confident of system and returns but checking the actual performance revealed some interesting facts
I checked the returns of bank nifty in specific, as I track it very often and it compliments my trading style
I found out that the system has been long since 09 February 2010 from the level of 8421
Bank nifty closed at 9180 and made a high of 9230 on 12 March 2010 (last trading day)
So total return comes to around 800 points approximately 8.5 percent
But since we buy futures of bank nifty the returns goes up significantly.Lot size is 50 and approximate margin requirement is around Rs 50000 and gain is 800*50=Rs 40000 that comes to 80 percent returns
So its 80 percent returns in a month, in one trade and the trade is still not closed.Considering these facts I feel these are excellent returns
Now we should just not look at facts and get too excited about the returns.We should try to read between the lines and find out the real reasons for this kind of performance.
Some important details about the system's characteristics which I mentioned in yesterday's post
Since this is a trend following system and uses trailing stops(SAR)...you will see it does well in trending markets (will perform better for bank nifty than nifty....and will perform better in case of icicibank than reliance)
It will have the disadvantage of trailing stops which is you will always enter away from market tops and bottoms...thus giving back your accumulated profits...and also have advantage of trailing stops...will let profits run to maximum limit,and will not take you out when oscillators scream "OVERBOUGHT"
What ever system you choose it will favor certain market conditions and perform badly in other conditions
With that knowledge my task becomes easy...I am on look out for stock about to breakout in trend...or simply trade in trending stock and ignore sideways markets and stocks(FMCG and Pharma)
It will have the disadvantage of trailing stops which is you will always enter away from market tops and bottoms...thus giving back your accumulated profits...and also have advantage of trailing stops...will let profits run to maximum limit,and will not take you out when oscillators scream "OVERBOUGHT"
What ever system you choose it will favor certain market conditions and perform badly in other conditions
With that knowledge my task becomes easy...I am on look out for stock about to breakout in trend...or simply trade in trending stock and ignore sideways markets and stocks(FMCG and Pharma)
After this trade's analysis I truly understand the following quote.
"The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight."
- Jesse Livermore
So "sitting tight" is what I take away from this trade,although I did not trade in Bank nifty this time,but it still gives me important insights into my trading system...and more importantly my own psychology
Wishing you good luck and hope everyone has a nice weekend
Cheers
My businessman friend is looking for short cuts to trading ,can you help?
I got a mail from one of the blog's readers, he wants to help his friend who is looking for premium service provider and doesnt have time to put in learing the do's and don'ts of trading
Excerpts from my reply are as follows
hi
First coming to your friend's problem..I think if he doesn't want to do some hard work or even get some basic information about stocks...he should not put money in any stocks.I truely understand his inclination towards stocks...that's because we are in a bull market and the returns that the market gave last year (100 % approximately)... will surely be more than the margin he makes in his business (even if its a successful business)...so he wants to try out his luck in stocks,he has some extra cash to burn and ready to lose money
He is in stage one of development of trader ....and will find one or the other way to BLOW his trading account soon...we all do that ...so only you can save him...If markets reaches all time highs...he will not even listen to your advice and jump in!!
What he can do is invest money in his own business...because he knows the pros and cons of it ...and he will be a master of his business....so why not put money in something he knows well...
If he still wants to put money in stocks...he should take up mutual funds...(I am strongly against mutual fund...because I can manage my money better than Mutual Funds...and investing in stocks is more convenient for me than Mutual Funds)
But mutual funds are tricky and timing is required in them too....so what he can do is put money when market corrects 10,30,50 percent from top....in three tranches...more money in percentage terms as market goes down...he can use same percentage (10,30.50.) of his total "extra" money...which he will not require for next 3 years...This is just a crude money management formula(I will come up with a better one in future)...basic thing is put money when price are low...buy low sell high kind of a strategy
So will the market correct 50 percent?...yes...and may be not for years(this is his basic set up to invest)...patience is required here...he need to have some quality at least to be successful...if hard work is not there... atlest patience should be...
http://new.valueresearchonline.com/default.asp
Check out this site...very good site for mutual funds' performance
See how badly they perform in bear markets and how well they do in bull markets check out 1, 2, 3 and 5 year performance
Why such kind of volatility in their performance?...they are supposed to be good money managers...well they are always invested type investors...so their performance goes up and down as per markets movement..do a comparative analysis between market's performance and mutual fund's performance...you will see some interesting facts..this is one of my favorites weekend activities!!
I dont know any good premium service provider,I never used them
If I was in his position I would invest in my own business...just as I do it now(trading is my business and I know it very well),if I have money I will put in stocks...not open a restaurant as I don't know anything about it (or gain information about it's operation,before I set up that business)
Important thing is don't use anybody's call...and if you do ...at lest don't sell your house and put money in anybody's calls...even if it's Warren Buffet's advice....because we all have different perceptions of money, our capital, markets and above all our expectations...that's why we fail in following calls give by anyone else ,no matter how talented that person may be .
Good luck.
Cheers
Excerpts from my reply are as follows
hi
First coming to your friend's problem..I think if he doesn't want to do some hard work or even get some basic information about stocks...he should not put money in any stocks.I truely understand his inclination towards stocks...that's because we are in a bull market and the returns that the market gave last year (100 % approximately)... will surely be more than the margin he makes in his business (even if its a successful business)...so he wants to try out his luck in stocks,he has some extra cash to burn and ready to lose money
He is in stage one of development of trader ....and will find one or the other way to BLOW his trading account soon...we all do that ...so only you can save him...If markets reaches all time highs...he will not even listen to your advice and jump in!!
What he can do is invest money in his own business...because he knows the pros and cons of it ...and he will be a master of his business....so why not put money in something he knows well...
If he still wants to put money in stocks...he should take up mutual funds...(I am strongly against mutual fund...because I can manage my money better than Mutual Funds...and investing in stocks is more convenient for me than Mutual Funds)
But mutual funds are tricky and timing is required in them too....so what he can do is put money when market corrects 10,30,50 percent from top....in three tranches...more money in percentage terms as market goes down...he can use same percentage (10,30.50.) of his total "extra" money...which he will not require for next 3 years...This is just a crude money management formula(I will come up with a better one in future)...basic thing is put money when price are low...buy low sell high kind of a strategy
So will the market correct 50 percent?...yes...and may be not for years(this is his basic set up to invest)...patience is required here...he need to have some quality at least to be successful...if hard work is not there... atlest patience should be...
http://new.valueresearchonline.com/default.asp
Check out this site...very good site for mutual funds' performance
See how badly they perform in bear markets and how well they do in bull markets check out 1, 2, 3 and 5 year performance
Why such kind of volatility in their performance?...they are supposed to be good money managers...well they are always invested type investors...so their performance goes up and down as per markets movement..do a comparative analysis between market's performance and mutual fund's performance...you will see some interesting facts..this is one of my favorites weekend activities!!
I dont know any good premium service provider,I never used them
If I was in his position I would invest in my own business...just as I do it now(trading is my business and I know it very well),if I have money I will put in stocks...not open a restaurant as I don't know anything about it (or gain information about it's operation,before I set up that business)
Important thing is don't use anybody's call...and if you do ...at lest don't sell your house and put money in anybody's calls...even if it's Warren Buffet's advice....because we all have different perceptions of money, our capital, markets and above all our expectations...that's why we fail in following calls give by anyone else ,no matter how talented that person may be .
Good luck.
Cheers
Triple Screen Trading System - Dr. Alexander Elder trading system
Sriganeshh said....
anuj
just thinking..u created so many excel programs.
what's ur view on elder's trading system..is it not good?
like to know ur views
best
sri
*****************************
My notes:
Dr. Alexander Elder trading system - http://www.elder.com/
Do you mean the triple screen trading system?
I think it is one of the best and logical way to trade.I feel it is similar to other systems or setups.like multiple time frames theory and what Ilango mentioned today in this blog 5th of 5th in Elliott wave...
What is 5th of 5th in Elliott wave? If you take a closer look you will see that, there is a 5th wave in progress and there are a smaller degree of a waves within that fith wave ,which is making 12345 wave pattern.
So the best place is to sell or buy is when markets are overbought or oversold in two time frames.I do this quite often.I check 15 min time frame and establish a bias (markets call table)and use Intraday (5 or 1 mins chart) to enter in direction of trend.
How do I do that?
Information that I have before the market opens (I know the direction of trend and I also know when it changes(SAR - Stop And Reverse )
Assuming we are in down trend(opposite in case of up trend).I try to establish a point where market will be overbought in 15 mins chart.Then I move to 5 minutes or 1 minutes to find overbought levels in that time frame.
This point is the place which gives me best risk to reward in terms of 15 minutes chart and my SAR (Stop And Reverse).So I enter shorts at that point
In simple words, look for a pullback (against the trend movement) in your trading time frame to get a good entry (better risk to reward ratio)
I hope it gives some new insights,for more read Dr Elder's book,Come into my trading room.I will discuss this in details with chart some other time
Good luck
Cheers
Related Post
Free Online Forex Futures Trading Strategy
Free Gold And Crude Oil Futures Tend Update
How do I calculate SAR
anuj
just thinking..u created so many excel programs.
what's ur view on elder's trading system..is it not good?
like to know ur views
best
sri
*****************************
My notes:
Dr. Alexander Elder trading system - http://www.elder.com/
Do you mean the triple screen trading system?
I think it is one of the best and logical way to trade.I feel it is similar to other systems or setups.like multiple time frames theory and what Ilango mentioned today in this blog 5th of 5th in Elliott wave...
What is 5th of 5th in Elliott wave? If you take a closer look you will see that, there is a 5th wave in progress and there are a smaller degree of a waves within that fith wave ,which is making 12345 wave pattern.
So the best place is to sell or buy is when markets are overbought or oversold in two time frames.I do this quite often.I check 15 min time frame and establish a bias (markets call table)and use Intraday (5 or 1 mins chart) to enter in direction of trend.
How do I do that?
Information that I have before the market opens (I know the direction of trend and I also know when it changes(SAR - Stop And Reverse )
Assuming we are in down trend(opposite in case of up trend).I try to establish a point where market will be overbought in 15 mins chart.Then I move to 5 minutes or 1 minutes to find overbought levels in that time frame.
This point is the place which gives me best risk to reward in terms of 15 minutes chart and my SAR (Stop And Reverse).So I enter shorts at that point
In simple words, look for a pullback (against the trend movement) in your trading time frame to get a good entry (better risk to reward ratio)
I hope it gives some new insights,for more read Dr Elder's book,Come into my trading room.I will discuss this in details with chart some other time
Good luck
Cheers
Related Post
Free Online Forex Futures Trading Strategy
Free Gold And Crude Oil Futures Tend Update
How do I calculate SAR
[FREE DOWNLOAD] Elliott Wave Calculator
The Elliott Wave Principle helps in describing how financial markets behave. As per the principle, markets create specific wave patterns in price. These wave patterns are often found to be in particular Fibonacci ratios.
I am uploading Elliott Wave Calculator Excel Spreadsheet. You can download it from here.
The calculator will help to broadly classify various waves associated with the Elliott Wave principle as per the Fibonacci ratios
Some of the commonly accepted ratios and rules have been taken into account while making the calculator.
Following assumptions related to price aspect are made while making the calculator.
1) You need to first establish Wave 1, based on that rest of the waves have been calculated .Once Wave 1 is identified, insert the values in grey cells under “FROM” and “TO” Cells
2) Wave 2 is 0.618 times Wave 1
3) Wave 3 is 1.618 times Wave 1
4) Wave 4 is 0.382 times Wave 3
5) Wave 5 is equal to Wave 1
6) Wave A is 0.382 times Wave 5
7) Wave B is 0.618 times Wave A
8) Wave C is equal to Wave A
Following assumptions related to time aspect are made while making the calculator.
1) Once Wave 1 is identified calculate the number of price bars between the start and end of the wave. Insert this in calculator (grey cell under the column “Time Bars”)
2) Wave 2 is 0.618 times Wave 1
3) Wave 3 is equal to the sum of time between Wave 1 and Wave 2
4) Wave 4 is 1.382 times Wave 2
5) Wave 5 is 1.382 times Wave 4
6) ABC waves is half in length to 12345 waves
7) Wave A and Wave C are of same time duration.
8) Wave B is 0.618 times Wave A
The above points are commonly accepted ratios in Elliott wave principle and thus are not absolute values
I feel if Elliott Wave price projection is used with oscillator divergence and trend channels, it can give quite reliable price projections. With the help of the calculator we can quickly form an opinion about the current trend in any time frame from 1 min to 1 month or more, in any stock or index
The calculator is still under development stage, price calculation have been fully developed, some aspects regarding time need to be modified if required
Lastly I would like to thank Ilango of "Just Nifty" for his valuable inputs in conceptualizing this calculator.For detailed information about Elliott wave ,please visit his blog.
Please post your feedback , suggestions and strategies about how this can be use in trading.
Good luck
Cheers
Apart from the above you may find these calculators useful while working with Elliott Wave principle:
Fibonacci Retracement calculator
Fibonacci Extension Calculator
Download - Elliott Wave Calculator Modifiable (Research Version)
Other Posts of Interest
Elliott wave pattern - Impulse (IM), Internal structure, Rules and Guidelines
Elliott wave pattern - Diagonal [Leading (LD) and Ending (ED)], Internal structure, Rules and Guidelines
Elliott wave pattern - Zigzag (ZZ), Double Zigzag (DZ), Triple Zigzag (TZ), Internal structure, Rules and Guidelines
Elliott wave pattern - Flat (FL), Double Sideways (D3), Triple Sideways (T3), Internal structure, Rules and Guidelines
Elliott wave pattern - Triangle [Contracting (CT) and Expanding (ET)], Internal structure, Rules and Guidelines
Free Online Forex Futures Trading Strategy
Free Gold And Crude Oil Futures Tend Update
I am uploading Elliott Wave Calculator Excel Spreadsheet. You can download it from here.
The calculator will help to broadly classify various waves associated with the Elliott Wave principle as per the Fibonacci ratios
Some of the commonly accepted ratios and rules have been taken into account while making the calculator.
Following assumptions related to price aspect are made while making the calculator.
1) You need to first establish Wave 1, based on that rest of the waves have been calculated .Once Wave 1 is identified, insert the values in grey cells under “FROM” and “TO” Cells
2) Wave 2 is 0.618 times Wave 1
3) Wave 3 is 1.618 times Wave 1
4) Wave 4 is 0.382 times Wave 3
5) Wave 5 is equal to Wave 1
6) Wave A is 0.382 times Wave 5
7) Wave B is 0.618 times Wave A
8) Wave C is equal to Wave A
Following assumptions related to time aspect are made while making the calculator.
1) Once Wave 1 is identified calculate the number of price bars between the start and end of the wave. Insert this in calculator (grey cell under the column “Time Bars”)
2) Wave 2 is 0.618 times Wave 1
3) Wave 3 is equal to the sum of time between Wave 1 and Wave 2
4) Wave 4 is 1.382 times Wave 2
5) Wave 5 is 1.382 times Wave 4
6) ABC waves is half in length to 12345 waves
7) Wave A and Wave C are of same time duration.
8) Wave B is 0.618 times Wave A
The above points are commonly accepted ratios in Elliott wave principle and thus are not absolute values
I feel if Elliott Wave price projection is used with oscillator divergence and trend channels, it can give quite reliable price projections. With the help of the calculator we can quickly form an opinion about the current trend in any time frame from 1 min to 1 month or more, in any stock or index
The calculator is still under development stage, price calculation have been fully developed, some aspects regarding time need to be modified if required
Lastly I would like to thank Ilango of "Just Nifty" for his valuable inputs in conceptualizing this calculator.For detailed information about Elliott wave ,please visit his blog.
Please post your feedback , suggestions and strategies about how this can be use in trading.
Good luck
Cheers
Apart from the above you may find these calculators useful while working with Elliott Wave principle:
Fibonacci Retracement calculator
Fibonacci Extension Calculator
Download - Elliott Wave Calculator Modifiable (Research Version)
Other Posts of Interest
Elliott wave pattern - Impulse (IM), Internal structure, Rules and Guidelines
Elliott wave pattern - Diagonal [Leading (LD) and Ending (ED)], Internal structure, Rules and Guidelines
Elliott wave pattern - Zigzag (ZZ), Double Zigzag (DZ), Triple Zigzag (TZ), Internal structure, Rules and Guidelines
Elliott wave pattern - Flat (FL), Double Sideways (D3), Triple Sideways (T3), Internal structure, Rules and Guidelines
Elliott wave pattern - Triangle [Contracting (CT) and Expanding (ET)], Internal structure, Rules and Guidelines
Free Online Forex Futures Trading Strategy
Free Gold And Crude Oil Futures Tend Update
Budget Day - Great way to test your intraday trading system's performance
Hi all,
First of all Happy Holi to everyone,hope every body enjoy playing with "other colors" apart from our daily favorites, green and red!!!
Friday was the budget day and as always it was a volatile day,reasons are quite simple, a lot of economic and industry specific news is released in very short period of time while the market are open.
I am attaching three charts :
IFCI - went up all day
ITC - went down all day
DLF - went up and lost ground at much faster pace
I feel these were nice intraday movements and are quite good to test your intraday system.While the news flow is heavy on budget day,tracking, analyzing and reaction to every piece of news is impossible.Price movement is our most reliable tool in this case ,as always.I would like you to test your intraday trading system base on these stock price movement.It will tell you whether your system is more of a leading or lagging in nature.It will also give you important insights into your own psychology of how you tend manage changing market conditions.Try to imagine how you would have traded in these three stock that day.As history repeats itself(one of the basic principles on which technical analysis is based) it will make you better prepared the next time you witness such a volatile day with divergent stock price movement
Cheers.
IFCI
ITC
DLF
First of all Happy Holi to everyone,hope every body enjoy playing with "other colors" apart from our daily favorites, green and red!!!
Friday was the budget day and as always it was a volatile day,reasons are quite simple, a lot of economic and industry specific news is released in very short period of time while the market are open.
I am attaching three charts :
IFCI - went up all day
ITC - went down all day
DLF - went up and lost ground at much faster pace
I feel these were nice intraday movements and are quite good to test your intraday system.While the news flow is heavy on budget day,tracking, analyzing and reaction to every piece of news is impossible.Price movement is our most reliable tool in this case ,as always.I would like you to test your intraday trading system base on these stock price movement.It will tell you whether your system is more of a leading or lagging in nature.It will also give you important insights into your own psychology of how you tend manage changing market conditions.Try to imagine how you would have traded in these three stock that day.As history repeats itself(one of the basic principles on which technical analysis is based) it will make you better prepared the next time you witness such a volatile day with divergent stock price movement
Cheers.
IFCI
ITC
DLF
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