1:1 R/R high probability reversal trading

Please ignore thread. Predicting tops and bottoms although possible, is not recommended.

So what I’m trying to say is that the market does indeed behave according to universal constants, but just because you know them doesn’t mean it’s easy to predict with them, as you need a certain amount of experience to see all the different types of elliott waves. (Actually, it’s very simple, but it’s never exactly the same.) Why does market go in uptrend or downtrend? What does this mean? It means that market reverses at 2.618 and then later 1.618 again and then depending on how the reversals take place the total net movement will be up and down, but in an alternating series of smaller up and down movements. If it were to go up or down linearly then these ratio’s would not exist and everyone who is not a dumbass would be a winner.

I agree that the market doesn’t care about them at all.

I can’t agree with that: I don’t think there’s anything the market “always” does. “Always” is one of my “red flag” words in trading information, when used in the sense of predicting market direction.

I certainly agree that risk/reward [I]in itself, to the exclusion of other factors[/I], isn’t very important. Together with win-rates, it determines profitability or loss.

I agree that entries matter, to some extent, but I think their significance is widely overestimated, and that trade management after the entry (including stop-loss placement and adjustments, and exits) is collectively far more significant.

I don’t listen to people who blame “stop-hunting”.

Yes, but objectively collected evidence, not individually cherry-picked examples, anecdotally selected to illustrate a contention. We can all produce those in an attempt to justify our beliefs, but they carry no objective evidential weight. :58: :slight_smile:

I’m glad that after so many other, previous experiments, you’ve found something which appears to work more reliably for you, at the moment. I hope you’ll excuse my also mentioning that I’m no believer in Elliott Wave theory at all, myself. My perspective is that (especially by the time you allow for “extensions”, “alterations”, “truncations” and the interpretation of all of the things that Elliott adherents have gradually had to introduce to answer objections concerning their perceptions), there probably isn’t a single chart in the world that an Elliott Wave enthusiast can’t somehow fit in with his existing preconceptions.

These are just my trades done today just the last couple of hours according to this principle. (mix of elliott wave 1-2 2.618 and wave 4-5 1.618 trades) I trade 10 second bar charts (candlesticks and bars are exactly the same, but bars focus less on closing so i like em more) with a 1 to 2 hour total chart information and a 5 minute expiry on the IQ Option binary platform.
People say you can’t pick tops or bottoms, well obviously you can :p. (Be warned however, you really need to know what you’re doing, else you will loose your hair.) The trend is also not always your friend, because really, who wants to jump on a stopping train? You either want to get on early or wait for the reversal (or the reversal after the reversal if you’re not comfortable with countertrend trading, but this is harder than you think, because corrections can take a while). Entering on the trend too late is -EV. Also, trades which have more than 1 fib extention around the same area are usually higher probability, so play around with it alot before going live.

Another great setup which I took just now. Notice the double 1.618 confirmation. Why did I not take the 2.618 trade (which is not on the chart but a bit earlier though)? Because once something looks like an harmonic pattern (type google, harmonic pattern, but don’t look at the fib ratio’s, they’re all wrong) it’s usually a corrective pattern which means 1.618 and the 1.618 was further away than the 2.618. Also the first of the three wave correction has only a small pullback (less than 50% means invalid 2.618 setup usually as a true elliott wave number 1 has a bigger pullback to somewhere around 0.618). And ofcourse, I cannot predict what happens after the reversal, as I trade high probability not high risk/reward.

I missed this one but nonetheless decided to place it here as it’s another beautiful example. See the three waves again? (The second one is almost always the strongest.) In this case does not only the market respect the 2.618 first wave pullback extention but it also lines up with the 1.618 second wave pullback extention.

Edit: I can probably can find a 1.272 extention of the complete second wave there as well (and I did :)).

Oh, and also, just because price is likely to reverse at those levels doesn’t mean you have to take the immediate first bounce. If you’re not comfortable you can always wait for the formation of a reversal pattern like a head & shoulders (pullback often though), double top/bottom or trendline (3 point connection) breakout. I see some pretty nice head & shoulders forming often.

Upon further experience (I haven’t discovered this for very long yet) I now realize that it isn’t always the 2.618 extention of the pullback of wave 1, because as shown below in weird cases it can also be the 2.618 of the entire wave number 1. It depends on how big wave 2 is and how big the pullback is of wave 1. Also you need a completed wave number 3 by which I mean that it needs another completed third wave cycle and needs to be above wave 2 ofcourse. Again, think 3 times 3.

This is not really a trade relevant to this thread but I decided to post it anyway because I used to trade trendline breakouts before (I took it but already pressed close on my profit so it doesn’t show), but I did not find it good enough because of the high pullback and fakeout percentage. So why did I take this one? Because the elliott wave theory showed me the reason why some pullback and some don’t. Breakouts are often accompanied by wave number 1 and these waves often pullback to around 0.618 . This has already happened in this case as you can see with the second shoulder of the head & shoulders pattern. In the past I would think these were some evil big boy stop hunters that would cause these fakeouts :16:…

Edit: A bit later market did go lower but that’s again only because the pullback was not at its end yet. The breakout did not continue much higher because the pullback happened after wave 3 of the bigger uptrend (not showing on the chart) and thus I could have expected another wave C which is forming right now. However it didn’t matter to me because the trade I took had a low expiry time. If you had large stops and profits this would indeed have been a bad trade (unless the pullback happened after wave 2).