This is about how an Elliott wave trader or analyst should begin a new financial year.
What does he need to check? What should be the very fitst steps before jumping in the hot waters of the financial markets?
Obviously, this is an essential Elliott wave trading article for those who want to avoid being a crab in a cold water that will surely begin to heat up as the temperatures begin to rise from mid February. Be sure to read it in full today. Let's get started.
Importance Of Elliott Wave Preparation
It does not matter what one wants to achieve, a prudent preparation is always helpful. The same principle must be adherre to by an Elliott wave trader.
January is a month when the financial markets are sending mixed signals about what could happen throughout the year. It is like the first wave structure that Elliott wave traders use to forecast the whole motive wave. Therefore, an Elliott wave analyst ought to take time to interpret the markets up to mid February when it usually begins to quick off.
One also wants to begin to monitor sectors and central banks in view to understand what is really brewing beneath the surface.
It is also useful to review the previous year's wave structures, and isolate distortions, latencies or every bit that one may not have noted.
It is crucial to pause in January because one does not want to rush, and make a wrong move at the start of a new year. A good start is always an advantage.
During that time, an Elliott wave trader will also try to go into the minds other traders and investors in view to anticipate their reactions.
All in all, it can only be prudent and wise to let the financial markets speak first before doing anything.
First Elliott Wave Act
The first thing to do is to begin to analyse major stock indices such SP 500, Dow Jones, Nasdaq and others. Those are preliminary wave analysis. It is not the final product, but just the starter.
Second Elliott Wave Act
Remember to analyse the market leaders of the components of major stock indices or sectors. Those market leaders will surely be leading the trends or corrections in the financial markets.
Third Elliott Wave Act
This is about having easy targets. I mean, one wants to compile both bullish and bearish watchlists using the Elliott wave principle and fundamental analysis.
I use an Android application called Smart News. It is an indispensable app that helps to be in tune with major news including economic news. Please download it onto your Android smart phones. One wants to apply the fundamental analysis, and read news about potential bullish or bearish cows.
There are also investment tips, but one should not use them blindly.
Always do a due diligence in conjunction with the Google acid test. The aim is to go beyond the Elliott wave analysis using an in-depth fundamental analysis to uncover the financial instruments that one will be buying or selling around mid Feb.
Fourth Elliott Wave Act
One that uses Elliott wave principle should not forget to map out charts by drawing the six critical price levels, equilibrium price levels, channels, trend lines and other key support and resistance levels on both yearly and monthly charts at the start of a new year.
Throughout the Elliott wave preparation, one should resist the temptation to buy or sell all over the place. If one is a more advanced market player, one may only take few positions and defend them.
Fifth Elliott Wave Act
Do not just be a trader. Train to become also a long term investor because in many cases long term investors will win the day.
Therefore, identify equities that are good instruments for a long term investment play without ignoring the SP 500.
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Sixth Elliott Wave Act
Be sure to know the current wave in which major indices are. Where are we now? That is an essential question that will help to forecast the markets.
It will also cause one to design a winning Elliott wave strategy.
Seven Elliott Wave Act
There are three market patterns: rising, declining and horizontal channels.
One does not want to forget that the three market patterns will determine the most appropriate trading and investing strategy, one will be deploying. It is common that an Elliott trader forgets to align the Elliott wave forecast with the market patterns. It does not help to keep violating the market patterns.
The SP 500 current wave structure will help one to align financial instruments that one wants to trade in a profitable manner.
For example, a bullish buy and hold investor ought to be cautious if the SP 500 is in the fifth wave or corrective phase.
One must always align the wave trading strategies with SP 500 trading setups in view to avoid going against the current market sentiment.
Ninth Elliott Wave Act
From the start of February, an Elliott wave trader should know what are the first financial instruments, he or she should be closely monitoring.
Please stay focused, and get ready to apply a top-down trading method to enter trades like a professional Elliott wave trader.
Around the 12th of February check the trading volume on the monthly chart. Find out what the smart money has in the menu.
Do not be the first person to jump in, but allow the most influential market players to take position first because they are more likely to support the trend. Be sure to combine the top-down trading method with the Elliott wave forecast. Be a trader and long term investor that uses the Elliott wave principle.
Tenth Elliott Wave Act
Trade or invest only with the 5% of your net worth. Calculate that amount, and set it aside for those purposes. Do not use funds that will leave a bitter taste in your mouth. Stay focused and disciplined, but also agile like a healthy gazette.
An investment strategy must always have defensive measures in place to avoid depleting funds. An intelligent Elliott wave trader must have a plan, strategy, funds and know when to enter a trade without rushing, and stepping on the feet of the giant investors. They do not like that.
New Year Elliott wave is an essential preparation at the start of a new year. It will surely help wave traders and investors have a good start.
A month of a careful preparation will make one more ready to take on the financial markets on the right foot without stepping on the toes of major investors that often dictate trading activities throughout the month of January.
A wrong preparation often leads to a mediocre performance, and one does not want that.
It is time to start doing things differently as an intelligent Elliott wave trader. I wish you a very happy new year Elliott wave.
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