, the prior day's high or low may be along wayaway. Their minimum protective stop-loss rule may be much closer.Another trading rule may require a position be closed at a specific profitobjective, say $500, no matter what the outlook for the main trend.As you can see from just these three examples, a trading rule may bevery specific and limiting, or it may only provide a minimum qualificationbefore a trade action may be taken.Your Trading Rules Must Be Your Trading Rules1 am not going to provide an example of a series of trading rules as Iprovided examples with the trading philosophy and trading plan. It iscritical to your success that you develop your own trading rules based onthe objectives of your trading plan and the technical analysis methods youemploy. Developing your own, specific trading rules will require you tothink carefully about your trading objectives and the technical analysismethods you are going to use. I don't want you to even he under theillusion thai someone can do this for you.Some readers may think this is a cop-out on my part. I've presentedanalysis methods and trading strategies. Shouldn't I now provide you witha specific trading plan and trading rules? Don't other authors of tradingbooks provide you with just this? Your trading business is unique. Youwill have goals and objectives different from other traders. But, there isone factor that is common to all successful traders.All successful traders have created their own trading plans and tradingrules, They know success cannot he bought. All successful traders havetaken the time to develop their own trading plans and rules that guide theirbusiness of trading- The Dynamic Trading analysis techniques and tradingstrategies taught in this book provide you with a comprehensive framework of understanding market activity and the position of the market atany time. The trading strategies taught have provided you with simplelow-risk and low-capital exposure trade set-ups.The next chapter, Pulling It All Together, will help demonstrate to youthe practical application of ail that you have learned up to this point. Aftercompleting the next chapter, you will be in a position to develop your owntrading plan, rules and strategics based on your goals and objectives.
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Trading Strategies and Trade Management
Dynamic Time and Price Projections,Energy Levels and the Atomic Partick ModelMost of us are familiar with the model of an atom as a mini solar systemwhere the nucleus is the sun and the electrons are the orbiting planets.This is called the particle model of the atom as opposed to the wavemodel. In the solar system, the distance of the planets from the sun variessomewhat because their revolution about the sun is not a perfect circle, batan ellipse. However, hi the particle model of the atom, the position of theorbits of the electrons are discrete energy levels. That is, the orbitingelectrons are maintained within a definite and distinct energy level anddo not waver in or out of the orbit position or distance from the nucleus.Electrons may "jump" from one orbit or energy level to another, butwill never occupy a position between the orbits. The electron makes thejump without ever passing through the space between the orbits. However,we cannot determine in advance when a particular electron is going tojump from one orbit to another or whether it will jump to the closest ora further away orbit.Our market model may be similar to the solar-system, atomic-particlemodel. Let's consider projected Dynamic Time and Price zones as beingsimilar to the discrete, electron orbit levels. The Dynamic Time and Pricelevels are tike the orbit/energy levels of the electrons. In this model, if amarket exceeds a Dynamic Time or Price level, it will most likely continue to the next "orbit" or Dynamic Time or Price level. They aredifferent in that they are relatively narrow ranges or zones rather thata single, distinct level.In the atomic model, an electron does not spend any time betweenorbits as it jumps from one orbit to another. In our market model, pricemust travel through the "space" between the time and price orbits orlevels. In the atomic model, there are no exceptions to the distinct orbitlevels and jumping from one orbit to another. In other words, the distinctorbits are the only acceptable levels for an electron to exist and theelectron will never reside in the space between orbits.In the market model, we are dealing with probabilities. The greatestprobability is that the market will proceed to the next projected DynamicTime or Price level once one is exceeded, but it is not a certainty. And ofcourse, the market must travel in the space between the projected DynamicTune and Price "orbits."How is the atomic, particle-model of practical value for traders andinvestors? If a market exceeds a projected Dynamic Price level, the oddsfavor that the market will continue to at least the next projected level. Inother words, we have a high probability outlook that the trend will
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continue to a defined objective. The same is true of time. If the markettrends through a Dynamic Time projection (orbit), [he odds favor that thetrend will continue to the next time projection or "orbit."Our analogy of market movement with the solar/atomic-mode] makesan important assumption. The trader or investor has a methodology thatidentifies time and price zones or "orbits" with consistent reliability.Dynamic Traders have just that. While the analogy of the market withthe atomic model is not perfect, it provides an excellent mode] of how amarket typically "jumps" from one Dynamic Time and Price level toanother.
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Chapter 7Putting It All Together
The man who goes to the top as a commodity trader doesnot do as he pleases. He submits to controls, to discipline.He brings his desires into line by channeling his resourcesand strengths into the trades that have a high potential anda high degree of certainly.Roy W. Longstreet
In the Putting It All Together chapter you• Learn how to initially organize all of the informationto clearly understand the position of a market,• Learn how to develop trading plans and tradingstrategies.• Learn how to organize and update the DynamicTechnical Analysis and trading strategies withTrading Log Worksheets.• Leanr how to maintain a structured, patient anddisciplined approach to technical analysis andpractical trading strategies.• Learn a Consistency of Approach to trading.
Putting It All Together
It's Easier Than You ThinkThe previous chapters have presented a vast array of dynamic technicalanalysis techniques and trading strategies. It may seem overwhelming howto put it all into practice to make a trading decision. It's not as difficult asit may seem. This chapter will walk you through the process of whatDynamic Trading technical analysis information and trading strategies toconsider to make the trading decision.The next seventy pages or so will describe a series of bond trades overapproximately a one year time period. Keep in mind that it would onlytake a few minutes a day to keep the information up-to-date. This chapteris quite extensive because of the detailed commentary for this relativelybrief period for bonds.One of the important objectives of this chapter is to help you developa disciplined and consistent approach to your trading. As you study thischapter, keep aware of the consistency of the approach to trading. Thereis a consistency in the time, price and pattern technical analysis andtrading strategies. Only the most basic time and price projections andtrading strategies are considered a pan of the trading plan for theseexamples. The downfall of many amateur traders is "paralysis ofanalysis." Keep trading relatively simple until the basics are mastered.While there may be fewer set-ups mat meet your relatively limitedacceptable conditions for a trade, the chance of long-term success isgreatly enhanced by first mastering the basics.
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Dynamic Trader - Chapter 7
Organizing The Dynamic Trading Technical Analysis InformationThe first step is deciding what information is necessary to make thetrading decision. The previous chapters have described three main factorsof market information that are important: time, price and pattern. Each ofthese factors help to describe what is the position of a market includingidentifying the degree of the most recent trend reversal and how far inprice and long in time the current trend or counter-trend is likely to last.Below are some of the questions to ask to help determine the marketposition?PatternDoes the market appear to be unfolding in one of the specific Elliott wavepatterns? If a specific Elliott wave pattern is not evident, is the market in atrend or counter-trend? What degree?What is the position within the trend or counter-trend? Near the beginning,middle or end?What is the typical outcome of the current pattern position? New trend inthe opposite direction? Minor or major counter-trend?
TimeWhat is the time-range target (Time Rhythm Zone) with a high probabilityof completing the current trend or counter-tread based on the past trendsof similar degree?What are the specific dates (Dynamic Time Projection clusters also calledProjected Turning Point Periods) in the future when the trend or countertrend have the highest probability of completing? Do any of theseDynamic Time Projections fall within a Time Rhythm Zone?PriceWhat is the price-range target with a high probability of completing thecurrent trend or counter-trend?If the market appears to be in one of the specific Elliott wave patterns,what are the support and resistance projections based on the typical Elliottwave price projections for that pattern position?Are there support or resistance projection zones that include at least twodegrees of projections?
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Putting It All Together
Trading StrategiesIf you have a firm idea of the market position, the next step is to determinethe trading strategies. The trading strategies to consider will be dependenton the market position.Trend Reversal Trading StrategiesIf a market is believed to be nearing the termination of a trend or countertrend, protective stop-losses will be brought relatively close to the marketon open trade positions in order to protect unrealized profits and trendreversal trade-entries will be considered.Trend Continuation Trading StrategiesIf a market is believed to be in the midst of a trend or counter-trend, trendcontinuation trade-entry strategies will be considered to initiate a position.Trading LogA trading log like one described in the previous chapter will help to keepthe information organized and help to prevent overlooking any criticalanalysis factor.
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Dynamic Trader - Chapter 7
Trading Philosophy, Plan and Rules For Chapt. 7ExamplesWe must develop a trading plan that provides a definite framework fromwhere to make trading decisions for the Dynamic Trading examples thatfollow. The plan must be simple and easy to put to the test by followingthe activity of a market over time.Trading PhilosophyThe Trading Philosophy provides the general description of the tradingobjectives.The trading objective is to enter trades in the direction of the majortrend relative to daily data. Trend swings usually last two-eight weeks.There are three general conditions needed to consider a trade entry:1. At the coincidence of time, price and pattern which indicates a reversalof trend; 2. At the first correction against the new trend; 3. On a trendcontinuation signal after the market has signaled the new tread isestablished.The initial trade for trend-reversal trade set-up as described in 1 and 2above will always he two-units. A trend-continuation trade set-up willonly be one-unit. Profits will be taken on the short-term unit at the firstprice target The long-term unit will be held to the time and/or pricetargets anticipated for the complete trend.The initial capital exposure on any two-unit position will not exceed5% of the available account equity. The initial capital exposure on a oneunit position will not exceed 2.5% of available account equity.This Trading Philosophy provides the general objectives for thetrading business. Only daily data is considered and the objective is totrade the major swings of intermediate term trends. There is a very limitednumber of set-up conditions that are acceptable before a trade may beconsidered. Capital exposure is limited for each trade-entry. Given theselimitations of the Trading Philosophy, trade set-ups and entrys may berelatively infrequent but should have a high probability of success.
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Putting It All Together
Trading PlanThe Trading Plan provides more specific trading parameters than theTrading Philosophy. Trade-entries are only considered on trend-reversalset-ups at anticipated trend reversal extremes or on the first correctionagainst a new trend,Trend-Reversal Trade-EntryOnly enter a trend-reversal trade when at least two of the three factors oftime, price and pattern are clearly in a position for trend reversal. A trendreversal trade is only made on the close of one of the three daily reversalsignals (reversal-day, signal-day, snap-hack-reversal-day), A trendreversal trade-entry may be either at the trend extreme or first correctionagainst the new trend. Trend-reversal positions will always be two units.As long as a market remains within the time, price and pattern zonesfor a trend reversal, trend-reversal trades are considered. Even if an initialtrend-reversal trade is stopped out, new trend reversal trades will be madeas long as the time and price zones anticipated for the reversal have notbeen exceeded.Trend-Continuation Trade-EntryOnly initiate a trend-continuation trade-entry when the market has madeat Least an initial signal a new trend is established by trading beyond aprior lesser degree swing extreme or beyond the 100% Alternate PriceProjection. Never take more than one trend-continuation trade-entryposition for any trend swing. Trend-continuation positions will always beone unit. The trend-continuation unit will be treated as an intermediateterm unit for stop-loss and profit taking considerations. The maximumunits that may be held for any trend swing will be three: two trend-reversaland one trend-continuation.Profit Taking and the Short-Term UnitProfits will look to be secured on the short-term unit at or near the 100%Alternate Price Projection. Either a profit objective order will be placed atthis projection or the protective stop-loss will be trailed at no further thanone tick beyond the one-day-high or low once this first objective is met.Profit Taking and the Intermediate-Term UnitThe protective stop-loss on the intermediate term units will be brought tono further than one tick beyond the three-day high or low once the newtrend is established by exceeding a prior high or low or the 100% APP.The protective stop-loss will be trailed at the one-day high or low if the
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Dynamic Trader - Chapter 7
market reaches the coincidence of lime, price and pattern projections thattypically wilt complete the trend. The intermediate.-term unit is neverexited on a price profit objective.Every open trade must have an open protective stop-loss order.Never add to a losing position.This Trading Plan is very specific as to the objectives and methodsof trading. While the trader must still make trading decisions, the planprovides very well defined parameters for the context within which tomake trading decisions. There will be a judgment to be made as to theimportance of the time, price and pattern position. Any two traders whohave studied the Dynamic Trading Time, Price and Pattern material inthis book should come to about the same conclusions when viewing anymarket position. There is some judgment to be made as to when the trendis considered established and when the protective stop-loss strategy isadjusted or when trend-continuation trades are considered. Once again,any two traders who have studied this Dynamic Trading material willcome to about the same conclusion at any point in time.Since only daily data is used and there are a very limited numberof trade set-ups that are considered acceptable, acceptable trade set-upconditions will be relatively infrequent. However, the chances of successshould be high as only fairly ideal trade conditions are acceptable. It isunlikely that complete trend swings will be missed, as the trend-continuation trade-entry set-ups should place the trader in the market even after thetrend is established.
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Putting It All Together
Trading RulesWe have worked our way from the very general Trading Philosophy tothe more specific Trading Plan. Now let's add a lew very specific andobjective Trading Rules that may not be violated at any time.Trend-Reversal Trade-EntryTrend-reversal trade-entries may only be made on the close of one of thethree daily reversal signals: reversal-day, signal-day and snap-backreversat-day. The initial protective stop-loss is always placed one tickbeyond the extreme of the daily reversal signal.Trend-Continuation Trade-EntryTrend-continuation trade-entries are only made on inside-day, outside-dayand Gann pull-back set-ups. The initial protective stop-loss is placedaccording to the rules of each set-up.Protective Stop-Loss (PSL) Short-Term UnitOnce a market has traded to the 100% Alternate Price Projection, the PSLon the short-term unit is trailed at no further than one tick beyond the oneday-high or low (1DH-L).Protective Stop-Loss (PSL} Intermediate-Term UnitOnce a market has closed beyond the 100% Alternate Price Projection,the PSL on the intermediate-term unit is trailed no further than one tickbeyond the three-day-high or low (3DH-L).Trend-Reversal Trade-Entry At The Initial Correction To A New TrendThe initial correction to a new trend is usually considered a Wave-2 orWave-B. A trend-reversal trade-entry on the initial correction to a newtrend may only be taken in the 50%-78.6% retracement zone.These Trading Rules are very specific and completely objective. Theydo not provide a rule for every trading condition by any means. They doprovide minimum and maximum conditions for trade-entries and stop-lossplacement that may limit the number of trades but should increase theprobabilities of success for the trade. For instance, for every trade and PSLposition, the rules provide the maximum protective stop-loss by stating thefurthest the PSL may be from the market position. Depending on marketconditions, the trader may decide the PSL should be closer to the marketthan the maximum distance allowed. Now that we have developed a
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Dynamic Trader - Chapter 7
Trading Philosophy, Plan and Rules, let's see how we put what we havelearned about Dynamic Trading together in the real-world.Putting It All Together In The Real-WorldTo demonstrate how to prepare the dynamic technical analysis and tradingstrategies, the balance of this chapter will follow a market for severalmonths. It will view the market in relatively small periods of lime withcomments and chart examples.Admittedly, this is a relatively short period of time with a limitednumber of trade set-ups. The objective is to demonstrate to [he reader howto apply the principles, analysis methods and trading strategies as a marketunfolds. Once the process is learned, it doesn't matter what is the marketor particular, market position. It is more important that you learn how tothink from an analysts and traders point of view than it is to view dozensof out-of-context examples.BondsEvery trade begins with an assumption of the market position based on thedynamic technical analysis. The first few charts and comments willprovide some background of the position of bonds going into the secondhalf of 1994. We will then look at how specific trade decisions are madeonce the position of the market is understood.
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Putting It All Together
What Is The Market Position?Do not consider a trade until you have a firm opinion of the marketposition.Is the trend impulsive or corrective?What is the position of the market relative to the trend?Is the trend in the initial, middle or final stages?What are the time, price and pattern objectives for the marketposition?The pattern of a market trend often provides a firm opinion of themarket position. Bonds made a high in Oct. 1993 followed by a persistentdecline into the summer of 1994, The chart on the opposite page shows awave count that appears to indicate bonds made a Wave-5 low in July1994.Once an opinion is formed of the pattern position of the market, determinewhat pattern must unfold to confirm the market position.The simplest corrective pattern to a five-wave impulse trend is an ABC,zigzag. An A-wave is usually a five-wave structure. Five-wave structuresShould be in the direction of the larger degree trend. A five-wave rallyfollowing the July 11 low would be an important pattern signal to confirmthe July 11, 1994 low completed the bear trend.What is the market activity fa anticipate following the completion of afive-wave impulse trend?Corrections usually reach at least a 38.2% price and tune retracement ofthe prior five-wave trend. We would initially anticipate the same for arally from the July 11 low, if that low completed a five-wave bear trend.Corrections to a five-wave trend are usually greater in time and price thanthe Wave 2 or 4 corrections within the trend. We would initially anticipatethat a corrective rally from the July 11 low would exceed the price andtime of the Wave 2 and 4 corrective rallies.What is the market activity that will invalidate the market position?The failure to complete a five-wave impulse rally would be a strong signalthat [he bearish impulse trend is not complete. This would also indicatethat the rally from the July low may be cither a correction itself or part ofa complex, corrective structure.
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Dynamic Trader - Chapter 7
Bond Major Low?As of late July, it clearly looks as if bonds have completed a five-wavebear trend. A failure to mate a five-wave rally would signal the bear trendmay not be complete.
The chart above is daily continuous futures data, often called spotfutures or first-month futures data. The contract data Is rolled over on thelast trading day to the next most active contract with no price adjustmentsmade for the gap at roll-over. All continuous contracts provide certainproblems, depending on how the data is used. Any continuous contractthat adjusts data backward or forward to "normalize" the data is notsuitable for Dynamic Trading analysis as actual prices are not used. Allnon-adjusted continuous contracts provide some continuity gaps at rollover periods. In most cases, they are not a problem for long term analysis.
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Putting It Alt Together
Spot Futures Data And The Wave-2 CorrectionThe chart on the top of the next page is a close-up of the daily continuous,spot-futures contract for the Nov. 1993 - Jan. 1994, Wave-2 correction,Wave-2s are usually a simple, ABC zigzag. On the spot futures data, theWave-2 appears to be an ABC, irregular correction where the Wave-Bexceeds the low of Wave-1.If a trend change occurs near a roll-over of a continuous contract, thepattern may be distorted. The next page also shows the same period forWave-2 on the March 1994 contract which was traded throughout thisperiod,March 1994 Contract And The Wave-2 CorrectionThe Nov. - Jan., Wave-2 on the March 1994 contract appears to be amore typical ABC correction. Wave-B does not exceed the low ofWave-1. Wave-C is higher than Wave-A,Long term time, price and pattern analysis uses the spot-futures dataand provides the long term pattern and the relatively broad time and pricezones for support, resistance and trend change. Once the long termanalysis is complete, traders look to the actual contract data that will betraded to update the market position and time and price targets for thetradable contract.
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Dynamic Trader - Chapter 7
Continuous spot-futures data: The roll-over from the Dec. 10 March contract occurred afew days prior to the Wave-B low. Distant bond contracts trade at a discount to nearbycontracts which distorted the form or pattern of the data near the Wave-B reversal.
March contract: The March contract traded continuously through the roll-over periodadd shows price did not actually decline below the W.1 low. If a continuous data rollover is made near a trend reversal which may distort the pattern, check the single contractmonth data for that period for the more accurate pattern.
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Putting It All Together
If A Market Doesn't Do What It Is "Supposed" To Do,It Will Probably Do Just The OppositeThe chart on the opposite page is a close-up of the activity immediatelyfollowing the July 11 low which was initially considered the completionof a five-wave bear trend. Through Aug. 2, it appeared bonds had completed a textbook Wave-1 and Wave-2. Wave-1 (7/11L-7/20H) was clearlysubdivided into five minor degree waves. Wave-2 was a perfect ABC correction making the low just three ticks below the 50% retracemcnt Thesharp rally above the Wave-2 high signaled Wave-3 should be underway.What is the market activity that validates the opinion of the marketposition ?If July 28 is a Wave-2 low, Wave-3 should reach a price range ofapproximately 162% of the price range of Wave-1. A decline below thelow of Wave-2 would invalidate the oudook that a five-wave impulsetrend began from the July 11 low.Bonds made a top on Aug. 2 and declined to below what wasconsidered the Wave-2 low. The decline below the Wave-2 lowinvalidated the outlook that an impulsive, five-wave rally began from theJuly ] 1 low. The rally to the Aug. 2 high must be considered corrective.Could it be a completed ABC correction of the five-wave bear trend fromthe Oct. 15, 1993 high to July 11, 1994 low? No. The rally lasted just 22CDs white The bear trend had lasted over 200 CDs. This July-Aug. rallywas probably part of the Wave-4 correction that was originally consideredto be complete at the June 6 high.
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Dynamic Trader - Chapter 7
The market activity following the July 11, 1994 low did not unfoldin an impulse trend. II was loo short in time and price to be considered acompleted ABC correction to the Oct. 1993 - July 1994 bear trend. Thebest alternative is that it was still a part of the Wave-4 correction.If the rally was not impulsive, then it mast be corrective. What doesthat imply? The bear trend should continue to new lows below the July 11,1994 low.Have an opinion on what the market should do, but don rt decide what themarket will do. - Bernard BaruchEvery decision is made from the basis of an opinion which is a resultof our interpretation of the facts at hand. Never be afraid to form anOpinion of a market position. But be very afraid of expecting the marketto fulfill that opinion. One of the primary causes of failure is traders orInvestors who hold onto an opinion of the market position long after themarket has invalidated me opinion. That is why no opinion should beconsidered out of context of the activity that will invalidate the opinion.
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Putting It All Together
Trading Strategies Are Related To The Market PositionWhen you have developed a firm opinion of the market position, formulatetrading strategies.The chart on the next page shows the most probable adjusted wave count.It is assumed Aug. 2 completed a Wave-4 (irregular ABC) con-fiction. TheAug. 2 high was made at the coincidence of the 78.6% retracement and100% Alternate Price Projection where W.c:C:4 = 100% W.a:C:4. Aug. 2was also the 61.8% Time Retracement of the prior decline and the 100%Alternate Time Projection where the time range of W.C4 = 100% of thetime range of W.A:4. The Aug. 2 reversal-day high was made at thecoincidence of projected time and price.Since we now have a confident opinion of the position of bondsthrough the Aug. 2 high, we can begin to consider trading strategies totrade what we believe will be Wave-5 and the final swing down fromthe Oct. 1993 high.Only formulate a trading strategy and consider entering a trade once youhave a confident opinion of the market position and have identified whatmarket activity will invalidate that opinion.
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Dynamic Trader - Chapter 7
The Bond Market Position As Of Mid-Aug., 19941. The Aug. 2 high completed Wave-4 of a five wave count beginningwith the Oct. 13, 1993 high. A Wave-5 decline should take bonds to anew low below the July 11 low without exceeding the Aug. 2 high2. If Aug. 2 is a completed Wave-4 high, trading strategies should prepareto enter either on the Wave 2:5 correction or on a trend-continuationsignal following a confirmation the Wave-2:5 top is complete.3. A Wave-2 usually retraces 50%-78.6% of Wave-1. A Wave-2 is usuallyan ABC, zigzag correction.4. This bearish opinion of the market position is invalidated if the Aug. 2,1994, Wave-4 high is exceeded.
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Potting It All Together
What Is The Dynamic Trading Analysis That Is Relevant To TheMarket Position?Now that we have a firm opinion of the market position including themarket activity that will confirm or invalidate the opinion, it is time toidentify the Dynamic Trading analysis factors that are relevant to thetrading strategies.Price: A corrective Wave-2 usually terminates in the 50%-78.6%retracement zone.102.25-103.27: 50%-78,6% retracement of Wave-1, (8/2H-8/12L)Time: There are two periods following the Aug. 12, Wave-2:5 low withclusters of Time Cycle Ratios.Aug. 23-24: Includes the 100% Time Retracement of W.1, 100% SecondMinor Alternate Time Projection (7/11L-7/20H from 8/12L) and others.Sept, 1-5: Should be the maximum time period lor W.2:5 correction,Includes the 100% Alternate Time Projection (7/11L-8/2H from 8/12L),162% Time Retracement and others. See the chart on the opposite page.Pattern: Ideally, a symmetrical ABC pattern would evolve. Even if theideal corrective pattern does not evolve, trades should be considered aslong as the market has not exceeded the extreme anticipated time and/orprice projections for a corrective high.Initial Trading Strategy: Enter on the close of a daily reversal signal ifmade within the 50%-78. 6% price retracement. If a trend-reversal signal isnot made, enter on the first trend-continuation signal following a declinebelow the Wave-1:5 low.
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Dynamic Trader - Chapter 7
Trade Preparation and Initiation WorksheetThe worksheet and chart on the next page show the daily bond activityfollowing the Aug. 2 high through Aug. 16, the day bonds rallied into the50%-78.6% retracement zone.The worksheet provides all of the relevant information regarding thecurrent market position, time and price projections and signals that willconfirm or invalidate the opinion of the market position.Bonds completed the Wave-1:5 low on Aug. 12. Wave-l:5 subdividedinto five minor waves. Three trading days later on Aug. 17, bonds made aminor high on a signal-day just below the 78.6% retracement Since a78,6% retracement is usually the maximum retracement anticipated for 4Wave-2:5 correction, a two-unit, short position (short and intermediateterm units) is taken on the close of the signal-day with a stop at 103.24,one tick above the high of the signal-day.The chart on the Trade Preparation and Initiation Worksheet does notinclude the market activity after the date the worksheet was first prepared,Aug. 16. The Closed Trade Critique Worksheet will show all of themarket activity for the period of the trade.Review the Trade Prep worksheet on the next page and you will seehow simply and concisely all of the relevant information is together in oneplace.
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Putting It All Together
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Dynamic Trader - Chapter 7
Trade Summary (ST=Short