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15   Illustralion 6-8    lllustratfon 6-9 lust as trend waves can have a failure wave, so can subwaves. These failure subwaves (Illustrations 6-1 OA and - ) occur approximately 25% of the time and indicate strength in the direction of the major trend. A fai lure subwave occurs when "c," "e," or "g" wave fails to exceed a previous subwave within the same retracement wave. The dashed lines highlight the occurrence of a failure wave. illustration 6-9 demonstrates an t;xtremely complex retracement wave 2 that is made up of three levels of hierarchy of subwaves. Occurrence of three levels of subwaves ,s rare.
 Illustration 6-1 Oneotmy original ideas was to use a trend line to enter a market after an "a,b, c" retracement (lHuslratlons 6-11 Ihiough 6 13). Often when ,i Irerul line is broken, the market moves rapidly with the trend. However, at times alter crossing a trend line, the market pulls back fo touch the trend line and then moves in the direction of the trenrl.   lilustraiion 6.-1 OB Failure wave " Ci) 0» «160 1 * 6?34 * L= SISO L<= 6226.. I jWl DfllLV 0" 6160 H" 6234 C- 62264. ,1,11 t..ji,...:..ttt.ii iiif lllustr.3tion 6-1 2 (5) i lid li7 if * " 1 ? 11 1! ?*iio"i7 41 °17.;; " 111 1 (
CHAPTER SEVEN  COPYRluHr WO COG INC. Illustration 6-13 Profit Targets, Protective Stops And Money Management In setting profit targets and protective stops with Symmetry Wave, my experience has been to lean towards levels on thehigher end while avoiding the extremes. The range of feasible levels runs on a curve (for both targets and stops) with the optimal level found toward the higher end of the mid-range. With so many different markets and ever-changing market conditions, there can obviously be no one ideal leveJ for eitherstops or targets. However, t do have my preferences as to how to handle establishing these critical parameters. More often than not, I find myself using the markets ATR as a base and guide for setting these levels. More on ATR momentarily. PROTECTIVE STOPS Generally, with Symmetry Wave, Ive found using smaller stops lOES NOT reduce drawdown. I prefer going with the wider stop, say 51,500 as opposed to $250. With the bigger stop, the number of losing trades decreases substantially, and aiiough the total dollar amount of the losses remain about the same, there are more winning trades and the net profit wilt go up. Here are typical results when using smaller stops versus bigger stops with Symmetry Wave. Profit Target -» | SI, | SI, | SI. | Protective Stop -* | S300 | S600 | SI,500 | | | 35 winners 535,000 | 44 winners $44.000 | 56 winners $56,000 | | | 50 losses S15,000 | 29 losses $17,400 | 16 tosses $22,500 | | | Net -i-S20,000 | Net +$26,600 | Net +$33,500 |
Note that the following conclusions can either be derived directly, or safely assumed, from this one table: 1. The rriaxirrrum drawdown is increased, not decreased, when too small a protective slop is used. 2. The smaller protective stops cause more frequent losses, and greater strings of losses.
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