Example of a true Type 1 trade

[jkeech]

Hi, can someone please show me an example of a 'true in every respect' (see below) type 1 trade.

Looking at the following criteria (direct form the Adv GET manual) -they seem very few and far between:

In the case of a type 1 buy ...

1) confirmation break through DMA - closed above DMA then traded at or above the high, the following day;
2) using this entry point - the profit to loss ratio from entry to the MOB must be at least 1.5 times the entry to stop loss point (2 Fibb levels below entry).

I just cannot find any trades which meet specifially the ratio of >=1.5 when using DMA breakout for entry and stop loss 2 Febb levels below. There just doesn't seem to be the profit available in a type 1 trade to satisfy a profit to loss ratio of at least 1.5 using hte above entry point and stop loss levels.

Many thanks, John.

[jkeech]

Thanks Linus - but unfortuantely this doesn't really help specifically with my query.

I'm looking for where we have some eaxmples of type 1 trades which match the Adv GET EOD manual - speicifcally with DMA breakout as entry and a profit to loss ratio of in excess of 1.5

Regards, John.

[fabrizio]

Jhon

Please explain exactly your needs not answered by the manual and /or by Marcus to and I'll try to support you.

Originally posted by jkeech
Thanks Linus - but unfortuantely this doesn't really help specifically with my query.

I'm looking for where we have some eaxmples of type 1 trades which match the Adv GET EOD manual - speicifcally with DMA breakout as entry and a profit to loss ratio of in excess of 1.5

Regards, John.

[jkeech]

Ok, many thanks -

The manual says for a type 1 trade that the profit to loss ratio should be at least 1.5

My understadning is that this is taken by comparing the difference in $ range of the MOB from the entry point, to the difference in $ range of the stop loss level from the entry point.

The manual says to make your stop loss two Fibbonacci levels away from the entry point.

In a type 1 buy for example ... using the entry point where the stock price exceeds the previous day's high, where the previous day also closed above the DMA - I just can't find many (if any) trade opportunites where the P/L ratio is at least 1.5 based on the above guidelines from the manual. Could you please show me some examples or point out where I am in error?

Many thanks again, John.

[fabrizio]

Originally posted by jkeech
Ok, many thanks -

The manual says for a type 1 trade that the profit to loss ratio should be at least 1.5

My understadning is that this is taken by comparing the difference in $ range of the MOB from the entry point, to the difference in $ range of the stop loss level from the entry point.

The manual says to make your stop loss two Fibbonacci levels away from the entry point.

In a type 1 buy for example ... using the entry point where the stock price exceeds the previous day's high, where the previous day also closed above the DMA - I just can't find many (if any) trade opportunites where the P/L ratio is at least 1.5 based on the above guidelines from the manual. Could you please show me some examples or point out where I am in error?

Many thanks again, John.

Ok let's see if I can help you .

A) Let's define what a Type 1 buy (or sell, in this case buy) is: you buy "with the trend" assuming that you are going to catch the lowest part of the W4 ( the 4th movement in an 12345 movement whereas 1,3 , 5 are Impulsive UP and 2, 4 are Corrective DOWN movements)
So you look for the beginning of a W5 , to enter a trade in the safest position possible.

Tom Joseph created 3 tools to identify this moment:
1) The 3 W4 Colored Channels
2) The 5/35 Oscillator
3) The PTI or profit index Indicator.

Assumption: you have to be in a CLOSED W4

So at this point you are looking to a " Good W4 Setup"

Note : among this 3 element the W4 Channel is the less important; pay attention: the 3 channels gives you the clue to recognize if the upcoming W% will start in a safe manner or will eventually have you stopped several times in its way up.

Look at the whole picture and answer yourself to this very simple quewstions:

a) Is the 5/35 (or the 10/70) back to zero and not belo 1.40 (-140% from the highets point of the W3 oscillator point) ?

b) Are the oscillator acting at the unison in the setup?

c)Is the PTI ABOVE THE VALUE OF 35?

d)W4 is closed (labelled) or still a projection?

e) Any key Mob supporting the set up?

f) Any 6/4 DMA or Regression Channell confirming or setting up to confirm a W4 breakout coming?

g) Is THE R/R at least of 1.6 or better under the current W4 set UP?

All the answer should be YES

Now :
Make the Xref with different Timeframes:
h) Any other TF is confirming the setup? Assume you are on 15 Min , check on 30 and on 60.
Answer: YES

There is at least 6 or 7 more questions but stay with those: plus two:
-Are W1 and W4 close to everlapping ( remeber for this moment W4 should never overlap W1) if not how far are they?

-How is the stochastich?

Ok now you got the whole picture : and ready to roll .
You can judge your trade as doable, enter it with your stop either with the manual rule or more aggressive one ( means lower); ( the 38%- (actually62%) it is a safe approach: remeber that you are looking for a W5 so a fearly long wave, so you can surely find a 1.6 R/R ratio )
and go looking for your target or an even higher one .

Do not forget to trail your stop if you are in a good Profit.

Hope I'v been helpfull.

[fabrizio]

Sorry for the Typo, but sometimes the browser doesn't allow me to edit posts.

Should there be some " doubt" let me know.

[jkeech]

Hi and thanks for your comprehensive answer ...

Could you please clarify & explain what you mean by the following though -

b) Are the oscillators acting at the unison in the setup?

g) Is THE R/R at least of 1.6 or better under the current W4 set UP?

* the 38%- (actually62%) it is a safe approach: remeber that you are looking for a W5 so a fearly long wave, so you can surely find a 1.6 R/R ratio - what do you mean by R/R ratio???


Now, some additional stuff here ... I use Advanced GET EOD. Most things in this forum however tend to relate to eSignal GET(?), and there seems to be some subtle differences. What is the difference in the two products?

I use only EOD, so I'm generally looking at DAILY charts and perhaps confirming with a WEEKLY.

Using type 1 buy as an example again ...

You've said some good stuff there and thanks for that. I feel I know most of the basics, but I'm still stuck on my original question - lets say everything is correct for a type 1 trade using the criteria you highlighted. We cannot get into the trade at the bottom of wave 4 though as we're waiting for confirmation through a DMA breakout (or regression channel if tight enough). So, my question again - I can't find a trade where the profit to loss ratio exceeds 1.5, if you enter around this breakout point (or a little later by the rules) and use the MOB and stop loss (2 Fibbonacci levels under the entry point) to calculate the profit to loss ratio. There just never seems to be sifficent profit in the expected move, unless you're prepared to use a much tighter stop (like the wave 4 low for example) ... which is not as per the manual.

What have I missed here, or is it just not possible to get a profit to loss in excess of 1.5 using the MOB and stop loss points as described???

Many thanks for your assistance, John.

[fabrizio]

b) Are the oscillator acting at the unison in the setup Meaning: Osc should be all in the same sense (unison) all up or all down
g) Is THE R/R at least of 1.6 or better under the current W4 set UP? meaning: the projection on a specific time frame that can safely make you think that there is not obstacle towards an UP movement cosnistent with your Target.( like a Mob, or any resistance or gann line ot T&P crossing or a TJ WEB or a RTC breakout, or an XTL.....) for I believe that once you decide your trade decide your entry as well got some parameters for your exit..I hope.


* the 38%- (actually62%) it is a safe approach: remeber that you are looking for a W5 so a fearly long wave, so you can surely find a 1.6 R/R ratio - what do you mean by R/R ratio???

R/R RATIO= risk/reward ratio. Meaning:
Do you invest 1 dollar in a risky situation to get if you win 0.50 dollar ? so if you do it you Risk to loose 1 $ with the eventual aim of getting 50cents. Is it worthwhile? U
If there is no risk at all ( TBOND or USA TREASURY NOTE) YES.
But a derivative market ( or a stock market) include a various degree of risk that have to be compensated by a "PREMIUM" wigìch is represented by a HIGHER RETURN IN GAINS THAT- BY ASSUMPTION- ARE NOT SURE AT ALL AS INSTEAD ARE IN A BOND STATE GUARANTEED; so that R/R ratio of 0.50 that could be FANTASTIC in the other case ( if ever would be possible but actually is not since you got 0.00000.... daily and this is called the "alternative cost of capital" ) but cannot be acceptable by THIS kind of Investment. So you look for:
160% (1.6) 200% (2.0) 300% (3.0) Risk reaward ratio.
THE RR ratio is even function of your stop. and so on.
So you will INVEST and RISK 1 $ to get if you are profitable 1 Dollar and 60 cents, so that you can go and buy the newspaper free with that additional .60 cents . And it is FREE!!!! ( less commissions)

For the other question the answer is given in the other post.
You are in a sliding chair that goes bach and forth: only you can decide when and if enter a trade and only you can decide when close that position . Unfortunately there is no bullet proof rules. I often I enter type one buys with oscillator not on the unison and with no DMA in consideration BUT never with a PTI lower than 35
. And I can be successful. with a targets of 10 and 15 points in scaling out with 15 contract on ES . Or be miserably stopped 5 or 6 points below with a W4 that continuos to go down.

If you follows all teh rules you have most of the chances to be successful: but you got FUTURES not US BONDS: so nothing is assured. Only you again are the master of your money , sliding your chair back and forth .

I reiterate Marcus advice: join his group, read all his papers, get acquainted with the .png trades that he posts and buy the tapes from TJ they will be of a great help in your trading activity.
Buckle up.

I Hope it Helps

[jkeech]

Ok, so this may be my error ...

I'm looking for a $1.50 possible profit (on top of my initial investment) for every $1 possible risk/loss. Therefore, if the trade loses I may lose $1. If the trade wins I will get $2.50 less my $1 investment capital = $1.50 profit. Would this be an R/R of 2.5 rather 1.5?

So, should I be looking for only $0.50 profit (therefore $1.50 return less investment capital of $1 = 50 cents profit) for every $1 I stand to lose?

Basically, this would mean my risk is 100% and my maximum reward is a 50% profit on my investment capital for the trade.

So, it seems I was looking for 2.5:1 instead of 1.5:1 ???

[fabrizio]

Correct.

[jkeech]

And you use 1.6 instead of 1.5 ?

Is this what Advanced GET teaches - ie generally used by traders using EW strategies?

Thanks again, John.

[MR]

John,

Type 1 trade logic originated in the 1980's when Tom Joseph, one of the best traders I have ever met, tried to figure out ways to better trade the dynamic Futures trading markets. Futures’ trading is exceptionally hard, no matter how you count it.

Hence, Fibonacci stop loss logic offered on page T-44 of the AGET Technical manual. It forced discipline before taking a trade. It is a strategy I still use today when I define strategies for handling "worse case" scenarios.

The past decade, fortunately, this stop loss logic has evolved as we added more sophisticated AGET tools. We now have the excellent MOB, Ellipse, XTL, 6/4 DMA and Regression Trend Channels. We can pinpoint risk/reward possibilities better and can stop losses quicker, which enables us to reposition later easier instead of riding a loss that grows bigger. These tools did not exist in the original Type 1 Buy history.

The BBS forum and this tread really does not allow me to define in great detail a more complete answer to your Type 1 trades questions.

I would strongly encourage you to look at the following links. They will improve your ability to identify and execute Type 1 trades with higher risk/reward ratios.

Yes, there are fewer “perfect” Type 1 trades. As long as we live in an imperfect world we really should be focusing more on trying to figure out how to improve trading under imperfect world conditions.

That is what I try to do when I post Type 1 ideas at “Trader’s Outlook” and at the Advanced GET User Group sites. I try to update AGET Users to the easy and the hard Type 1 setups.

Also, below the links should be a sample Type 1 setup, highlighting some of the questions you asked earlier.

Links you need to check out for more Type 1 setup information:

http://markets.advancedget.com

http://share.esignal.com/groupcontents.jsp?folder=1%20Welcome&groupid=20

http://share.esignal.com/ContentRoot/Advanced%20GET/Answered%20Questions/Good+Wave+4.pdfvc

http://share.esignal.com/groupcontents.jsp?folder=Answered%20Questions&groupid=20

http://share.esignal.com/groupcontents.jsp?folder=Elliott%20Oscillator&groupid=20

http://share.esignal.com/groupcontents.jsp?folder=Wave%204%20Channels&groupid=20

http://share.esignal.com/groupcontents.jsp?folder=PTI&groupid=20

http://www.advancedget.com/Support/...ads/PracApp.pdf

http://www.esignalcentral.com/training/get/default.asp

http://install.advancedget.com/GETDemo.exe

http://www.esignalcentral.com/train.../tips/page3.asp

http://www.esignal.com/education/li...ley/default.asp

http://www.infowire.net/td/html/syn..._newslette.html

https://esignaltraining.webex.com/e...444477386376449

http://www.esignal.com/events/default.asp

[jkeech]

I note Marc in one of your documents you talk about W4 and W1 overlapping.

I presume this means that in a type 1 buy scenario that you're looking to see if the W4 end has come down in price to near where the W1 completed?

I actually thought this was a bad indication, I guess I'm wrong though - is it actually better for the W4 to be down near, or at the level of the W1 end?

Thanks, John.

[MR]

John,

I would encourage you to read this article again. I think
you may be missing the intent and purpose behind it.
It may not be a good Type 1 setup, but it technically still
is a possibility. That is all I am saying.

Click to see this article

In page T-26 in the AGET Technical manual it says the following:

"WAVE 4 SHOULD NOT OVERLAP WAVE 1. (RULE/GUIDELINE)..."
"this means the end of Wave 4 should not trade below the peak
of Wave 1. This rule cannot be violated in cash markets. In the
futures markets, a 10 to 15% overlap can be allowed. However,
Use an overlap as a last resort."

I return from vacation in a week. If you still desire to explore this
subject, I will return to it and be willing to discuss it further.

[jkeech]

Many thanks Marc.

Best regards, John.