5 Simple Steps to Enhance Your Elliott Wave Trading
This is the first of a series of articles to help anyone who is using the Elliott Wave Theory to increase their profitability, simplify the process, and make the analysis easier and more reliable.
You can improve your Elliott Wave Analysis and trading system with a few simple additions to your technical analysis. This will save you time and improve the use and analysis of Elliott Wave for all trading styles.
TC2000 is one of the rare charting software that includes Elliott Wave as an Indicator, which can be used in a variety of ways to make trading the Elliott Wave Strategy easier and less work.
The first step in making your Elliott Wave Strategy or System work better is to understand what is creating the Elliott Wave Patterns. This analysis goes beyond the standard, traditional Elliott Wave Theory to learn WHY the patterns form. When you understand the why of a theory, you are able to interpret the wave patterns with far more accuracy. When you understand who is creating which waves, you have a powerful analytical tool that will reduce risk, increase accuracy, and thus profits.
Related Article: Learn more about TC2000 Balance Of Power indicator which tracks large lots versus small lot activity. Watch webinar CLICK HERE
The internal Market Structure has changed enormously in the past few years. Dark Pools or Alternative Trading System venues account for nearly 40% of all trading activity each day, but this data is not shown on the exchanges. High Frequency Traders use pre-market Retail Trader orders to front run. Professional Traders employ new professional exclusive orders, routing, and analysis that does control price to the penny.
What this all means is that the Retail Trader needs something, a tool or method to track the hidden inner market where the majority of trades are occurring.
Unfortunately for most Retail and Technical Traders, all of this change is hidden and unknown. The advantage you have is that TC2000 has indicators, which provide information that will forever change how you use the Elliott Wave Theory or trading systems.
The first step in this learning phase is to employ any available visual technical tools from your charting software.
Related Article: For Experienced Traders with more than two years of trading in the market, and struggling with consistency. This is the course for you, more advanced tools and technical analysis. PEEK INSIDE
The chart below from TC2000 is set up with a combination indicator that shows the wave formation in an easy to see graphical representation, AND the indicator that reveals which of the Market Participant Groups created that wave. This is vital information because it can help you see what type of wave is likely to form next. It explains deviations in wave patterns, and helps you avoid weaker entries and poor quality trades.
Better analysis of the Elliott Wave pattern means higher profits for your trades.
The two indicators that these lessons will go over first are:
Elliott Wave Oscillator set on a histogram with a zero center line oscillation.
Balance of Power aka BOP, the Worden indicator that tracks and reveals large lot versus small lot activity to expose Dark Pools, Pro Trader setups, Smaller Funds, pre-setups for High Frequency Trader triggers, and much more.
The combination of these two indicators is one of the most powerful indicators that Elliott Wave Traders can use.
Tracking the Dark Pools as they accumulate, distribute, or rotate is one of the most important additions you can make to your Elliott Wave analysis. BOP as a histogram works extremely well with EWO. The combination offers invaluable information for short-term trading activity.
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The setup should be the BOP above EWO so that you can quickly and easily compare the two patterns which are the wave pattern of PRICE, and the wave pattern of giant and large lot activity. By studying both you will have a complete analysis of ALL of the data available for a superior analysis. Nowadays you must track the Dark Pools activity as their buying power is so dominant, but totally hidden on Alternative Trading System venues.
Dark Pools use Alternative Trading System venues to avoid High Frequency Trader front running, and to hide their large lot buying activity during the day. Most of the Dark Pool buying or selling occurs either 3-4 hours ahead of the market open, OR they use delayed orders which do not show up until after the market has been closed for at least an hour to up to 3 hours after close.
Only BOP reveals where the Dark Pools have been most active, as these giant institutions special orders do not alter the price trend or direction. They use controlled bracketed orders to maintain absolute control over their entry price, often to the penny.
Elliott Wave Traders can improve their profitability and lower their risk by adjusting their TC2000 charts, and learning how to interpret BOP and other indicators that are exclusive to TC2000. This exclusivity is a huge advantage, as the High Frequency Traders and other predatory systems are unable to front run proprietary indicators.
More next week.
Go to the TC2000 Learning Center training webinars for beginners and experienced traders Click HERE
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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