I get asked all the time why I use Elliott Wave Theory (EW) even if I keep saying it doesn't work on its own. The key to this theory is to recognize patterns to help with some of your other analysis. I use many things to help me with analysis and recently I have been delving into planetary cycles thanks to Platy.
We all wish we could be as good or trade like GANN, but knowing what he knows is just one of many traits he had to trade successfully. I find that personality plays a big part in ones trading lifestyle. We need to be curious enough to keep looking for that elusive answer, and we need to have patience, and nerves. If your the type to just want the answer you will never get it. Its a life long process that Gann have been blessed with finding. If only we could all be so lucky. Many who studied his system end up concentrating on only parts of his work, probably because they don't have the patience to go through everything and find that what they are doing is enough.
I started my technical trading using typical trend lines back in the day and that proved inefficient, then I went on to EW. This also proved to fall short on its own even though I can say that I have become good at counting waves. The problem is that with 21 patterns, every turn gives you more possibilities its like a road that branches off and when you turn into your left or right more roads pop out. You might be able to eliminate half of the patterns.. but you still have less than a 50% chance of finding the pattern as they can subdivide or extend and they can all eventually come to the same conclusion, but one wrong count and all your counts are wrong. Playing roulette back in the day allowed me to think about my chances in succeeding and I apply that same mentality today.
I can better my chance with roulette than the 50% that people say it to be. You see roulette has numbers and colour. The colour does not pay out big, but if you were to look at the previous trends then you can at least increase your chance that the colours would change. (if for the last 3 or 4 rounds the red has been popping up then you know a black will eventually come out of hiding), you wouldn't put your money on red if the ball has landed on red 8 consecutive times would you? Winning small for longer time is better than winning big and losing more later. The trend is important as well as the time but if I'm not good with time I wouldn't go into trading stocks using a tool I don't know how to use. Im sure all trading tools work once you know them but if it was easy everyone would be using it. Just pick your weapon of choice...
What I do know is Time Frames. This is different from Time Cycles, but I am sure in my career I will eventually be able to link both of them together. Right now though keeping your trading tools simple is KEY.
You maybe able to get your hands on many indicators, trends, and patterns but you need to know how to use them. It confuses the mind to have so many charts and indicators, so when it comes to trading time.. just keep it simple (KISS). During the day I have many charts open and spread out over 5 screens. But I only have 1 screen that holds 3 to 4 of the same charts in different time frames and in that I will only have PRICE, MA maybe a BB and STOCHASTICS. Most of the time though I only look at the Stoch.
Believe it or not you don't need a lot or any. You just need to know how to use "ONE" and know how to use it well.
Part 2 will be posted this weekend.
No comments:
Post a Comment