The 5 Fatal Flaws of Trading

By: Elliott Wave International

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit -- and more importantly, do it consistently. How do they do that?

That's an age-old question. While there is no magic formula, Elliott Wave International's own Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don't claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person's life. Maybe you'll find one in Jeffrey's take on trading. We sincerely hope so.

The following is an excerpt form Jeffrey Kennedy's Trader's Classroom Collection eBook. Continue reading "The 5 Fatal Flaws of Trading"

Can The Fed Drop Interest Rates Below 0%?

By: Elliott Wave International

This question is not as preposterous as it may seem.

For the financial markets, the biggest event of the week starts tomorrow: On Wednesday and Thursday (Feb. 10-11) Fed chair Janet Yellen will appear before Congress to deliver her semi-annual Monetary Policy Report.

"It's huge." That's how one strategist put it this morning, in a CNBC interview about the importance of Yellen's testimony.

Why are all eyes on Yellen? Maybe because by now, almost everyone has forgotten how powerless the Fed appeared in 2007-2009, when none of its measures could stop the financial crisis. Despite the recent market chaos, six years of rising stock prices reaffirmed the notion that the Fed can move mountains. "As the Fed goes, so do the markets" is the current mantra -- so, on Wednesday and Thursday, analysts will be listening carefully: Will Yellen mention the ongoing market turmoil? Continue reading "Can The Fed Drop Interest Rates Below 0%?"

USDJPY: "Diving" For Opportunity

By: Elliott Wave International

On a recent vacation to the Yucatan, my friend decided to get certified in scuba diving.

I, on the other hand, prefer breathing my air above water! But I did tag along with her to one of the classes, anyway. She learned how to handle and interpret all the various diver gauges: gas pressure, submersive pressure, depth, and on.

The one feature all those indicators had in common was a bold, red line to indicate the level the diver must obey to stay out of danger.

That's when it hit me: Scuba-diving is a lot like financial markets. Investors and traders jump in -- and use an array of safety gauges to keep them on the right side of price action.

Well, at least those investors and traders who use technical market indicators. For them, those bold, red lines indicating the point of danger -- those are equivalent to the most critical component of market analysis: protective stops. The second prices cross this line, it's time to "swim back up to the surface" and safely re-adjust your position.

For any investor/trader, then, the ultimate goal is to clearly identify these life-"lines" ahead of time, before jumping in. That, dear friends, is where our newest, FREE report "How to Set and Manage Stops With the Wave Principle" comes in.

Here is an excerpt: Continue reading "USDJPY: "Diving" For Opportunity"

GPS vs. Road Map: Which Works Best? (Part 2)

By: Elliott Wave International

Think of Trading and Investing as a Trip

Here's my advice: View the Elliott Wave Principle as your road map to the market -- and your investment idea as a trip.

You start the trip with a specific plan in mind, but conditions along the way may force you to alter course. As I mentioned earlier, alternate Elliott wave counts are simply side roads that sometimes end up being the best path.

Elliott's highly specific rules keep the number of valid wave-pattern interpretations to a minimum. Usually, you would consider the "preferred count" to be the one that satisfies all three of Elliott's rules and the largest number of guidelines. Your top "alternate" is the one that satisfies the next largest number of guidelines, and so on.

There are only three hard-and-fast rules with the Wave Principle: Continue reading "GPS vs. Road Map: Which Works Best? (Part 2)"

GPS vs. Road Map: Which Works Best? (Part 1)

By: Elliott Wave International

Some of the best stories about global positioning systems (GPS) are the weird detours they sometimes recommend.

A while back, while on a family trip through Great Smoky Mountains National Park, I decided to use my GPS to drive around the park's western boundary to see the wildlife. My old-fashioned map made it look like it would take the better part of the day. But my GPS said the trip would only be about 20 miles long. Little did I know -- until I got there -- that the road from the GPS was only the remnant of an old wagon trail. I had to backtrack and take the path my paper map had originally suggested.

Sometimes, the old-fashioned way of doing things is still the best way.

I believe that's true when it comes to analyzing markets, too. Financial markets can also make you take weird "detours" -- just when you expect the price to go straight up or down, depending on how you've positioned your trades. Continue reading "GPS vs. Road Map: Which Works Best? (Part 1)"