A Moment in Time

One of the most asked questions I receive when traveling around talking to traders is "will this software work on "X" time frame?" People ask this about their odd FOREX time frames (120 minute, 240 minute, 13 minute). They ask it about Swing Trading (30 minute, 60 minute), and they ask it about extremely short time frames (1 minute, tick charts, volume charts). I try to show examples of just about every type of market, on every type of time frame in my seminars to show just how versatile this software really is. I even ran into a gentleman in Omaha, Nebraska who trades this stuff on a 6 SECOND chart! While I don't recommend that, it makes my point that these strategies are completely dynamic, and Advanced GET is a great piece of software no matter what the market, no matter what the time frame.

Here is an example from today's YM on a 1-minute chart. It first set up as a Stochastic Continuation trade with a 3-to-1 Reward vs Risk.

6 bars later, this trade reached 50% toward the profit objective. This is the first place to take profits, and adjust the stop to break even.

It is important to note that, at this point, the trade is not "successful". By definition, a successful continuation trade must make a higher high (or lower low in a down trend). Thus, since we have not broken the high, this is not yet a successful trade. HOWEVER, more importantly, this is a PROFITABLE trade. Another highly asked question at our events is "what is the % of accuracy of the trading strategies." It is a valid question, but the more IMPORTANT question is "what is the % of profitability of how you MANAGE the trades?" This particular strategy is about 60% accurate. However, the 40% of the time it is wrong, we still wind up making money a certain percentage of the time. This is one of those times:

So this trade stopped out at break even after the initial profit objective was reached. Thus, it was a PROFITABLE trade, but not a SUCCESSFUL trade by strategy standards.

Once this retracement moved on, the market set up for a Type One Elliott trade.

You would have had to be aggressive on the entry with this trade. Aggressive entries are not for beginners, as getting stopped out happens more often the more aggressive you get over the long haul. However, in this case, it worked out quite nicely.

Depending on whether you are an aggressive trader or not, you either got stopped out of the Counter Trend trade that set up at the MOB, or you did not take it at all because of the Reward/Risk not being above 1.618 to 1.

Several bars later, the market topped out again. This time, it was up near 10800, which happens to be 50% of the range of yesterday's HUGE bar. Now, for those of you who have been to the 2 and 3-Day seminars we put on (see http://www.esignallearning.com/seminars/schedule/default.asp?categ=premium) you know the significance of being below 50% of a recent range. You know to expect weakness below this level. This knowledge of weakness here gives us some resistance off which to play another Counter Trend trade. The purple line on my chart is 50% of yesterday's range, while the slimmer blue line is the low we had from back in July of this year.

As I am writing this post, we have not yet reached 50% toward the MOB from the previous Wave 4. That is the initial target. In order to call this a SUCCESSFUL counter trend trade, we must reach this MOB. However, if we can get half way there, we will have a PROFITABLE counter trend trade. Which is more important to you? I'd rather be profitable than right! :)

Now, I did not take this counter trend trade, as it showed up while I was in the middle of this post. Taking another look at the TIME aspect of this swing down, the bottom of the swing (where the Wave 3 is marked) is exaclty 13 bars from the previous Wave 5. We know that most swings in the market last between 13 and 21 bars. We were in that range at that point, and had not yet made it even HALF way to our MOB. I would most likely have taken some profit in that area based on TIME, and been stopped out of the rest on the swing up shown as Wave 4 on the chart. Others would still be in this trade, looking for new lows. I tend to get myself to risk free as quickly as possible. Sometimes this is a benefit, and sometimes I leave additional profit on the table. These tendancies are part of another discussion for another time, and are based upon who we are as individuals and how that effects our behavior as traders.

Happy Trading and Be Prepared!

nate mccartney

Comments

[Don V.]

snip...
I even ran into a gentleman in Omaha, Nebraska who trades this stuff on a 6 SECOND chart!
...snip

I didn't know Warren Buffet used AGet to trade and I didn't know he used 6 second charts.
(He IS the only investor in Omaha, right? :-) )

[Nate McCartney]

Unfortunately, Mr. Buffet declined our invitation to the event. :) The gentleman in question was trading a handfull of stocks, and made several HUNDRED transactions per day. That's just WAY too much work!