Saturday, January 06, 2007

The Safeguards

To operate effectively in the trading environment, we need rules and
boundaries to guide our behavior. It is a simple fact of trading that
the potential exists to do enormous damage to ourselves—damage
that can be way out of proportion to what we may think is possible.
There are many kinds of trades in which the risk of loss is unlimited.
To prevent the possibility of exposing ourselves to damage, we need
to create an internal structure in the form of specialized mental discipline
and a perspective that guides our behavior so that we alwaysact in our own best interests.

Sunday, December 31, 2006

Mike Davis says:

For most of us, this is the eternal struggle trying to define a reversal or correction. You get some help with the rule of alternation as quite often, if 2 is simple, 4 is complex or visa versa. At least that is what a lot of the wave people think.
The Measured moves happen a lot but as you point out, differ in outcomes. The only thing that might help you realize what is happening in the first wave down is the count and pattern of the previous move up.
With the waves, there is always an alternate count lurking around. I try not to get too stuck on the wave counts and hope that the win/loss percentage helps pick it up.