Learn Why It’s Important to Trade with The Trend
EWI’s U.S. Intraday Stocks Analyst explains why you should take every opportunity in direction of the trend
by Alexandra Lienhard
Updated: February 13, 2017
The editor of Elliott Wave International's U.S. Intraday Stocks Pro Service with Tom Prindaville sits down to tell you more about his background, his approach to the markets and why it's important to stick with the trend.
Tom Prindaville's U.S. Intraday Stocks Pro Service gives you 20+ updates throughout each trading session to help you stay ahead of fast-moving opportunities in the Dow, S&P 500 and Nasdaq. Learn more.
Alexandra Lienhard: I'm Alexandra Lienhard, and today I'm talking with Tom Prindaville. Tom is one of our Senior Analysts on our Pro Services team. And Tom, I know you've been with Elliott Wave International for 16 years now, but I'm sure you had interest in the financial markets before that. So can you tell me a little bit about how you got into finance in general?
Tom Prindaville: Yes, sure. Back in the late--actually the late 80s, when I started thinking about my future financially, I began looking into different investment vehicles. And the one that really looked like a faster track to getting there, securing my financial future, was commodities and futures trading. I pursued that. It was fascinating to me that you could actually sell something that you didn't own. And so that's what led me into where I am today.
AL: And how about the Wave Principle? How did you first discover that and ultimately come to Elliott Wave International?
TP: I had stumbled across that in my investigation of the markets. And I had a rudimentary understanding of how the Wave Principle worked, but not a good grasp of it when I started my trading way back when, back in '93. I think I took my first futures trade in sugar, I believe it was.
AL: And as I mentioned, you're part of our Pro Services team. You post multiple updates throughout the day. Can you talk a little bit about what makes your analysis unique?
TP: Sure. During that discovery period when I started trading, a fascinating thing happened. In trying to understand the proportionality of the market, I was using Fibonacci tools. And one evening, I inadvertently turned the tool upside down. And instead of doing a retracement, it gave me a projection. And ironically, the levels of a 161, a 261, a 4236-- that's where the market reacted. And it was interesting that-- I said, well, this is a coincidence. I'll go see if there's any more coincidences out there. Well, as it turned out, it wasn't a coincidence. It was really how the market works. And the market unfolds in proportion to itself. You can see this time and time again in a very short time frame, or over long periods of time where a market can-- where markets will actually give you a support and resistance levels far into the future based on original wave action that occurred off a key low.
AL: Well, Tom, it sounds like you tapped into something that's very interesting and unique. Can you talk about a lesson that the market has taught you?
TP: Well, there's been many. Probably-- it's pretty simple. It's pretty straightforward. It's part of the axioms that you learn when you first get involved in it. But it was a hard one to learn, and it's very simple. Trade with the trend. Just stick with the trend. Take every opportunity in the direction of the trend. Too many people try to-- you know, there's five ways up, so the market must be ready to pull back. That's not necessarily what always happens. And so if you look for the pullback and then adjust your position in line with the dominant trend, you're much better off.
AL: And trend following is certainly something a lot of analysts at EWI echo. So what are some of the mistakes that you see traders make?
TP: Probably the number one mistake is not trading with the trend. Again, it's so easy to get it in your head that this is what's going to happen, because this is what it seems like the market is trying to tell you as far as counting waves. But if you just count waves in a vacuum and obviously, counting waves is a significant tool. But using it in a vacuum without some other technical techniques to actually help you see that, indeed, you're dealing with the end of a 5, a 5, a 5 type move, then you've get a problem. You need to rethink.
AL: And how could subscribers make the most of your service, Tom?
TP: Actually adhering to some of the things we've talked about today-- trade with the trend, be disciplined, put your emotions aside. And the only way you're going to do that is if you really feel confident in what you're doing, you have a plan, and you're aligned with the direction of the trend. So if you use your tools, basically go back monthly, weekly, daily, and allow these things to tell you what is the dominant trend and trade with that, use your count, use all your technicals, trend lines, whatever you have at your disposal that gives you confidence in your trading. That eliminates the emotional aspect, and you'll be a far more successful trader and my service will help you get there.
AL: Well, Tom, you cover some of the most important markets out there, focusing on the US markets. So I know you're a busy guy. Thanks for taking a couple of minutes to talk today.
TP: You're welcome, Alex. Thank you so much. Thanks.
No datasource selected or available.