Hey Pooruser, I think I understand your predicament. Your frustration actually puts you in very common company. That is, it sounds like you've made some bad trades that have left you with little money left and you need to get it back. Believe me, you have much company in this regard.
Now looking back a few months, I remember when Fish posted how freaked out he was when TZA was going bad. Of course indirectly blaming me for making the trade. If you guys paid attention to the trade and specifically the amount of money as a percentage of the account I'm using above along with the options trades around that position and the justification for each, you'd understand that from the beginning it was an almost sure bet. Now surely, when I got into it at $7.70, I could have timed the entry better just looking at the wave counts. It then fell to under $6 when a few freaked out, which told me that that went 'all in' on the trade. But what did I say? Just sit it out because you will most likely never get in at the bottom or out at the top. The times that you do are pure luck.
As long as you're correct in the end is all that matters. And be sure to have a reasonable and justified basis for you assessment as to why you're making the trade. SYNA had that and paid off. REGN was a small trade made twice that was more of a gamble along with seasonality that went wrong and that's why I made both small trades. But now look, TZA is actually a good trade because of the power of shorting calls (you must have a broker that allows it) and we can now wait for a better setup for a new trade. The $10k account is up almost 80% in a year and every trade was made the day before and emailed ahead of time.
So, as to your question about the market moving on its own or not, technically you can say yes, you're right. But that is exactly what elliotwave is - it's NOT a technical analysis study of market direction timing. That's what most think and are dead wrong. Elliotwave theory is simply a proven fact of the five emotions of human behavior. When you start to study it, even just the simplicities of it, it's truly fascinating because it makes so much sense. So, when you look at the chart of an index, not so much individual stocks unless they are heavily traded by millions of traders daily, you can typically count 5 or 3 waves at any cyclical leg up or down. The simplicity of the theory is basically this:
Wave 1 - the initial wave let's say of a downtrend. This is the first down move against a previous long term uptrend that catches traders off-guard. It will fall to a point, and then reverse. This upside reversal against this first leg down makes investors/traders feel like it's a dip buying opp and makes them wipe their face as if to say, 'whew, that was scary. I don't know where that came from. Probably some large investor having to sell. No big deal, buy more!"
Wave 2 correction - again, this reversal off the wave 1 decline 'suckers' in new buyers or new money from existing holders. Or, those that short the previous bull run thinking the market was extended and didn't cover on the wave 1 decline are typically squeezed out on this for fear of it actually being a simple pullback. The problem for both is that these waves typically are fast, but weak in volume and breadth. They only will retrace between 50% of the wave 1 move and 72%. It's the extension to that 72% that scares the shorts and emboldens the dip buyers.
Wave 3 - By Elliotwave rules, this can NEVER be the shortest wave and is typically the biggest. Why? Because when the market reverses off the wave 2 high back down, it scares the hell out of the dip buyers. As it gets going, the emotion is to stare at your stocks dropping in disbelief 'riding it out'. But it just keeps going.
Wave 4 - ugly correction of wave 3. Typically is a rising wedge
Wave 5 final leg down - A weak final leg down to end it all and where the news is typically the worst. Time to buy!
Don't worry, just follow the trades in the account and you'll be fine. I think the market is setting up pretty well and predictable. I think I can get the now $17,600 account to well over $25k by year end. But I'm playing it carefully and you must be able to short calls and puts. If you already don't, get an account at IB!
AI
