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Thread: My Trading Journal - Wolfe Waves

  1. #21
    Join Date
    Oct 2011
    A, A
    I had seen Constance Brown's Book in the past, seemed to be interesting, really.

  2. #22
    Join Date
    Feb 2013
    Ok so here we go...

    CLM3 (Crude Oil June Contracts) H4 Chart

    My Trading Journal - Wolfe Waves-clm3-h4.jpg

    We have the wolfe wave being formed. Now what's interesting in this chart is the dotted trend line which is parallel to TL 2, 4. I projected this from Point 3 at it nicely contained the short bull rally before reversing.

    Now you might ask why project TL2, 4, from Point 3 and not point 1. The reasoning is quite subjective. Now from my point, projecting this dotted TL from point 3 makes more sense than compared to projecting it from Point 1 (the space is too wide). But that doesn't mean you should not project TL2,4 from point 1. There are cases where this is true as well.

    Anyways, so we are currently riding the Wolfe wave.

    Another point to note is that the ETA/EPA is not always right. As you can see from the chart here.

    So the question is how do we place our target price.

    One option would be to set the TP to the price on the EPA line for the current bar (using the cross hair tool).

    However, a more realistic target price set up would be to simply look to the left of the chart and find out key points of support (for shorting). As you can see from the rectangles, these were areas of previous support, to price is very likely to react to these levels.

  3. #23
    Join Date
    Feb 2013
    Wheat Futures - WW Set up

    Here's another nice set up for Wolfe Waves. While it isn't completely formed, i'm riding the 5th wave. As you can see from the dotted TL, which is parallel to TL2,4 it gives you an estimate on where price is likely to reverse.

    My Trading Journal - Wolfe Waves-wheat-futures-h1.jpg

    Now how do I come with the target price for riding Wave 5?

    I use a technique borrowed from another very simple trading system called Mouteki. You can search for it and the method is very simple, so i'll skip the details of that here.

    So I go to a higher TF and draw a TL on support levels and calculate the estimated price projection. While Mouteki isn't 100% (ie: the projection it gives is not 100% accurate), it does give you an idea of where price CAN head to.

    My Trading Journal - Wolfe Waves-wheat-futures-h4.jpg

    Now once I have this estimate, I then look to the left of the chart. A general guideline would be to set the initial Target level at the same price as P1. Targets can then be moved even more based on what the charts tell you. Usually, closing 60 - 80% of your order and moving stops to BE is a commonly used practice.

    Another key point to note is you need to keep an eye on the fundamentals as it gives more confidence to your trades. For ex: Oil trades i took on previously was due to last Wed's inventories report and the ongoing data that kept showing an increase in supplies. Same with grains as well, and let's not forget the strengthening of the US $ last week. I find this method of trading to be more clear and neat without having to use MA's and so on.

    Stochs is what I find to be really helpful especially for re-entering trades (from a smaller TF)

  4. #24
    Join Date
    Feb 2013
    Wheat Futures - Interesting Developments

    So I closed my positions in Wheat. Price managed to drop a decent level and is currently trying to build up for a move to the upside. Wolfe Wave traders would know that this is the best wave to ride as it gives maximum profits. But the question is, where do you enter?

    In the chart below (which is the same as the previous chart), i'm using a supply/demand indicator & stochs. This is important, to get an idea of what price is going to do.

    My Trading Journal - Wolfe Waves-wheat-futures-h4-1605.jpg

    It is clear in the chart that price touched the demand zone at 692.75 and is bouncing back. Now a little bit about trading S/D zones. You never enter on the first touch, because prices usually tend to re-touch the zone (also known as buyer's remorse or false break outs, which is where most people get stopped out). Also note that price hasn't yet reacted to the TL2,4 parallel yet, which is again another confirmation that there is bit of a downside move left for wheat.

    BUT.. Stochs show a different picture. A buy signal. But on H1, Stochs is still showing some signs for a downward move. Also according to Mouteki's TL trading method, our projected price sits at 662.

    Now what's interesting with Mouteki's method is that prices don't always drop straight to the projected price (it happens maybe 50% of the time). Instead price does a retracement before dropping to the projected price or near the levels.

    Strategy: Daily charts shows continued weakness, so the move to the downside isn't complete yet. Price could go back to either 704, or 700 level (which isn't marked on the chart). H4 Stochs will be the key to entering the position again.

    Overall, yesterday's wheat trading gave a profit of 11.75 points. Trade was closed at 696.5 instead of 685.

  5. #25
    Join Date
    Feb 2013
    Wheat Futures - Re-entry short, TP 686 done!

    Now its time to wait for the right time for price to reverse.

    My Trading Journal - Wolfe Waves-wheat-futures-wolfewave.jpg

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