Illustration 5-SB

The dally Swiss Franc chart (Illustration has reversed its trend in Fcbaiary to the downside, and in early April rallied approxitnaioly 330 points to create retracement w.tvc 7. Aiier wave 3 we would anticipate a rally of at least 300 poinbtt: enter short (approximately 90% of the previous symmetry wave). On April 29, wave bottoms at . . To this price we add 300 points and come up with . 966 as our sell target to go short. On May 14, the 300-point rally target is reached and a short position is established. Subsequently, the market falls down to accomplish wave number 5.

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To further jilus.trate.aggressive trading, we will use a weekly Gold chart-and trade off a gigantic symmetry wave (see Illustration 5-7). The magnitude of wave 11 is approximately $67. After trend wave III we expect the retracement wave II to be balanced by a similar size wave. For early entry we would expect a retracement of at least 90% of $67, or $61. Wave IV is approximately $69 in magnitude-an excellent long-term short position with bigprofitprUentiai and a relatively small risk.

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At times some incredible trades can be achieved using the Symmetry Wave Method in conjunction with the early entry melhoci while taking only a relatively small risk. Illustration 5-8 presents a monthly Cold chart. In March of 1983, there is a retracement wave (IV). The trend wave (V) ends in February of 1985, and subsequently we have a retracement tasting 34 months that matches in magnitude the retracement wave (IV). The ensuing downtrend wave (VII) is approximately $150 in magnitude.

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The smaller retracement waves can also be used for early entry. Illustration S-9 uses a da wheatchart to demonstrate this. Between v/aves 11 and 111, thereare two sets of smaller symme wave counts: Wave 2, which is 7.25( , is malched by wave 4, which is 6.75i?. This provides early entry using a very small symmetrical wave. Later, wave (2) is matched by wave (4) provide another long jwsition with the major uptrend. Finally, wave II is matched by wave for a final long position with the trend.

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lilustraiion S-10, the daily Eurodollar churl, provides one more example of the early entry method. The major trend is up. In early lirne the market has a big ictraccmcm, followed by a rally amJ a mini retracement wave 2 on June 25. four-day rally is followed by a symmetrit al relrac;etnent wave 4, to provide a small risk investment with the uptrend. Wave 2 is I 5 points in magnitude, and wave 4 is 1 f> points.

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rhe Symmetry Wave Method can be used to trade off gigantic waves, as in the monthly Cold chart, or off minrwHves, as in the hurodollar chart. All sizes of w.iveb ,ir(> viable for establishing a fiosilion. Experi<4ice shows ihm it is best t" put an critry order in before tlie rnjrkcl reaches the <:ntry price. A coinmon mistake among traders rs the tendenc to wait and see what the market will do. By then, the market has already done it, and its too late. You have to put your orders in beiore the fact.

Late Entry Method

The decision on whether to use the early entry method or the late entry method should not depend on which method will produce better results, but on ones own nature. For some people, entering a market long when it is failing, without a bottom in sight, is too fearful, yet to others itisexcitingandachallenge. To be successful in trading, it is important to use a style of trading that is suitable to your nature. Among other tbi ngs, this may rnean usi ng a method that produces less profit but is within your comfort zone. Larly entry arid late entry have the same risk, but early entry produces greater profit since it takes advantage of the entirety of a trend wave.

When using a late entry method, like with the early entry method, you first must wait for a symmetry wave to be established. However, with the late entry method, a position is entered only when the market starts to move with the trend again. Once the symmetry is established, you must wait for the market to resume the move with the major trend. There are many degrees ofwaitingfor alrendtobe re-established. You could enter the market as soon as it starts to move with the major trend (Illustration 5-11), or you could wait for the market to substantially move with the major trend and only then enter the market (1 llustration 5-12). To accomplish late entry, methods that were mentioned al the beginning of this chapter, among others, can be used.

ustration 5-11

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The same charts will be used for illustrating late entry as. were used for early entry. For-example, using the S&P SOO chart (llkrstration 5-13), you could wait for wave 4 to match wave 2 and then use a nine-day stochastic crossover as an entry method. In this case, your entry wou Id have been at the close of May 20, marked with an arrow. Another method may have been to use a three-day breakout. This woitld mean taking.the highest high pf the past three days and, putting a buy order one or two ticks above the previous three days (see Illustration 5-14).