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| Elliott gave me the go, STZ gave me some Sidestepping Part 2 |
| Saturday, December 30, 2006 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 1
STZ (Constellation Brands)
We left off with the chart from 10-16-06, but I usually look for some form of directional move after the signal sign. ProfitSource divides its precomputed scans into two different types. The ones with the funky looking red and green triangles fall under the Trigger category and the ones with the eyeglasses fall under the Watch category.
 Trigger Indicators : These can be long or short Elliott indicators depending on your category of scan, but these are new opportunities that have recently been found.
Watch Indicators : If the "Trigger Indicated" opportunities stay in the defined Elliott Wave criteria for more than one consecutive trading session, they move on over into this category. According to the ProfitSource manual this indicator also applies to " all other results of other precomputed scan types". I'll try to get some more info on that...Note to self.
So which one do I go with? I think the consensus is still teetering back and forth, but on this particular trade I waited for STZ to show me those geeking looking glasses. Mostly, I think which one you choose will depend on the individual. Note to Self: What has been the historical performance of entering a position from the initial Trigger vs. Watch.
 Pulling the chart back up, I noticed a couple of things. First, since around the beginning of August 2006 until the beginning of October it was on a steady climb. Secondly, at the beginning of October it took a nose dive faster than a cocaine heartbeat. Thirdly, from the day after the nose dive, it has been holding its own. So what did I make of all this? To be honest, I didn't make anything out of this. Looking back at the start of the climb, I can see that there was some news generated about the Consolidating their operation, and making it streamline on August 2, 2006. There was some other news back in July 2006 about a joint venture with Grupo Modelo. Using some technicals, you could see that the 50/200 SMA was a bullish cross around August 8, 2006. What about the nose dive? The nose dive happened when STZ was in-line with expectations, but 2nd Qtr net income dropped on higher sales. What about the "holding its own" right now? Well, thats were we are.
My next step was figuring what my Maximum Risk, Maximum Reward would be on the trade. If there's one tool I like the best in ProfitSource, it has to be the Risk to Reward tool. Click on the tool, click on your entry price, click on your stop price, and drag and click for your target and time criteria. Ahhhh.....I'm in charting heaven! But before I can use that, I need a target..don't you think! Well maybe that's were the Range Projector tool might help out. The Range Projector gives me a probable price target and time frame that is statically likely based upon swing levels and turning points. Note to Self: That seems like a mouthful, why don't you explain the settings and how they work...maybe you need to learn a little more
 Here is the chart after the range projector and risk to reward tool has been applied. The one thing that I didn't notice for the longest time was the three vertical ticks on the Range Projector bar. The Range Projector bar on the screen capture is green. The first tick (to the left of the screen) indicates the shortest time frame that the price is expected to be achieved. The Second Tick is the average time frame, and the Third tick is the longest time frame. This can be very useful depending upon your trading style.
Now that we have determined my Risk to Reward and time frame, the question is still..should I take the trade? Even if I do take the trade, what strategy will I take in this trade. Will it be an option trade, a stock trade, some form of spread. One thing I do know, if you don't have your questions answered before getting into a position, your backwards looking 20/20 specs will answer it for you.
To be Continued in Part 3
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 2, Profitsource, Wave 4 Buy |
posted by Fibonacci_Trader @ 8:47 AM Add to: DiggIt! | Del.icio.us | blink it |   |
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| Elliott gave me the go, STZ gave me some Sidestepping Part 1 |
| Friday, December 29, 2006 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
STZ (Constellation Brands)
I thought it might be interesting to look back at a position that has been one of patience. Usually, this type of patience is more than I'm willing to wait. I don't usually see myself as a long-term investor, more like a short to mid-term trader.
When I first looked at this position, I have to admit, I really didn't know who they where, what they did, etc. Of course, why does "knowing what they do and who they are" mean anything to the technical trader? To some it does, to others it doesn't. For me, I like to know a little something about the company (at least it doesn't make you look like a fool if someone asks you about it).
I did read up a little on the company. Went to their website, looked at the SEC reports, scanned for insider transactions, then it was on to the charts and indicators.
Lets go into my ProfitSource now. Although I have a chart saved with all the relevant info from back then, I thought it might help myself and maybe others to show some progressive steps. Here we go.
Here is a current shot of the software, but I want to look back to the date I first started looking at the position. In order to do that, I need to change the date in the software from the current date.
For those of you still moving around in ProfitSource, the field is highlighted in the screen shot. All you need to do is Uncheck the "Use current data" checkbox, click on the drop down arrow after the date, and select which date you want to go back to. I first started looking at this position on 10-16-06, so we will change it to that.
 Now that the date has been changed, we can see that STZ is listed under a Wave 4 Buy signal. This is the first day that STZ appeared on the the precomputed list of ProfitSource. Pre-computed you say, yes precomputed. HUBB, the providers of ProfitSource, provide scans of the entire market for Elliott wave set-ups. When I say provide, I mean that all the data can be downloaded without you having to do the scans yourself. This does not always give the best results, but it doesn't always give the worst either. Like I send in a previous post, "Elliott Wave is not the only thing" so don't think its your pathway to riches. It is just another indicator that has helped me understand the market. More times than not, I am overlaying Elliott wave with other indicators. Note: Watch out for overlaying...it can drive your eyes buggy.
Continued in Part 2
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 1, Profitsource, Wave 4 Buy |
| posted by Fibonacci_Trader @ 11:47 AM Add to: DiggIt! | Del.icio.us | blink it | |
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| Re-analyzing The Elliott Wave System |
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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 Add to: DiggIt! | Del.icio.us | blink it | |
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| The Journey Begins! |
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PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
The primary purpose of this blog is to expose my own weaknesses in my trading behavior. There is no better way to force conviction then to post it for all to see.
What's my trading style:
- Directional System trader
- Contrarian motivations
- Technical analysis with fundamental toppings
What do I trade: (this may change)
Why do I trade: (this may change)
- Eventual lifestyle change for family and loved ones
- Constant Challenge in a always changing field
- Probability and Math junkie that thrives on figuring out why things do the things they do
Do I use any software or subscription services?
- ProfitSource - There are probably many people out there that think they have been swindled into buying this software, but my view is completely different. The software has limitless possibilities for back testing systems, and the interface is very intuitive. If you have a 30-day trial, you probably won't get the true feel of the software. For me, I started changing my view about the software after about 45-60 days. Be aware though, I was tweaking with the software an average of 30 hours a week. The bottom-line (I hate when people say that) is everyone has to make a judgement call as to what they think they need.
- Optionetics Platinum - Primarily being an option trader, I don't see how you can get a better bang for the buck. I believe they offer a trial subsription, but if you don't know anything about options...save your money until you understand a few key concepts.
- Wall Street Journal - Have it as my general reading
- Investors Buisness Daily - Better than the general reading of the WSJ
What I've Read:
- I'm going to post this is another section
Trading Demons I've battled with:
- Undisciplined trading - No trading plan or lack of a system
- Making trades on emotion - Boy that will kill ya
- Hoping something will make a move - I hope it moves up today!
- Praying something will make a move - "Lord, If you have it make a move in my way, I will never be an undisciplined trader again"
- A belief in divine intelligence - "hey i was right before...damn I'm so smart"
- Taking on positions that I don't fully understand
- Lack of Money Management - "Lets put all the eggs in this basket"
- Fighting the Market trend
- I could go on and on.
I could go on and on, but this is good for a start. This blog should keep me honest, and I hope it can help some others along the way.
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Bio, Introduction |
| posted by Fibonacci_Trader @ 11:43 AM Add to: DiggIt! | Del.icio.us | blink it | |
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