Welcome to 2012

Happy New Year and I hope you all had a great Christmas holiday.

This is the first blog posting of 2012, the aim is to produce one new post per week, however, at times it may run every 2 weeks or so, if you’re signed up by email you’ll always receive the posts as they’re posted – I am still working on the predictions blog post, I’ve just not had much time over the Christmas break to devote to it and I’ve not forgotten my promise to my Facebook fans of revealing a key secret – I’ll post within the next 2 weeks without fail.

The trade entered and stopped out prior to Christmas (FTSE100) was re-entered during the Xmas break and is still open, I’ll update with charts in a seperate posting – but the trades already profitable and that profit is locked in by way of a stop loss, so off to a winning start in 2012 already, but more importantly it shows that my rules and trade strategy worked.

I had a great time over the Christmas break, I always take extended leave to spend with my family over this period – well to be honest, it’s in the hope of severe snow, so I can get out on the sledges with the kids!  No snow at all this year though!

I have also been reading some really great trading and investing books that I will review in due course – some of which I’m happy to add to my Recommended Reading list – keep a watch for the updated list over the next few weeks.  Click here to view/buy

I’m not making any major changes to the way I trade in 2012, however, I am embarking upon a tough and long journey starting right now (Well I actually started over Xmas) for the next few years I’m going to study and try to understand/learn the works of W.D. Gann – will it work – I don’t know but it’s one of the last areas I have to learn and study so let’s see.  Gann mentions in a few of his books that the market moves in sections usually 3-5 sections – this fits in nicely with the Elliott Wave Principle so I’d be surprised if the two don’t merge somehow along the way.

I’m fairly conversant in the Elliott Wave Principle and learning that has helped me to understand the markets, if you get chance it is a great addition to have – there’s plenty of links to EWI on this site just click on them to sign-up for FREE to the Club Elliott Wave (or click here) – you’ll then automatically receive interesting and thought-provoking reasons as to market positions, news events etc – well worth the effort of signing up for free and if following that you wish to study Elliott Wave in greater detail then the books and courses are great value for money.

Thinking of the Elliott Wave Theory – it is a damn good reason to explain that markets move 5 steps forwards, 3 steps back but over the longer-term that’s why and how civilisation grows and betters previous generations.

Over Xmas I also read Bob Prechters “Socionomics” books – I’m 100% a convert! – There is no doubt in my mind that events are driven by social mood – NOT events happening and social mood pertaining from those events!  The anger surely has to precede the Riots?  that’s what generates the Riots.  It takes a few readings, but after a while it all starts to make sense and I’ve actually used my tiny socionomic knowledge for part of my 2012 prediction.  I’m updating his Socionomic books into my Recommended Reading section – even If you just looked at the pictures! You’d see how everything fits together.

If this interests you (this is a brand new science and way of understanding the markets) then here’s a link to get you started CLICK HERE – this link takes you a 60 min documentary on Socionomics – well worth an hour of your time as it helps pice together events, mood and stock market positions!

Although I don’t trade exclusively by The Elliott Wave principle, I have studied it and learnt the basics to a fairly advanced level, my first response when looking at a chart is to see if there’s a clear wave pattern formed – To me The Elliott Wave Principle is the best explanation of how the markets work, I’ve detailed some basic info below for you – if you want to learn more, then I would recommend as a first port of call clicking through to Elliott Wave for more detail – it will not be a waste of your time.

Learn Elliott Wave Analysis — Free Often, basics is all you need to know. December 15, 2011

By Elliott Wave International

Understand the basics of the subject matter, break it down to its smallest parts — and you’ve laid a good foundation for proper application of… well, anything, really. That’s what we had in mind when we put together our free 10-lesson online Basic Elliott Wave Tutorial, based largely on Robert Prechter’s classic “Elliott Wave Principle — Key to Market Behavior.” Here’s an excerpt:


Successful market timing depends upon learning the patterns of crowd behavior. By anticipating the crowd, you can avoid becoming a part of it. …the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. In markets, progress ultimately takes the form of five waves of a specific structure.

The personality of each wave in the Elliott sequence is an integral part of the reflection of the mass psychology it embodies. The progression of mass emotions from pessimism to optimism and back again tends to follow a similar path each time around, producing similar circumstances at corresponding points in the wave structure.

These properties not only forewarn the analyst about what to expect in the next sequence but at times can help determine one’s present location in the progression of waves, when for other reasons the count is unclear or open to differing interpretations.

As waves are in the process of unfolding, there are times when several different wave counts are perfectly admissible under all known Elliott rules. It is at these junctures that knowledge of wave personality can be invaluable. If the analyst recognizes the character of a single wave, he can often correctly interpret the complexities of the larger pattern.

The following discussions relate to an underlying bull market… These observations apply in reverse when the actionary waves are downward and the reactionary waves are upward.

1) First waves — …about half of first waves are part of the “basing” process and thus tend to be heavily corrected by wave two. In contrast to the bear market rallies within the previous decline, however, this first wave rise is technically more constructive, often displaying a subtle increase in volume and breadth. Plenty of short selling is in evidence as the majority has finally become convinced that the overall trend is down. Investors have finally gotten “one more rally to sell on,” and they take advantage of it. The other half of first waves rise from either large bases formed by the previous correction, as in 1949, from downside failures, as in 1962, or from extreme compression, as in both 1962 and 1974. From such beginnings, first waves are dynamic and only moderately retraced.


Read the rest of this 10-lesson Basic Elliott Wave Tutorialonline now, free!Here’s what you’ll learn:

  • What the basic Elliott wave progression looks like
  • Difference between impulsive and corrective waves
  • How to estimate the length of waves
  • How Fibonacci numbers fit into wave analysis
  • Practical application tips for the method
  • And More

Keep reading this free tutorial today.

This article was syndicated by Elliott Wave International and was originally published under the headline Learn Elliott Wave Analysis — Free. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world
I hope you’ve found this post helpful and useful.

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