Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
1987 Stock Market Crash 30th Anniversary Greatest Investing Lesson Learned - 19th Oct 17
Virgin Media Broadband Down, Catastrophic UK Wide Failure! - 19th Oct 17
The Passive Investing Bubble May Trigger A Massive Exodus from Stocks - 18th Oct 17
Gold Is In A Dangerous Spot - 18th Oct 17
History Says Global Debt Levels Will Lead to Another Crisis - 18th Oct 17
Deflation Basics Series: The Quantity Theory of Money - 18th Oct 17
Attractive European Countries for Foreign Investors - 18th Oct 17
Financial Transcription Services – What investors should know about them - 18th Oct 17
Brexit UK Vulnerable As Gold Bar Exports Distort UK Trade Figures - 18th Oct 17
Surge in UK Race Hate Crimes, Micro-Racism, Sheffield, Millhouses Park, Black on Asian - 18th Oct 17
Comfortably Numb: Surviving the Assault on Silver - 17th Oct 17
Are Amey Street Tree Felling's Devaluing Sheffield House Prices? - 17th Oct 17
12 Real-Life Techniques That Will Make You a Better Trader Now - 17th Oct 17
Warren Buffett Predicting Dow One Million - Being Bold Or Overly Cautious? - 17th Oct 17
Globalization is Poverty - 17th Oct 17
Boomers Are Not Saving Enough for Retirement, Neither Is the Government - 16th Oct 17
Stock Market Trading Dow Theory - 16th Oct 17
Stocks Slightly Higher as They Set New Record Highs - 16th Oct 17
Why is Big Data is so Important for Casino Player Acquisition and Retention - 16th Oct 17
How Investors Can Play The Bitcoin Boom - 16th Oct 17
Who Will Be the Next Fed Chief - And Why It Matters  - 16th Oct 17
Stock Market Only Minor Top Ahead - 16th Oct 17
Precious Metals Sector is on Major Buy Signal - 16th Oct 17
Really Bad Ideas - The Fed Should Have And Defend An Inflation Target - 16th Oct 17
The Bullish Chartology for Gold - 15th Oct 17
Wikileaks Mocking US Government Over Bitcoin Shows Why There Is No Stopping Bitcoin - 15th Oct 17
How to Wipe Out Puerto Rico's Debt Without Hurting Bondholders - 15th Oct 17
Gold And Silver – Think Prices Are Manipulated? Look In The Mirror! - 15th Oct 17
Q4 Pivot View for Stocks and Gold - 14th Oct 17
Gold Mining Stocks Q3’17 Preview - 14th Oct 17
U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold - 14th Oct 17
Yuan and Gold - 14th Oct 17
Tips for Avoiding a Debt Meltdown - 14th Oct 17
Bitcoin Hits New All-Time High Above $5,000 As Lagarde Concedes Defeat and Jamie Demon Shuts Up - 13th Oct 17
Golden Age for GOLD, Dark Age for the Stock Market - 13th Oct 17
The Struggle for Bolivia Is About to Begin - 13th Oct 17
3 Reasons to Take Your Invoicing Process Mobile - 13th Oct 17
What Happens When Amey Fells All of a Streets Trees (Sheffield Tree Fellings) - Video - 13th Oct 17
Stock Market Charts Show Smart Money And Dumb Money Are Moving In Opposite Directions—Here’s Why - 12th Oct 17
Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill - 12th Oct 17
Two Highly Recommended Books from Bob Prechter - 12th Oct 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Have You Taken These 4 Simple Steps to Improve Your Trading?

InvestorEducation / Learn to Trade Oct 21, 2016 - 12:22 AM GMT

By: EWI

InvestorEducation

4 Simple Steps to Improve Your Trading

Jeffrey Kennedy is a 20-plus year Elliott wave market veteran. In this new interview, he walks you through his 4-step process of how to find high-confidence, low-risk trade setups.

[Editor's note: The text version of this interview is below.]


********

Alexandra Lienhard: Jeffrey Kennedy is the Chief Commodity Analyst at Elliott Wave International. He has 20-plus years worth of experience as a trader, analyst and teacher. He's joining me today on ElliottWaveTV to talk a bit about how to spot high-confidence trade setups using wave analysis.

Now, Jeff, thanks for talking today. I know it's been a while.

Jeffrey Kennedy: Hello, Alex. Good to see you.

Alexandra: So, I know from reading your analysis over the years that you use a four-step process to evaluate whether to enter a trade or not. It's actually the basis of the 6-session intensive course that you teach, the 4 Elements of High-Confidence Trading. Now, without getting into too much, because you cover it in quite a lot of detail in your course, can you briefly summarize what those four steps are?

Jeffrey: Of course, Alex. The steps are quite simple. Number one, I focus on trend. What's the trend of the market? Number two, I focus on pattern, specifically Elliott wave pattern -- because I'm an Elliottician. Number three, I like to bring in momentum indicators and oscillators -- for example, RSI or stochastic. And the fourth critical element is Japanese Candlestick Analysis. I find it a great compliment to the overall process.

Alexandra: And, talking about all of those steps, it sounds like going through each one of them is a lot like building a case in order to make a trade. You mention a couple of other technical indicators that you employ in addition to wave analysis. Do you have a favorite indicator or oscillator that you use?

Jeffrey: Well, actually, let's go back to your first point, building a case. That's exactly what the 4 Critical Elements course I teach is designed to do. The field of technical analysis is very rich and very diverse; there are a lot of different disciplines under that term "technical analysis," under that umbrella term. For example, you have point-and-figure analysis;, you have sector rotation; you have traditional chart reading -- say, for example, Edwards and McGee type work; and, of course, the Elliott Wave Principle. What I've found over the years is that it's actually best to pull from many different schools of thought of technical analysis and actually build a case. That actually gives you the high-confidence, or the high-probability trade setups that I know analysts and traders are actually looking for.

Now, as far as the second part of your question -- my favorite indicators and oscillators -- I would probably say my go-to technical page for momentum is a combination of RSI, Relative Strength Index, and stochastic.

Alexandra: Now, once you find a high-confidence trade setup, does that mean it's time to jump in?

Jeffrey: Actually, no. It doesn't. All that means is you have potential. You have the potential opportunity. What I then like to look for, and I discuss this in greater detail in the book The Visual Guide to Elliott Wave Trading written by my colleague Wayne Gorman and myself. One of the key concepts, or one of the key principles of my approach to trading, is always to wait for confirming price action.

Then, once you have all the pieces of the puzzle in place, if the overall trend of the market is up and you're playing the buy side -- in other words, you're focusing on countertrend moves or pullbacks within a larger up-trending market and that pattern is in place (whether it's an Elliott wave zigzag, flat or triangle), and then you have your momentum patterns, or momentum signatures in place (for example, a bullish divergence), and then on top of that you have your candlestick analysis -- that's what I like to look for. In other words, that builds the framework for the setup.

Now, what comes next is the confirming price action. I want the market to commit to me before I commit to the market.

Alexandra: Do you have any advice for analysts and traders in terms of improving their chances of spotting winning trades?

Jeffrey: Absolutely. I would probably say, the single best piece of advice I can offer traders is to focus on quality, not quantity. Just because you trade more doesn't mean you're going to be more successful. Over the years, I've come to realize that I would much rather focus on a high-quality trade setup than one that maybe barely meets the standard of what I would consider to be a high-quality trade setup. So, simply put, focus on the quality. If you focus on quality, what will happen is you'll find that you trade less, and the attention that you do spend with the market will be focused on those higher-probability opportunities.

Alexandra: Well, Jeff, I know we're just touching on the surface of how to spot high confidence setup, so I appreciate you taking a couple of minutes to summarize it all for us.

Jeffrey: My pleasure, Alex, any time.

Alexandra: Thanks.


Learn to Build a Case for Your Market Analysis

Get Jeffrey Kennedy's free resource, 3 Lessons: Learn to Spot Trade Setups on Your Charts. You'll learn the 5 core Elliott wave patterns as well as a method Jeffrey developed to add clarity to his wave analysis. Then you'll see how he combines Elliott wave with technicals such as RSI, MACD (Moving Average Convergence Divergence) and Japanese candlesticks to build a case using a chart of Las Vegas Sands Corp (LVS).

Get your FREE report now

This article was syndicated by Elliott Wave International and was originally published under the headline Have You Taken These 4 Simple Steps to Improve Your Trading?. 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.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife