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Trading Forex: Patience Pays Off
Trading is not a "one-size-fits-all."
This is an excerpt from a Market Insight comment that Elliott Wave International's Senior Currency Strategist Jim Martens posted for his Currency Specialty Service readers on April 1:
4/01/2008 - Tuesday was a great example of why patience in the market is so important for most traders. When I first looked at the chart of the Dollar Index, I saw a rally that had retraced just about 61.8% of the prior decline, and the rally from the secondary low was either in five waves or close to it. [See wave c in the chart below – Ed.]
The depth of the retracement warned that a correction might be nearing an end, and the structure of the advance warned that a top of some sort was imminent. And that was the warning I issued [to subscribers - Ed.] I felt that it was just too late for most to participate to the upside. The next "play" would be to the downside, and I was waiting for the evidence that the top was actually in place.
So we waited, and later in the day the dollar moved to a new high. That new high occurred on failing momentum, a typical fifth wave event. [See the RSI indicator at the bottom of the chart below - Ed.]
And the market subsequently fell in five waves.
That suggested two things. First – that the top might be in place at 72.733, and two – that a rebound was due. The rebound would offer the opportunity against an established high.
So you can see how having patience pays off. I've identified an opportunity with limited risk compared to downside potential. And that's what this effort is all about. Here's how I described it in real time. [on Tuesday, April 1 - Ed.]
"The chart of the Index reveals the kind of chart set up I described in the above-offered webinar*. Before getting aggressive, I look for a small five-wave movement in the direction of what I suspect is the new trend. I then wait for the subsequent correction to take action. At that point we have the set up and the point of failure at the prior extreme. That's one potential action point.
"Another is after the market actually reverses the proposed correction and starts to head in the direction of the new trend. And finally, a break beyond the extreme of the initial five-wave movement offers yet another opportunity. Trading is not a 'one-size-fits-all.' Why not use a combination of several approaches, some with different risk levels? ...JJM..."
(*Jim Martens is referring to the complete recording of his March 25 live 49-minute webinar "How To Boost Your Forex Trading With Your Currency Service Subscription," which is posted inside the Currency Specialty Service right now. Here's one viewer's feedback:
"I was thoroughly impressed by the clarity with which Jim Martens explained how to use Elliott wave principles in FOREX. I found particularly useful the concrete examples using USD-JPY and USD-CAD that showed good entry points and more importantly how to know where to put your stop and get out. I sincerely hope that there are more such webinars in future."
You can watch a free clip from Jim's March 25 webinar here. For details on his Currency Specialty Service subscription, click here.)