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Energy: EWI's Chief Oil Analyst Reveals When Elliott Is at Its Best (Part 2)

New insights from our Chief Energy Analyst

by Alexandra Lienhard
Updated: August 22, 2016

In part 2 of our in-depth conversation with Steve Craig, Elliot Wave International's Chief Energy Analyst, he reveals why the volatility in crude oil and natural gas keeps him excited about the markets he covers.

P.S. -- if you missed part 1, you can watch it here.

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[Editor's note: A text version of the interview is below.]

Alexandra: Between crude and natural gas, what keeps you excited about the markets you cover for Elliott Wave International?

Steve: I stay excited because the markets are exciting. The volatility of oil and gas markets is often second to none. You never know what to expect each day. I think it's just an absolute great market to trade as well as to analyze.

Alexandra: As you said, the volatility of crude oil and gas is second to none so I'm sure you've had some exciting market calls over the years. Can you talk about a lesson the market has taught you?

Steve: The biggest lesson that I learned very early in my career, there's an old adage and it goes something like this -- it's better to be out of a market and wish you were in, than in a market and wish you were out. That stems back to the debate between fundamental analysis and technical analysis. You can have a great fundamental story to put on a position, but your timing can be just terrible. You can end up as a consequence taking a big loss or at least having huge draw downs before position goes in your favor. I think again that's the value of Elliott wave analysis, you know exactly where you're wrong at and it gets back to risk management.

Alexandra: And along those same lines, what are some of the biggest mistakes you see traders make?

Steve: The single biggest mistake is traders make, well there's two actually, they overtrade their account size and they don't manage their risk. Elliott wave allows you to manage your risk really well. You can really fine-tune it, to know what price level needs to hold for your count to remain valid.

Alexandra: Now Steve, you've been involved with energy futures since their inception. And you're currently responsible for EWI's Energy Pro Service, which includes up-to-the-hour forecasts for crude oil and natural gas, along with end-of-the-day comments on crude, nat gas, as well as several related ETFs. What do you find to be the most challenging part of your job?

Steve: Well, I think the most challenging part of my job is following not only the preferred Elliott wave count, but the alternate counts that come along. If you're an Elliottician worth your salt, you can always come up with a couple of ways to view the market. When they're pointing you in the same direction, you need to keep an eye on the alternate counts, but really just stay focused on preferred count until it is no longer valid.

Alexandra: Can you elaborate on that and explain why it's important to keep an eye on alternate counts?

Steve: Where it really becomes important is where an alternate count has a diametrically imposed message. In other words, if your preferred count is bullish, but you can make a case that a much bearish picture is about to unfold, you really need to understand where that will occur at and then you also have a wave count to jump right into should that prove to be the better view of the market.

Alexandra: I would be remiss to ask you about the most challenging part of your job, without finding out what you enjoy most -- so on the flip side, what's the most rewarding part of your job?

Steve: I think the most rewarding part hands down is getting emails from subscribers thanking me for doing a good job. I wish I could tell everybody that I get it right all the time, but I don't. That's just a fact of life. If you trade the markets, you're going to have losses. If you analyze markets, you're going to be wrong. There's no method, fundamental or technical, that's going to keep you on the right side of the market at all times. The message is that it all gets back to risk management. When you're wrong, you need to recognize it immediately. There is always going to be another trade, whether it's in oil and gas or some other market. But knowing the Wave Principle allows you to view all markets through a very similar light. For me, I don't know of a better way to do it.

Alexandra: Well, Steve, thanks for chatting today. It's always fun to get to pick your brain because you do in fact use your own experiences in the energy markets to keep your subscribers ahead of major moves. I appreciate you taking a couple minutes to talk.

Learn more about Steve's forecasts and analysis by clicking the link below.

Oil... Gas... ETFs... What'll Be Your Next "Homerun" Trade?

Energy can be volatile -- and that's a good thing! Volatility means opportunity. Let new intraday and daily Energy Pro Service forecasts be your guide to the next major energy move.

Natural Gas: When 5 Waves Down Mean... Up!

Harvey's Here. So Why Are Oil Prices Lower?

Crude Oil, Market Sentiment - And What We Pay at the Pump

A New Twist on "Peak Oil"

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