How Elliott Waves warned us to exit a trade early

You might think that all of my ideas will be profitable. That is not true! In the last 3 years, I think there have been but 2  ideas that caused trouble. I am going to discuss the last trade that didn’t make it to our 8% goal. You will see how Elliott Waves warned us to exit the trade early. The value of the approach is not just picking low risk trades, but also understanding when we have to run for cover.

First, I will present some of charts that I used to decide on the trade. 

I recommended buying an initial amount at 84.75, which got filled when the stock dipped to 84.50 on 20 Jan 2020. Our idea was to buy some more at 83.35. But the stock rallied directly. However, the wave structure didn’t look good. So our member were sent an email recommending to take over 3% profits and wait for another dip to buy again.

Trading the markets requires us to be aware of what is happening around the world. It is not just the wave count that helps you make money. We need to make sound decisions, always keeping an eye on the risk. I had suggested buying at 86.50 for one half position, but then sent members the following chart.

We eventually got long at 86.50! Then, on 30 Jan, I sent the following messages:

30 Jan 2020
Good morning folks,
I was travelling all of yesterday and returned well past midnight. However, I did see the price dip to 86 and rally by 2% from our buy level for the first half at 86.50, and that made me happy, perhaps too soon!  Now that I am looking at the chart, things are looking clearer.
 
Please see attached. 
Remember, by following these specific steps and entering only at the recommended levels, we will be giving ourselves the chance of exiting the trade at breakeven or better, even if the markets take an ugly turn. But as of now, we will stick with our paradigm that this is only a wave 4 dip.
All the best
Ramki

Subsequently, we got long the second lot at 81.50, making our average rate 84.00. Everything looked fine for a short while, but then we got the Union Budget!

I sent my members the following set of charts:

https://tinyurl.com/uool452

Finally, on 5th Feb 2020, I asked my members to exit the entire position at 79.30, knowing the market was likely to remain bid for a short while. The high was 79.70 after we all got out, The stock then continued lower to 69.60, a further drop of over 12%. 

The moral of the story is this. Knowing how to trade is the secret of success. Elliott Wave Analysis helps us with the tools, but you should know how to USE it well. My online program seeks to teach some of these skills.

 

 



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