See how Elliott wave pattern analysis helped "craft a rock-solid trade" in ROKU in late November 2017
By Elliott Wave International
Fact: 90% of traders lose money. Also a fact: 80% of all day traders quit within the first two years. And, according to a July 16, 2017 Forbes article titled "Day Trading: Smart or Stupid?" many traders are "moaning and groaning" sleep-deprived suckers "trying to become rich... with 32-ounce bottles of Pepto-Bismol prominently displayed on their desks."The reason is simple. What should be a completely emotion-free zone -- the trading room "floor" or brokerage office or personal computer screen -- is often a breeding ground for elevated heart rates and sweaty palms. We may know the odds, but that doesn't stop mainstream culture from fanning the flames of blind hope in a bull market that can't quit. Here, these recent news items paint the emotionally charged scene:
"5 Ways to Make Millions in the Stock Market" (Huffington Post)
"Penny Stock Trader: From $1500 to $1 Million in 3 Years"
(CNN Money)
"U.S. Stocks Surge! The Bull Market is Back" (Forbes)
It's not rocket science: Emotion is the number one enemy of successful trading. Which means the number one ally is UN-emotional, objective market analysis that doesn't focus on the news, or which way the crowd is running. Some traders know its name: technical analysis.For the past 20-plus years, Elliott Wave International's chief market analyst Jeffrey Kennedy has personally tried and tested dozens of technical tools, from old-school to cutting-edge, even developing his own in the process. The end result is a what Jeffrey calls a "holistic" arsenal for identifying high-confidence trade set-ups in any liquid market, and on any time frame.
In one of his most popular educational videos "4 Keys to Crafting Rock-Solid Trades," Jeffrey outlines four simple steps of the "pre-flight checklist" for an emotion-free trading strategy. Take steps one and two:
- Identify the trend, and trade with it. Choose the path of least resistance and have the wind at your back. Utilize pullbacks; those are the opportunities to rejoin the trend.
- Once you've successfully identified the trend, look for a price pattern you recognize.
(Editor's Note: Right now, you can get Jeffrey Kennedy's "4 Keys to Crafting Rock-Solid Trades for free! Follow the link to begin)
As an Elliottician, the patterns Jeffrey looks for are the five core Elliott wave patterns, each of which adhere to specific rules and guidelines. Take, for instance, the impulse wave, pictured below. Its middle part, wave 3, travels far and fast in a short period of time.
- "Roku: One of the Markets Hottest Stocks" (Sept. 28 Fortune)
- "Is There Any Stopping Roku?" (Nov. 13 Barron's)
"We are currently in that honeymoon period in Roku. It's easy to get excited about an IPO and you want to, when everything is awesome.
"From an Elliott wave perspective, within wave five, it appears we need another push higher to above 51.8. I do like the upside and it's natural to do so because hey, we're in the honeymoon period. But remember, following that time, the pressure may be to the downside."
Get immediate access to Jeffrey Kennedy's free 20-minute video, "4 Keys to Crafting Rock-Solid Trades." In this video, Jeffrey reveals his time-proven tricks to ID top trade set-ups in the markets you follow. Learn more now.
This article was syndicated by Elliott Wave International and was originally published under the headline 90% of Traders Lose Money. Some Don’t.... EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
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