What a great step towards successful trading career. Journal is a great tool. Like I always say there is a huge difference between a trader who keeps a journal and record of his/her trades and one who doesn’t. The later is lost, without purpose, without an AIM!
Ok about the setup of your screen above. My honest suggestion would be to trade without much “Technical Analysis”. All technical analysis have 50% success rate. A support level may be formed may be not, may be hit or may be not, may be price will stop there and reverse or may be just go through it, or may be just hesitate a bit and then go. No doubt any thing that helps with targets is a good idea. Still as long as one method is adopted and followed consistently it is always profitable in the long run.
The reason we have two charts m5 and m1 is that we trade them both simultaneously. This paradigm shift is really amazing, this is the Essence of AIMS Stress Free Trading. Successful Trading requires Trading with an Edge. Do You know Your Edge? If No, you probably don’t have one! But there is an edge that we have shared with you. It is the very concept to understand this relationship between M5 and M1 chart, this is our Edge.
I suggest everyone display only M1 and M5 on left and right with the template you have on m1 and give it a try.
The Following Could be Hard to Follow! But I’ll try anyway!
Try not to think S/R and Pivots for a test. For a period of 4 weeks. You’d find that if you focus on the Setup you’d be doing all the stuff exactly as you would with those trend lines and S/R. Trend lines and S/R are a typical technical analysis tools. Many seasoned traders still use them but here is a thing. Everything around us including us, and our Brain/Mind is a product of Chaos. Where as Straight Lines and Squares and Boxes are a product of human ‘Left Brain’, Newtonian physics. A product of linear mathematics. Newtonian physics considers 97% of the universe as noise. That is because we try to measure hte universe with Straight Lines, Circles and Squares but the universe is not “Structured” that way.
(Likewise, Traders consider all the moves as noise unless price goes in a straight line or channel.)
Many say, “I use, 200ema or Trend Line ( and all the other good stuff etc) because of the fact that many other traders use them”. This implies that since traders use a e.g. 200ema all around the world thats why the market creates the structure as it is. This statement defies the Law of Chaos. Chaos is a highly organised structure. We should not think in those terms. The structure of the market is this: Price goes sideways, Creates a Tight Range i.e. Setup 1 then explodes/breaks out of that range, (Alligator opens = Impulse Wave) then it exhausts which creates more interest in buyers/sells (AO back to ZL after a nice Peak = 4th wave) and they have another go at it but this time as they become profitable others take there positions out as well and so eventually we go back in to a sideways market i.e. another 4th wave. 80% of the time we remain in the 4th wave, the sideways market. That’s why we say if you look at a chart and within 10s you don’t know which wave you’re in, you are in Wave 4. Which means don’t trade.
So coming back to the point, Chaos cannot be measured with ‘Linear Mathematical and Geometric Tools and Calculations’. There are no Straight lines and cones and Cubes in nature (except in the case of some crystal formations) 97% of the universe is not straight. The Clouds, the river bank, the trees, the edges, how do you measure them? The only way is Fractal Geometry. A dot has no dimension, a line has 1 dimension, a square has 2 dimensions (LOL we have dots, lines and AIMS Levels/Boxes haha) and a cube has 3 dimensions. So What is the dimension of a square with a scribbled line on top of it? hmmmm it cannot be 1 or 2 dimensions, it can only be something between 1 and 2 dimension. Aha, a Fraction of the whole. We know from scientific calculations that the Dimension of a Square with Scribbled lines is around 1.26 or something like that. Have you noticed that it is a ‘Fractional Number” Hence the name/term Fractal Geometry.
The connections betweens neurons within a single human brain and the bits of information it can create and send exceeds the total number of particles in the universe. Can you imagine that? When we all start thinking using all those connections we create a very complex universe of impulses around us. Those impulse create movements in our bodies Those movements and decisions are the points where we create fractals i.e. AIMS Levels. When you stopped whatever you were doing and started reading this post you created a fractal. When you read a sentence or two you may go in to a ‘trance’, a thought of your own starts, may be about the sentence or something else, there, you create a fractal within that fractal then you get out of the trance and come back to reading this post, you create yet another fractal and the process goes on until you are done with reading this post and start reading something else in the forum yet creating a fractal but a different one. Once you’re done with forum and you start doing something else but still on the computer you are still under the fractal of being on the computer (your wife may be counting that time against your ‘time spent in front of the damn computer even on a weekend’ – for her its just one fractal that never ends) once you stop using the computer you start a fresh aims level, a fresh fractal. So within the fractal of using the computer you created many fractals. but the one that took the most time of yours may be the impulse wave and hence a taller fractal may be a wave 3. LOL
When Traders Hit the WAVE and Trade it all the way that means those who stayed through out the entire impulse wave were in tune with the market. They Created and Traded a Wave that contributed to the Wave 3. The trader who is not in tune in synch with the structure of the market may exit and perhaps either not creat an impulse wave for their account of may only a small one. Every winning Trade should be bigger than every loser trade you know why? The winners are Impulse Waves so should be proportionally bigger and losing ones are 4th waves so should be smaller. Think about it.
When we do all the above we take decisions in a highly organised manner and when plotted using a charting software such as MT4 it appears like so, as above in your charts. Each time the direction changes it forms an AIMS Level.
Hence the most important thing to always remember. I repeat
“Within an Upper AIMS Level and a Lower AIMS Level there is Always an Elliott Wave of a Certain Degree”.
With this belief I don’t plot S/R and stuff. For me the aims levels are the most important levels. (Steve’s reading and says, “Immy, those are the S/R levels” Hahah i know i know) Having said all of the above, 8-10 times price retraces back between 38-50% after a third/impulse wave. And 8-10 times it usually retraces back the Wave 4 (corrective wave) of the previous W3/impulse wave. 8 out of 10 times the first wave the second impulse wave may end somewhere between Fib Expansion 62 and 100 which we call Target Zone 1 and 2.
If one cannot think Fractal within a Fractal they will never understand Elliott Wave. then if one cannot understand the difference between Fractal and Linear Geometry they will never be able to get Elliott wave correctly at all, moreover if one does not understand the rules of The Science of Chaos they will never understand the market and its structure.
So, here I am I have done my writing and in the end I will say, Well Done! and your journal really brought alot of stuff out of me this fine monring! thank you for doing this!
I wish you a happy weekend and many money-filled pips!