June 29, 2011
- in Uncategorized by schooloftrade
When the Wave Pattern Fails, one of our favorites
Wave Pattern Failures
What is a wave pattern? Buying a pullback or selling a retracement.
We have very specific rules for trading these patterns.
When a wave pattern fails, its often a great opportunity to make profit.
Let’s review the many ways we take failures on the wave pattern.
How do we trade failures?
The same way we do the others, just look for the failure and trade according to your rules.
How do we know their coming?
Look for the speed and the time & sales window to give you clues at the initial swing high/low.
We also look for LACK of big money at the test of the trigger line for the wave trigger.
Lack of big money is also a sign of wave failure.
And how do we know which failures will actually be the wave itself?
The key is two-fold:
– Reading tape a few minutes before the actual trigger will have given clues to this failure (to identify who is in control of price)
– Know the timeframe your trading has a different personality than others.
Watch this video on our 3 Price Patterns on the blog.
Ranking System: a, b, c for the trades we take so you can be aware of the risk per trade.
What are the range charts? And how many bars will there be?
– 89range chart = each bar = 89ticks of trading range
– 4range chart = each bar = 4 ticks of range.
There are 22.5 times the number of bars on a 4range chart. (89 / 4 = 22.25)
Grains markets:
– Corn ZC
– Wheat ZW
– Soybeans ZS
Pros:
– Fear-based so they move like crude oil and gold
– 1030-215pm is a small window, easy to focus
– Tax advantages for trading futures
Cons:
– Low volume times + high volatility + high speculation = CFTC mandates higher margins.
– You need to know this market, there are crop reports, regular news reports, and weather reports.
– The FEAR is something you can never anticipate.
– Momentum
– Speed
– Size / Volume
Trading the afternoon session?
Watch the ‘8-Phases of the E-mini’
You can apply this to any market you wish, just replace the 930am OPEN and the 415pm CLOSE with the correct open/close info on the market you wish to trade.
Other markets we can trade:
– Crude
– Gold
– Russell
– Euro
– Aussie Dollar
– Yen
– Corn
– Wheat
– Soybeans
– FDAX
– FESX
– Bonds
– Notes
