FOREX Wolfe Waves
This strategy is one of the most effective "copyright" strategies of our time. Many traders will show a truly amazing results, when fully master the technique Wolfe Wave. However, we do not advise beginners to use the system. It is quite complicated and requires full concentration. This system is for those who have already managed to understand the forex market.
Below is the full article from the book Raschke and Connors. In other words, we suggest that you familiarize yourself with the strategy Wolfe Wave "first hand".
This particular methodology is perhaps the most unique and effective trading technique, which I (Linda) ever come across! She developed and offered by my good friend Bill Wolf. During the past 10 years, he earns a living by trading S & P.
His son Brian also sells S & P. Brian first met my teenager consistently make good money in futures scalping NYFE1 from his apartment. Brian is now 21 years old, and he extended the trade in "waves Wolf" to other markets.
The theory of wave patterns Bill based on Newton's first law of physics: every action has a reaction. This movement creates a clearly defined wave with valuable opportunities projection. Most clearly, this wave is formed when there is good volatility. Little practice, it is easy to train your eye to quickly identify these models.
following rules make sense when you consider some examples. Please note the unusual sequence in the count. As you can see, it is necessary for the inductive analysis.
Starting from the top or bottom on the bar graph, we define the starting point of our reading of the new wave. This count is for a buy. We begin counting from the top. (Score wave was conducted to the contrary, if we were starting from the ground, trying to find a scheme of sale).
Wave number 2 - the top.
A wave number 3 - the first decline reason,
Wave number 1 - base prior to wave 2 (top). Point 3 must be lower than point 1.
Wave number 4 - the top of wave 3. Point of wave 4 should be above the bottom of wave 1
trend line is drawn from point 1 to point 3. The extension of this line of projects anticipated reversal point, which we call wave 5. This is the entry point for the movement to the line of the estimated final price (1-4).
The estimated final price (Estimated Price at Arrival, EPA) - the trend line, drawn from point 1 to point 4, allows to project the expected price target. Our initial stop is placed just below the newly formed reversal at point
He can then quickly move to breakeven.
you can not start looking for "a wave of Wolfe," until the point formed by 1, 2, 3 and 4. Do not forget, for a buy point 3 must be below the point of I. Scheme for selling it should be higher than point 1. In addition, the best waves point 4 will be higher than point 1 for a buy and below 1 for a sale. This ensures that absolute runaway market conditions do not exist.
Now, study the examples and see if you can train your eye to begin to see the scheme of "Wolf waves".
Example 15.1 shows what it looks like a "wave Wolfe," when it begins to take shape. Points 1, 2 and 3 are to be formed. Point 2 should be minimum or maximum significant fluctuations. Then, between 1 and 3 is the trend line. It projects, where we should expect to point 5.
Example 15.1. S & P - 60-minute bars, fragment.
Point 5 is formed. We will buy at the turn of the field and put a tight stop just below. If we draw a line trend from point 1 to point 4, it should give us a price projection.
Example 15.1A. S & P - 60-minute bars, fragment.
price reaches the target with a potential gain of 12 points! Example 15.3. Sugar - 10-tick bars.
CSCE World Sugar # 11 - SBH6
Point 2 - the initial starting point of the model. It always seems easier to start counting at this point. Then give it back and find the points 1 and 3. Do not forget that point 4 must be higher than point 1. Drawn by our trend line projects a point 5. At this level the market finds support, so we go long at the market and place a stop slightly below the 5. The market traded up to its goal.
Example 15.4. S & P - 5-minute bars.
is an example of "Waves of Woolf's" five-minute chart. In this structure, we find time for a week in the market S & P from three to six circuits. A trend line connecting points 1 and 3, projecting our area buying market is very often little point runs beyond 5, so you should wait until the price will unfold above the trend line, and only then open the transaction. In this example, we buy at the market and place a stop below the minimum. The market then in the next hour grows by two points!
Example 15.5. Canadian Dollar - December 1995.
Point 2 - starting for this reference. (We can find a point 2 only after it had already formed the points 1 and 3.) Point 2 is not necessarily long-term trend reversal, it is enough to make it high or low large fluctuations.
My friend Dan sent me this graph, when point 5 is formed. I shook my head and said that the market had seemed so strong - how could he fall! He very nearly got to the predicted line. I do not think anyone could have imagined this scenario in a while. (Note the model "Splash and a shelf," which dropped out of the market)
Example 15.6. Boeing (BA) - 1995
This is an example on the chart action. Point 2 - at least large fluctuations. Point 4 below the point of I. A trend line connecting 1 and 3, predicts a point 5, where the market reaches a price target up to a tick! Again, as an example of the Canadian dollar, the deal is not quite reach the predicted target on the downside. However, this drop of 10 points was a lot of opportunities to take a good profit.
Example 15.7. SPZ - a 10-tick bars
It took me a while to get hand on finding this model. Now I try to look for them on all their plots. I enjoy watching them evolve.
weight in my office watched as an example to take shape with 60-minute S & P, as shown earlier. None of us could not believe it when the predicted target was achieved. Local group of followers, "Wave Wolf" became faksovat this schedule each other. Of course, none of us caught a movement. Some are lucky and they used this model to exit a short trade at 5, but Brian opened a long position is almost directly under! »
Raschke and Connors