Know where you at

Advanced strategies for the daily call

Markets come in waves

market structure within these waves repeats based on the beauty principle

Knowing at what point you are within a market wave structure is essential for:

trade direction selection

stop size selection

order entry tool selection

position size

(amongst others)

the building blocks within a market wave are

directional components like trends (breakouts and channels)

and

sideways components (compressed, swing, chop, wide range)

The most important aspect is to accept that what is trend in one time frame is a range in another time frame.

That's just how it is and needs to be accepted. In short, wave analysis has a high degree of time frame violation possibilities and, as such, needs clear definitions of where trade setups are versus trade execution.

In wave structure, a significant turning point typically is on one or more timeframes signaled by a "V" formation.

(Please review the "V" trading rules to clarify what type of trades can be considered to be QUAD trade positioned.)

In general, sideways and directional components alter in a market wave structure and require different tools to be traded.

The average trader overlooks that the sideways components are between the direction components, resulting in premature entry timing trade execution based not on price behavior but horizontal support/resistance assumptions with defined price levels.

This, in turn, results in a trading style that ignores market wave analysis, providing much lower consistency rates and increased trading errors.

After an initial breakout from a sideways range (adjacent higher price bars without retracements) directional channel trading follows.

The angle of these channels indicates the probability of the upcoming sideways phase.

While a directional phrase should never be faded(traded counter trend) and not reloaded with limit orders, an established sideways channel can have resting limit orders to fade overshoots of the range on small size for trading range profits.

Naturally, QUAD exit targets have a different rule set as well for sideways, trend and channel modules.

(a simplified version to be found in our "What not to do" sheet for the daily call):

The length and compression rate of a sideways segment determines whether only a continuation of the previous trend should be considered for entries or whether the probabilities have risen for a breakout of the sideways channel in both directions.

Furthermore, the relationship between waves compared with various time frames and the trend leg count of an alternating chain of sideways and trend segments affects order entry tools and position size.

Again, timeframe relativity errors are quickly established within wave structure of markets and as such a top down approach is necessary.

I can not stretch enough the significance of a clear overview like this, structured into a consequent rule set for the astute trader to minimize significant trading errors like

overtrading

FOMO trading

accumulating trading losses, trading the market from the wrong side

inappropriate position size

inappropriate order execution tools

and most significantly, trading psychologically against the market rather than surfing the market structure.