Apsll,
You display your own mathematical ignorance in your reply to me. I'll have nothing more to do with you until you answer my question.
If your risk/reward ratio is 3:1, how frequently do you have to win in order to break even?
Until you can answer that question for me, you should refrain from commenting on anyone else's intellgence.
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Apsll,
You never answered the initial question I posed you.
If the traditional reward/risk ratio states you shouldn't take a trade less than 3 dollars profit for every dollar risked, how often do you have to be right in order to make money?
Do you read just 1 post that fits your preconceived conclusions, or do you go through a sample of the person's record? It would be like judging Warren Buffet by looking only at his bad bet against the dollar.
Track my posts on the SP--where I have not had the success I've had on certain individual stocks.
I was correctly bullish at the October 2005 lows.
An error after the breakout of 1280, that I quickly corrected, although I remained cautious.
Correctly bearish at the May 2006 peak, and correctly bullish at the June/July lows.
Out of 6 comments, 4 were correct, with 2 small losses.
If you can't see the value in an indicator that is correct 66% of the time, and the times it does fail, you will get out with small losses, then I have nothing else to say to you.
I have commented on dozens of stocks, tracking the individual swings.
Search for threads on AAPL, NEM, HAL, HOV, TROW, PDC, MOT, HL and a host of others. Or search on threads for HaveNoCents, and see my analysis at the time, and how it turned out.
The accuracy of those comments is somewhere near 60%.
This isn't about "prediction"--its about making money.
The guestimate that we would peak at 1350 was proven wrong. So what? Any technician worth his salt would have concluded the trend was still temporarily up, and would have adjusted accordingly.
Elliott Wave a "crackpot theory?" The basic ideas of Eliott were already part of Dow theory--ie. a bull run advances in 3 legs, with 2 intermediate reactions against the trend that correct 1/3 to 2/3 of the prior advance.
Sounds a lot like a 5 wave advance to me. Elliott extrapolated this basic pattern to larger and smaller time frames, and then added the corrective patterns, which may or may not be useful.
Is Dow Theory a crackpot theory? I don't think so. Dow Theory is a beautiful theory to me, and is the foundation of the technical approach.
Telling people to "follow the trend" is useless without examples HOW to define the trend.
Telling people to "cut losses" is useless without examples of HOW to cut losses.
I had quite a few losing option trades last year, mostly because I stubbornly "followed the trend" rather than taking profits when I should have.
Fortunately, I had a few big option trades go my way, and have more than made up those losses to make my trading worthwhile.
I will grant you the main problem with Elliott is the somewhat arbitrary way of identifying patterns on alternate time frames. I'm working on some trading systems that use concepts from EWT, but aren't as dependent on the concept of a EWT "count", because, in the grand scheme of things, the "count" isn't all that important.
It is the interaction of price trend, and price cycle, on multiple time frames that is important.
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Diceman,
You write:
This is not about any market theory.
It is about your comments not really meaning
anything.
Perhaps it doesn't mean anything to you because you are too damn stubborn to understand it.
What is so hard about understanding the idea that I'd favor being short at these levels, unless we close above 1410, when I'd likely be in cash, waiting for a pullback to consider going long, on a short term basis?
What was so hard to understand back in the summer that a new high above 1326 should be best approached by buying the SP when it was within 1 SD of the 21 day moving average, with sells on close above the 2 SD BB?
What is so hard to understand that a new high above 1350 would indicate the trend was still up, although I'd still be cautious?
Your criticisms are more inconsistent then Elliott Wave theorist wave counts!
You argue that Elliott has no method to determine when their outlook is wrong.
I have told you time and time again that there are levels where the outlook needs to be changed, and perhaps reversed.
You write:
Don’t you realize when you are wrong.(my term)
You can’t just say: "this was a phony bull".
or "I will revise my forecast"?
You refuse to accept this, because an Elliott Wave trader should close out one position (for a small loss) and then try again from a different level.
Why? Moving average cross over systems, or breakout systems can have similar problems when volatility is high, but there isn't a strong trend?
Those systems will be right eventually, too.
When I do this, you say that my statements are meaningless. EVERY OTHER TECHINCAL SYSTEM WILL HAVE THE SAME PROBLEMS! Does that make techincal analysis meaningless too?
The fact is, mechanical systems totally unrelated to Elliott, will reverse position depending on market action. It is the whole point of having a system--to adapt to change.
The whole point is to conserve capital, and have the most money on the line when you have the greatest possiblity of being right.
Can there be any other "secret" to trading other than cut losers and let winners run?
You seem to object to trading that way. You seem to believe a trader should have courage of his convictions, and stick around even if he is bleeding capital.
Some have wondered why I don't post here much. Diceman is the reason why I don't post here. I don't like repeating myself, or rehashing things that should be obvious, such as limitting losses and msximizing gains.
We go over the same old ground, and he just keeps repeating the same criticisms I've dealt with before, apparently not to his satisfiaction.
I never see diceman post any of his thoughts on individual stocks, the general market, what he is trading, or how he trades.
I have posted numerous actual trades, both winners and losers. I have posted how I understand the market in great detail, as well as how I use indicators, and the concepts of trend and cycle. A look at my posts will show that my accuracy is pretty good, even for an Elliott Wave trader 
I only have a vague idea of his trading strategy, which seems more and more like a buy and hope strategy, as opposed to trading, which is why I use Telechart.
There is nothing wrong with being a long term trend follower. It has its uses. But that method does not invalidate other approaches for those willing to look into them.
In the grand scheme of things, diceman doesn't object to Elliott. He objects to bearish market outlooks that suggest the upside is limitted, while the short side has the better risk/reward ratio.
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have read enogh old threads from the elliot enthusiasts to see that you are all wrong most of the time. And you always have some excuse for why, A misinterpretation here a "I was close to the mark" there.
So are trend followers, if the system testers are to be believed. Trend followers often have systems with % wins much less than 50%.
If you take the traditional reward/risk of 3 to 1, before taking a trade, how often do you need to be correct to break even? Do you know?
If an Elliott Wave trader takes 9 trades and loses 1 dollar on each trade, and on trade 10 makes 100 dollars, is he profitable? Yes or no?
The fact is, there are some very smart mathematicians who believe markets follow fractal patterns. While they would not call themselves Elliott Wave proponents, the fact that:
1. Some mathematically sophisticated people are applying fractals to markets
2. Elliott Wave is a fractal theory
Lead me to give Elliott Wave a second look.
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Truemaster,
I don't fault Diceman for being skeptical of EWT. There are good reasons to be skeptical. Assuming it has some value, why?
There are no economic reasons I can think of that require prices to oscillate in 3 and 5 wave patterns, but there are times when it seems to happen.
Having said that, from my observations, I have to agree with Hamilton Bolton who found some of the concepts of Elliott Wave to be of value.
For those who do not know, Hamilton Bolton was a money manager during the 50's and 60's, who did work on market breadth, as well as bank credit. Telechart has a Bolton-Tremblay indicator, which he invented. He was both a fundamentalist and a technician, when being a technician was unfashionable. He (along with his collegue Maurice Tremblay) produced the Bank Credit Analyst, and in that publication, charted the market using Elliott Wave.
What is frustrating about the diceman is his constant moving of the goalposts.
Back in June, he complained (ad nauseum) about Pretcher, his lack of using stops to alter his conclusion, etc.
He wanders down that same worn out path again in this thread. Yet, when I point out a close above 1410 would cause me to change my analysis, he writes:
That is the point.
You can keep revising forever.
Hello! This IS a market you are talking about! Markets move up, then down, and then up again! Trend followers can be accused of the same thing--it is called a whipsaw!
Some mechanical systems are always in the market, and therefore always revising their positions, based on market action. Is that really a flaw if they make money?
The whole point of trading is to see if you can catch some of these swings!
Diceman is a trend follower--a long only trend follower at that. That is all he talks about, as if it were self-evident.
The fact is, markets trend. They also cycle, which means selling at highs and buying at lows is a good strategy. It is a strategy even the fundamentalists would agree with.
While I readily acknowledge markets trend, I think too little emphasis is placed on cyclical components of price action, which can give you better entries (ie. less slippage) and better risk/reward ratios.
But he neglects to mention the significant drawbacks to FOLLOWING trends, especially the volatility of their results, the often intolerable drawdowns, etc.
Knowing the TREND alone won't make you money, unless you have a VERY long holding period. It is when you buy WITHIN THE TREND, that determines the profits.
I want to find the LOW RISK points within the trend to initiate a position. I don't want to buy because everyone is buying, or sell when everyone is selling, unless there are very good reasons to do so.
I want to find, like Jesse Livermore, those "danger points" where you will know if you are wrong very quickly, but can add to your position when proven right.
By doing this, I can maximize my wins, while keeping losses small.
If diceman prefers to stick with trends, even though there may be points in time when waiting for the signal could cause him to give back most of his profits, that is his perogative.
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Diceman, you need to read more carefully.
In my initial post, I wrote:
"Although it is unlikely, if we close above 1410, I'd be forced to revise this count, and would be neutral in that context."
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Truemaster,
Over the long term, I share your bearish conclusions, and I do agree with your bearish sentiment over the intermediate term, but I do think you might want to consider the following.
By my observations, we are only in wave (1).1.5 of C. Knowing how the first 2 waves of a trend often lead to false starts, I don't think those support levels you pointed out will "be taken out like a hot knife through butter" in the immediate future.
A wave 2 retrace from 1280-1300 is likely to scare the bears, and encourage the bulls. Then the bottom can fall out of the market, fooling everyone, except the Elliott Wave Traders :)
The wave 3.3 you are looking for will come when the pundits realize the economic wreckage the subprime fall out is causing in the real estate market, and the general economy. It is going to take a few more months before the data killing off "Goldilocks" is truly in, and even a deluded bull sees the handwriting on the wall.
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Anyone notice that there are rather large transaction costs associated with some of these inverse funds?
I wanted to place a market order on QID a few weeks ago, and the spread amounted to around 10%. For an investment of 2500, you would end up with 2350 worth of shares.
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Scott,
This is not strictly a "prediction" because there is no specific time frame attached to any of the price projections. It is my subjective guess that the process will take about 6 months.
In real trading, I look at how the market is acting, by looking at the price, volume, and momentum, along with the response to news, to see if the outlook is still valid, or if it needs to be adjusted.
The key point with EWT--you can place very close stops when your outlook is proven incorrect. It is also important to be competent in using conventional technicals, because there are many times when EWT won't be helpful.
Take a look through my posts, where I gave my thoughts in real time, particularly this one in May 2006.
http://www.worden.com/training/default.aspx?g=posts&t=12715
They weren't perfect, nothing is--but they were remarkably close. At least 2 posters here--HnC, and Socrates, have commented on the "remarkable" accuracy of many of my posts.
Keep an open mind, and take the analysis for what you think it is worth.
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FWIW,
If I'm examining things from an Elliott Wave POV, I believe we are at the start of the big wave C down.
Elliott Wave terminology can be confusing. Although this post will use lots of those terms, I'll summarize my position for those not familiar with EWT right here.
6 Month Outlook SP-500.
Near term:
1. Intraday high around 1400-1410, likely tomorrow
2. Decline of about 9.14% from those levels to 1272-1300.
3. A possibly sharp retracement rally (bear market rally) taking us back to around 1370.
4. The potential of a decline of major proportions, that could take the SP down to 1082, or 21% lower from the 1370 level.
If this is true, the bear market is still early, and the bulls will fight tooth and nail in trying to prop the market up. From the low of wave 1 (to be calculated shortly), we could still end up very close to these levels before a severe sell off starts.
From the high at 2/22/07, I count 5 waves down to the low on 3/5/07. I consider that the end of wave 1 of a larger 1 of C. I'm using intraday data (hourly) to do this.
Wave a of 2 ended on 3/12/07. The decline and recovery yesterday was wave b of 2. We are in wave c of 2, which should end tomorrow with options expiration, with Monday starting wave 3 down.
The decline from the February peak to the end of wave 1 was a loss of 5.65%. If wave 3 is (1.618 * 5.65%),
wave 3 should cause a loss of 9.14%, depending on where we end up for this wave c of 2.
If we end up at a high around 1400 tomorrow, then we could see a decline to about 1272 on the SP before wave 3 is done, essentially erasing all of the gains since the July lows.
I'd prefer to round up to around 1300, as that is where my 200 day envelope channels suggest support to be at.
We might still see wave 5 of 1 of C take the SP down to below 1272, but there is plenty of time to figure out what path the market takes.
Of course, we are likely to see some support around
1330--the 55 week moving average.
What happens once wave 1 is done? The target suggested above is nearly a 13% decline from peak to trough. We could rally 8% from those levels, which would take us all the way back to 1374--not too far from where we currently are.
Of course the bulls would be snorting again, talking about us silly bears, and how they are ready to challenge the highs.
FWIW, I don't expect such a sharp wave 2 rally, although I would expect a retest of the 200 day moving average, before wave 3 down. If wave 3 is the standard 1.618 length of wave 1 (a 13% decline), then wave 3 should be a 21% drop, which would take the SP down to 1082.
I'll come back to revisit this count, as it develops.
Although it is unlikely, if we close above 1410, I'd be forced to revise this count, and would be neutral in that context.
What is the point of all of this? It suggests there will be ample opportunities to trade, both long and short, although the shorts would seem to have the edge from a trend following POV.
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