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| Re-analyzing The Elliott Wave System |
| Friday, December 29, 2006 |
I hope everyone had a wonderful Christmas...On to Business.
Since one of my trading demons has always been the lack of trading plan, I thought that system trading would be my trading of choice. I still believe it is the choice, but the hardest thing about a trading plan is following the damn thing. By the way, that watch list thing has always been a vicious destroyer of my trading plan decisions....if you've been there...you know.
One of the system plans that always interested me was Elliott Wave. I don't really remember how I started getting interested in Elliott Wave, but I think it was a by-product of research on Fibonacci ratios. For some basics on Elliott Wave or Fibonacci you can visit some of these places:
http://www.acrotec.com/ewt.htm
http://www.investopedia.com/articles/technical/111401.asp
http://stockcharts.com/education/MarketAnalysis/elliotwavetheory.html
http://www.mcs.surrey.ac.uk/Personal/R.Knott/Fibonacci/fib.html
http://www.textism.com/bucket/fib.html
Initially I thought that this would be the Holy Grail of trading. From the start, the only thing Holy about it...seemed to be my Trading Account which appeared like a noodle strainer. There have been several posts at discussion groups talking about the merits and downfalls of Elliott Wave trading. Personally, Elliott wave is a great thing, but not the only thing! I do believe that both Elliott wave and Fibonacci ratios are excellent companions to other trading indicators and systems. If you hear someone whining about Elliott, or Fibonacci, or "name your poison" indicator, just ask them "What have you been using that is working!" I'm not much for whiners, I'm for solutions. I could probably sit here all day talking about bad decisions I've made in my wannabe trading plan, but I don't sell chronic depression pills.
I wish I could say that after reading The Elliott Wave Principle by Frost and Prechter that I had a crystal clear understanding about Supercycles, Minuettes, motive waves, impulse waves, extensions,and truncations. Unfortunately, my mind was overloaded with info despite reading the book 4 times. Not to say the book isn't good, but it is not a read for the faint-hearted.
What I figured I needed was software that could do the majority of the number crunching and wave finding for me. I looked at several options with or without Elliott wave and Fibonacci, and the one I finally decided on was ProfitSource. My other main choice was AdvancedGet.
This is what leads me back to the beginning of this post...system trading. ProfitSource, although new to the block, has unbelievable capabilities for backtesting. Like they say "past performance does not guarantee future results", but they also say "History has a way of repeating itself.
Over the course of this blog, I'm going to start testing different criteria with different systems. Some I will be able to post, some I may not (may be some legal ramifications). Hopefully, this will be both a learning experience for myself and everyone else.
A trader once told me that if you can make your significant other understand your trading system in plain terms, the worst that can happen is that you learn the strategy to a greater degree. Hopefully, taking the time to post this material allows me this opportunity as well.
Stay tune,
FibonacciLabels: Elliott Wave, Profitsource |
posted by Fibonacci_Trader @ 11:46 AM   |
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