Transcription
Okay, I'm sorry. What? Okay, awesome. Small group, that's good. I like small groups. Big groups are fun. I'm not scared. If you don't mind, I'm gonna be walking around. I hate standing behind a podium, and I love the wireless mic, so thank you for the wireless mic. One time I'm in Vegas, they they didn't have a wireless mic, and they had a um, this cable that I was connected to, and I felt like a dog on a chain. It was, I hated it.
Um, I've already spoken to many of you and introduced myself. My name is Jeffrey Kennedy. I'm the chief commodity analyst at Elliott Wave International and also the editor of Traders Classroom. Traders Classroom is really the product I love the most because it's educational. It gives me an opportunity to teach you different styles of technical analysis, just not the Wave Principle, but also candlestick analysis, how to utilize your indicators and oscillators, chart patterns like head and shoulders, inverted head and shoulders, those sorts of things, all toward the idea of trying to get you up to speed so that you can identify what I consider to be high-confidence trading opportunities on your own.
So ideally, my ideal customer joins my service, Traders Classroom, and they'll be a subscriber for two or three years, and then on occasion I'll get an email and say, "Hey Jeff, I'm canceling my service. I'm sorry to do that, but I'm ready to go off on my own. I can do this on my own," and that's what I really love because it lets me know I'm doing my job as an educator. Because I'm a very active trader, I've been where you're at. When I first started 25 years ago, I did not have a mentor. I did not have somebody to help me out, so I did what many of you do: buy the services, buy the subscriptions, buy the books, go to the seminars, and honestly, it didn't help my trading. And that's when I started trying to think of things on my own. And one of the key things, and I always love recommending this gentleman's work—a gentleman, by the way, I believe he's passed away unfortunately—his name is Mark Douglas. He wrote an awesome book, excellent book, called *The Disciplined Trader*, and I highly recommend everybody to read it. And the reason why is because it talks about the real game of trading, and that's you. It's your psychology, it's your emotions. The weakest link in a successful trading equation is always going to be the individual, so it's you. If something gets screwed up, guess what? It's your fault. That's just the way it is. And once you begin to understand that, you can begin to really work on the key component that will ultimately determine your success as a trader, and that's you. If you want to improve your trading, improve yourself. It's quite simple.
Now, today's presentation is going to be very basic, but I like basic. I like simple. And one thing that's important to understand with what we do as technicians is, "The limits of my language are the limits of my universe." I love that quote, and the reason why is because it speaks directly to technical analysis. Who can read this? Oh, you can't. Very rarely do I have somebody who can actually read this. How about this? Anybody? An electrical engineer? A doctor, of course. How about this? I'm sure we have some musical types. Okay. Technical analysis is a language. The better you understand the language of technical analysis, the better you'll be able to understand the narrative of the market. So the Wave Principle, that's what I'm going to be talking about today. Here are some reasons why I'm an Elliott Wave-ian. I've been with EWI, Elliott Wave International, now for 25-plus years, and this is what I enjoy: it helps me identify the trend; it identifies counter-trend moves within the larger trend; it helps me identify the maturity of a trend; it also allows me to identify what I consider to be high-probability objectives through the use of Fibonacci ratios, retracements, and multiples; and then it also allows me to identify when I'm wrong, and that it does so by the means of the rules and the guidelines. So, and this is the book I wrote with my co-author, Wayne Gorman, if you're interested. It's on Amazon. That's a shameless plug.
So basic Elliott. I spoke with one of you earlier, just a quick Jeff. I believe in the—and I encounter this quite a bit whenever I'm speaking to crowds regarding the subject or the subject matter of the Wave Principle—and many people find it very confusing. I believe the reason it's confusing is because it's not taught well or taught properly. So we're gonna be looking at the basics. Mastering the basics will take you a very, very long way. Okay. Now, there, when it comes to the Wave Principle, there are literally about a hundred different rules and guidelines, and there's all kinds of, you know, there are basic patterns, the core patterns, and then we have what I call variations and complexities. How many of you are familiar with, say, the Elliott Wave flat correction? You are? Know what my students are? Okay. Well, you know there's a variation to that actual pattern, and that pattern would be—one variation would be the expanded flat; one variation would be the running flat. A good example of a running flat in action was a stock I was following in trading called IONS. It did a nice running flat prior to the big pop to the upside, if you're curious. But these are the five core patterns. Everything that we know about the Elliott Wave Principle starts here. So inundate yourself with these five patterns. If you can master these five patterns, you'll probably have a better skill set than some people who practice Elliott, you know, the Wave Principle that I see on the internet, because I'm always—you know—looking at what somebody's thinking in another market. I'm looking at their wave count. It's just like, okay, rule violation; didn't it follow guideline? Rule violation; no guideline; no guideline. And it's just—it's—if you're going to do Elliott—now let me just caution you right now—if you're going to include the Wave Principle in your, say, quote-unquote, traders toolbox, learn how to do it well. Follow the rules; follow the guidelines. Because if you do not—like any tool—it will hurt you. A knife in the hands of a skilled surgeon can save lives; a knife in the hands of a lunatic can take them. The Wave Principle is just a tool; candlestick analysis is merely a tool. There's nothing magic to this stuff, but these are tools, as such. You, it's your responsibility to learn how to utilize these tools correctly or properly, because if you start trying to do the Wave Principle and you're not following the rules and guidelines, you're gonna be long a market right before it crashes or vice versa. Okay, question? No questions? Good.
So here are the five core patterns. What the Wave Principle does is it classifies price action essentially into two modalities of the five core patterns. You have the two modalities: one is called motive wave; one's called corrective waves. The impulse and the diagonal fall into that motive wave category; your flat, triangle, and zigzag fall into your corrective wave category. That's it. Okay, very simple. These are the five core patterns. It all starts here. Now, when I first began learning the Wave Principle, I had a real big disconnect. You know, I could see these line diagrams on a on a plain white sheet of paper. I had a friend at the company who would, you know, test me constantly, and he would draw these line diagrams, and I could—excuse me—but I could count the hell out of these things. It was easy to identify, but when I started to look at open, high, low, close price charts, my eyes crossed. It was just like I couldn't see what was going on. So it's very important to me whenever I'm showing these line idealized diagrams to also show examples. This is what an impulse wave looks like. Okay, clean, clear five subdivisions. You can clearly see this waves one, two, three, four, and five. Prices travel very far in a very short period of time. This is a great example of what a classic impulse wave looks like.
Ending diagonal. We talked about this in Traders Classroom. I basically—again, whenever I'm doing Traders Classroom, it's a service that teaches people about really all forms of technical analysis—but I was using this as an example of an ending diagonal. And ending diagonals are a terminating wave pattern that could only occur in the fifth wave position of an impulse wave or as a wave C of either a zigzag or a flat, but this is what one looks like: basically a rising wedge or sometimes referred to as a falling wedge if you're familiar with um, Edwards and Magee and Bisetti. Zigzag: five, three, five pattern, ABC. Something that you may want to write down because it's very important. I use it; I'm constantly living by it. Counter-trend price action. Counter-trend price action tends to be contained by parallel lines. So if you're looking at my style of trading, I I don't try and pick tops or bottoms. I kind of gotten away from that. That just—you can do it. I've done it; I'm sure you've done it as well, but it's a tough game to do consistently month in month out, year in year out. I'm very much of a trend trader. I like to find a market that has a well-established trend, and then all I do is I wait for those pullbacks. I wait for those counter-trend moves. It's easy; it's fun. Okay. Well, counter-trend price action tends to be contained by parallel lines. This is a flat. This was Goose Canada. I was tracking this back in late 2018. Flat correction, and you can clearly see the subdivisions: ABC down, three waves; ABC up, three waves; impulsive decline in wave C. Easy.
Okay. This is worth writing down as well, and this is what I teach my students, and this is what I do myself. A lot of times I'll get emails from my subscribers who—and it's something like this—"Hey, I'm in XYZ stock. The—I can't recognize the pattern. This is what I think it is. What do you think?" And I continue to hold it. Okay. My first idea is, if you don't know what the hell is going on, why are you still in the stock? Bottom line: if you can't count it confidently, don't trade it. All too often, and I and I mention I had a brief conversation with Doc here. Day trading, for example, a lot of times you'll begin to—who's ever day traded before? Who's ever like sat in front of a computer and looked at a price chart for like not just four or five hours, but like twelve, you know, you're watching overnight price action. Okay, your eyes are gonna cross. You're gonna start to see exactly what you want to see. Okay, look at a chart. If you recognize a pattern, great. Run with it. Do some more analysis. Look a little bit deeper, but if you don't recognize it, walk away. If you can't count it, don't trade it. And all too often I'll see, you know, bad trades, and it all stems from a very unclear, a very confusing wave count. Triangle. Specifically, this is referred to as a running triangle because your wave B terminates beyond your wave A origin. Triangles are important to understand because they always precede the final move of a sequence. In other words, they're letting you know that the party is almost over. And just very, very important. So pop quiz: who's had the coffee? Let's see who's been listening. Any idea what pattern this is? Remember there's five patterns: impulse wave, that's a five-wave moves where the waves do not overlap; the ending diagonal; that looks like a rising or falling wedge; then you have your zigzag, your flat, and your triangle. What does this look like? What? Okay, does anybody say it's a correction? Good. You have had your coffee. I have to catch up on mine. This is just a classic impulse wave. You got a flat in the wave two position and a zigzag in your fourth wave position. To—does not terminate below the origin of wave one. That's a rule. Wave three can never be the shortest impulse wave of waves one, three, and five, and wave four cannot end in the price territory of wave one. Classic. How about this? This. Okay. Now, a lot of times, too, to arrive at a the relevant or the operative wave count in a market—one way to go about it—there's two ways. Number one, you can look at a chart and see something clear like the impulse wave we just looked at. Another way to arrive at the operative labeling in a particular market was to figure out what it is not. Okay. So does this look like a motive wave or corrective wave? Corrective? Anybody say motive? You guys are on top of it. No, this is clearly a corrective wave. If it's slow, it's choppy. There's a lot of swings at noir breakouts that seem to fail. It's a classic zigzag. It's a five, three, five pattern where your wave B here is a flat correction.
Okay. Now let's look at some real-time application because I'm a fluent, somewhat active trader. From that small arrow on your left to the larger arrow on your right, is that price action would you consider that to be motive wave price action or corrective wave price action? Because again, that one question critically important because it's telling you if you're starting out, starting your wave count off on the right foot versus, say, digging yourself a hole. Is this motive or corrective? Corrective? Anybody say it's motive? Anybody want to try and count that as a developing series of ones and twos to the upside? Slow, choppy price action contained within parallel lines tends to be a counter-trend price move. For me, that screams a selling opportunity. Does everybody understand that concept? If you do, raise your hand. Okay, I need audience participation, otherwise I'm gonna start calling on you individually. It just helps me to speak better. Okay. This is the wave count. This is what we refer to as a complex correction. Don't let the name fool you. All that really means is that there's two types of corrective wave—two corrective wave patterns joined together by an X wave. And this was the trade I took as a result of that counter-trend price action. This is what we were looking at right here: A, B, C, X, A, B, C, and it set the tone. Okay. The one takeaway from this slide I want you to remember, and again, worth writing down, I like to see something called confirming price action. Okay, I want to see something on the chart that begins to support my assessment. Okay. Whenever I come to New York, I've learned one thing: I just don't walk across the street without looking. Why do you look? What do you look? Left and right, and actually left, right, left, right, two or three times. Why do you not do that? Exactly. Okay. Well, you want to make sure nothing's coming. Okay. What you're doing by pausing at the street and looking left and right and left and right is you're waiting for confirming price action. You're looking for—hey—making sure it the way is clear. Point being, this was an extremely profitable trade for me, but notice I didn't pick the top here. I don't care about picking the top. I'm looking to identify a place I can jump in where I think I have the best odds of having it or experiencing a successful outcome. In other words, stop trying to pick the top and pick the bottom of a market. Okay, it can be futile at times. It's—you can do it. I've done it. Again, I have no doubt every one of you have done it at least once, and it's great. You have bragging rights around the water cooler. You feel like, "Oh man, I'm so brilliant. Watch out, Wall Street. Here I come. Gonna be on the cover of Barron's." It's a hard game to do consistently year in and year out.
Okay, let's take a look at this price action. Who can count this? What do I have now? Remember five core patterns: impulse wave, that's a five-wave moves where the waves do not overlap; the ending diagonal; then you have your zigzag, your flat, and your triangle. Okay, maybe this might help: best way to eat an elephant is one bite at a time. So if you see a price chart such as this, try and section it off and focus on what you do recognize. How many waves do we have here? Five waves down. The importance of a five-wave move is that it identifies—allows you to identify the trend of the higher degree. What do we have here? Well, answer is five. Everybody got it correct? What about this move? Three-wave move. Okay. So answers three. So what forecasts can we make from this interpretation? Because remember a five-wave move, the direction of the five-wave move tells us what the larger trend is. A three-wave move is always going to be a counter-trend move. It's always going to be a counter-trend structure. So from a trading perspective, what do we want to do as traders? Are we buying? Who's buying? Who's selling? We got sellers. Awesome. This is the forecast that we can make. We can say, okay, hey, with five waves down and three waves up, we can at least expect a move to below 140.421 if it—and that's in wave C. When in other—you're working—whenever you're working a zigzag, the most common relationship between waves C and wave A is equality. If it's a third wave, then you're gonna see larger multiples like 1.618, 2.0, 2.618, things like that. Yes? Yes. I would not be looking to sell it here, even though I can count it up and done. The reason why is because all too often I'll see something like this—say it's the top—take a position, and then ultimately prove and wrong. Okay. I want to see something on the price chart that argues that yes, that was indeed a top: confirming price action. A trade to me is like a party. I want to arrive fashionably late, and I want to leave before the cops come. Let's—you know what kind of parties I like to go to. Okay. So I'm always going to be late. In this instance here, the few of the—probably the soonest I would be looking to actually take the position would be over here with a stop against the high. And the reason why—and this is also worth writing down—notice that advance. Now notice the subsequent decline. That's what I call a wave of equal weight in the opposing direction. One of the best ways to identify a top or a bottom in a market is look for a wave of equal weight in the opposing direction. That's—that's something that—again—it's one of my trade setups. When I see something like that, that again bolsters my confidence that we—that wave C is indeed done, and I'll be looking for the market to continue lower. Yes, exactly. It could have turned into a complex correction where a WXY happens. That's a—that's a—Okay. What—the question is—excellent question—what I retake a short position in this if I'd been stopped out? If like, for example, if I've been—gotten in here—the market goes up, spikes up, takes out my stop, would I get back in? The answer is yes. All too often, when we take a position in a market and we get stopped out or we cut it loose because we think we're wrong, don't throw the baby out with the bathwater. Just because you're initially wrong does not mean you're ultimately going to be proven wrong. Okay, stick with it. Watch what happens because you might actually see the market do what you originally think it's going to do.
Okay, for example, this is a story we all can relate to. That's one of the things I love about traders. We've all been through it. We've all—we—we experienced the same difficulties as traders. The camaraderie, well, as is unbelievable. For example, you're looking at the market. You think it's bottomed. You take a position to the buy side. Okay, how many have done that? Raise your hands. Okay. Market starts going up. You start getting excited. Start patting yourself on the back, and you start doing the math. What's doing the math? You start counting the money. Okay, and then what happens? The market comes down, hits your stop, or puts you so far into water you can no longer feel or take the pain. Has that happened? Everybody? Okay. And then once you get out, what happens? The market does exactly what you thought it was going to do. Okay. Just because you're initially wrong doesn't mean you're ultimately going to be wrong. Stick with it. So if I got stopped out here, I would probably stick with the trade because you've got such a nice five-wave move down. Now, in this case here, again another nice trade. Here's some of the trades I took during my little bong campaign back in '18, and it was a great year. Focus on what I call the critical elements: trend, pattern, momentum, and candlesticks. I love candlestick analysis. The Wave Principle allows me to take a lot of data—a lot of data—data being each one of these price bars, each one of these open, high/low, close price bars—the range of those price bars—that is a massive amount of data. The Wave Principle allows me to look at that price—all that data—and quickly identify a context, a trend. You know what's going on. Candlestick analysis—and I'm a big fan of Nison's work—it allows me to actually look at a single price bar and interpret it. So I think those two disciplines work very, very well together. Momentum, I think, is a critically important to your, say, your traders toolbox, and also pattern analysis, whether it's inverted head and shoulders, any of the old-school flag pennants. The Wave Principle, for example, all that is is pattern analysis. So these are what I consider to be the four critical elements. Now, if you're into COT data, for example, if you're a futures trader, hey, fine, add that if you want to make that a fifth component, a fifth critical element, go for it. If you're into seasonality, and that—if you're into market profile, and that—if you have something that already works, keep it. Okay. One of the biggest mistakes you can make as a trader is to find something that works, and then you do what's really wrong. And men have a horrible track record with this because it—we're wired this way—you have—find something that works, you do it for a few months or maybe even a few years, and it's working, and then what do we do? We try and make it better. We try and make it better, faster, or smaller, whatever, and what happens? We end up totally screwing up what was ultimately working. If it's working, don't change it. If you have something right now and you're doing well and you're having consistent returns week in week out, month in month out, you're—and you're out—please leave the seminar now because if you're—I don't want to get something new in your mind. I've spent the last 10 years of my career pretty much trying to—unforgettable works. I love simple. Okay. And bottom line: if you want to improve your trading, improve yourself, because it always starts there. Okay, pop quiz again. What's wrong with this picture? Sorry. Exactly. Wave two ends or terminates below the origin point in wave one. That's a rule violation. If you're going to do Elliott, do it right or don't do it at all, because what will happen—and I get frustrated with this—somebody will start doing Elliott, and I've got one subscriber who's driving me batty right now because I know he hasn't read the book, and it's like, "Kim, wave C be a three-wave move?" No, wave C cannot be a three-wave move. It's in the book; it's a rule. Wave C's always going to be an impulse wave. Okay. If you're going to do Elliott, do it right. If you're not willing to do what it takes to do it right, please don't do it at all, because otherwise you'll walk away going, "Oh yeah, that Elliott Wave stuff doesn't work." No, it does work if you do it properly. Okay. If you do it incorrectly, yes, you'll be looking up when you should be looking down. Okay. This is a flat pattern. We know that because we have three waves in wave A, a three-wave moving wave B, and that's followed by a wave C decline in five waves, not three. What's wrong with this student? Wave B is too short. Wave B has to end at or near the origin point of wave A. If you're not going to do this right, please don't do it at all. Okay. You will hurt yourself. Okay. Now some fun stuff, too. Okay, I'm—yeah, I got time. My favorite trade setups. We were talking about this: the fourth wave pullback. The reason I like the fourth wave pullback is because there's a complexity to the Wave Principle specifically pertaining to impulse wave development, and that's called a truncation or failed wave. A failed wave occurs whenever a move that should make
A new price? I does not do so. Okay. That occurrence is actually very rare. So I like the fourth wave pullback. Can everybody see and understand what I'm doing on this chart? The wave count? Do you see why I would not say that as a corrective price move up from the low? I want it saying, I want confirmation on this. Give me hands up; everybody sees and understands why I'm labeling this as an impulse wave; waves one, two, three, four, and five. Good. Okay. So that's a fourth wave pullback; that's my buying opportunity. That's the subdivision within wave four; that pattern right there, that blue B, that's referred to as a running flat. Three up in an A, 3-2-B wave. C does not make it above the A wave extreme. Then we have the ending diagonal into the low. Does everybody understand that?
Moreover, just to keep it simple, don't do Alice in Wonderland, by the way. What's Alice in Wonderland? Falling down the rabbit hole. You look at a price chart and you essentially fall into the details. Don't do that. Lean back. Remember, counter-trend price action, corrective price action, tends to be contained by parallel lines, and that's exactly what we have here. We have a sloppy, choppy, slow move contained within parallel lines. Notice how quickly that move took off to the upside and the length, very, very far, very, very fast. All of that; it's the characteristics of a third wave price move. If I have something on the chart that I know this is clearly a third wave move, I know what's going to happen next in the sequence. I'm gonna pull back in four, and then I'm gonna rally to new highs only five. So I like to wait for that pullback, and that's what we caught. Does everybody see that? Okay.
Now, how does an Elliott Wave technician actually make a forecast? Well, these patterns have an outcome. The patterns that we looked at, those five core patterns, they have an outcome. A zigzag will be more than fully retraced; a flat won't be more than fully retraced; a triangle will give way to a final fifth wave move or a wave C price move; five waves up and on. What will happen? Prices will fall back into the, you know, span or the price territory of the prior fourth wave move. So ultimately, we will see prices come back down, back into that, say, twenty-five area, and I believe that's exactly what happened. I may have a slide here. Oh, and that's just me. If you're interested in learning more or taking the next step, my contact information is up there: ElliottWave.com or customercare@ElliottWave.com; either one. Yes, Doc? Sure. Wave 2 – wave 3 for me; it has to do with, with just a mental probability thing. Okay. When you're down here, oh, when you're down here. Okay. Where's mine? There we go. What? Okay. This is a viable trade. Okay. You have five waves up and then ABC into the low there. So a trendline connected from that high to that line over there, the breakout. I'm more than happy to play the breakout. Okay, but at that point, at that stage of the game, right here, oh, wait, cool. Okay. So draw a trendline from that high to that high right there. Come down. Once you start breaking above that trendline, that's a great buying opportunity right there. I'm sorry. Yes, exactly. Exactly.
Okay. Now, at this point, I take a buy-side trade. Typically, when I first started counting the wave waves, everything I was a lever eat. I had five waves up in three waves down. I was always looking for a third wave. That's incorrect. And the reason why is because markets are more often than not in a counter-trend type phase, more so than a trending market phase. So really, at this point, I don't know if the advance is going to be a wave 3 or going to be a wave C. I know we're going up, but the market has not told me yet; it hasn't shown me the rest of the story. Only until we start getting above the what I call the upper boundary line of the base channel. I don't think of it this way. We remember when I said counter-trend price action tends to be contained by parallel lines. Okay. There's more to that. If you think about it, that means, if you think about it, that if price action is not contained within parallel, it's going to be an impulsive move. I don't really get confirming price action that this thing is indeed a third wave move until up here. Okay. So this is why whenever I take a, say, a buy-side position, I always kind of work with the idea that I'm looking at a C wave, because I would much rather be, say, pleasantly surprised than greatly disappointed. I don't want to have a buy-side position here thinking it's a thinking it's a C wave. There we go. Thinking that this is, I don't want to start off thinking that that's wave three, because ultimately I could be proven wrong. But if I think it's a C wave, I can catch wave C and then see it turn into wave 3. But as far as probabilities or confidence, the fourth wave pullback is one of the, I think, highest probability trade setups Elliott does indeed offer. It's awesome. So I look for fourth waves all the time. Questions? I got a few minutes left here. Yes.
Well, once we, once we start clearing the prior swing highs here again, wave of equal weight in the opposing direction. So let's say I get in at this point here or even get in later, I mean, I get try it. Oh, where would I initially put the stop once I get in here? My stop goes right there. Yeah. Risk is, if you want to survive the game of trading, meaning if you want to be in trading three years from now, five years from now, you have to manage risk. Okay. You're going to be wrong; you're going to be wrong. It happens. So whenever you are wrong, you need to make sure it's not a devastating blow. Okay. I have blown up, up probably a dozen trading accounts over the years. Okay. Who's blown up a trading account? Come on, we've all been there. If that's emotional baggage and you think that as a negative, cut it loose. Okay. That's simply the cost of education. Okay. So my MBA in trading probably cost me about a hundred thousand dollars. I've learned a lot by losing, and but I don't make those mistakes anymore. Very, very important: you must manage risk. Okay. You need to manage risk so that if you are lost or even have three, four, five, six losses in a row, they're not devastating; it does not wipe out your account. Small losses are the cost of doing business. If you have a dry cleaner or a restaurant, the rent you pay, the mortgage you pay on the brick-and-mortar establishment is the cost of doing business that you ultimately will pass on to your customers. Okay. Small losses are distinctly the cost of doing business as a trader. Big losses? That's not acceptable. Big losses tell me you're not doing your job and managing risk. Okay. More questions, sir? Yes, sir. Okay. Yes. If, okay, in this case here, and this is a good example. Okay. Let's say I take an initial stab at that right there and I put my stop at the low. When I'm seeing this breakout, I think I probably have it by that point, so maybe I move my stop up to that low right there. Okay. That sell-off stops me out, which is kind of natural, by the way. Where we see the move, the sub, that decline come down and take out some of those prior swing lows. Whatever screws the most people tends to be what happens. Okay. So basically, the market's actually running stops with that price move. So let's say I get stopped out. When am I looking to get back in? When that high basically gives way. So I'm back in on this area right here. Okay. But you bring up a good point as far as time and wait. How long do you wait? Okay. If you take a position in a market, and this would be, say, my price stop here, I get in right there. There's mothers my, there's my protective stop. Okay. If I take a trade in three or four days later or three or five days later, if I'm not seeing what I want, I'll get out. That's what I call a time stop. Because if I'm writing my analysis, the market should be doing something, and in, in three to five days, if it's not doing what I thought it should, something's wrong. I may not see what's going on or what's wrong, but I certainly take that as a warning sign. Yes. Oh, yeah. No, no. I trust me; I've been in that kind of a situation. In fact, I think it was first quarter of 2018, VX Acts. Remember that? It went from like $200 a share of like $20 to share or two dollars to share, like, you know, in a day. I was in there. That was that experience cost me 20,000. Try and figure if you what would cause the gap. Okay. When it comes to earnings, for example, that, that's what prompts many gaps. I tend to be very, very cautious. So if we're coming into an earnings report or if I'm trying to play an earnings report, I will not trade big-sized prior to earnings. Like there was a stock recently, what was it? Oh, I, it was a big gap down. I forgot what the name of the stock was, but it was an earnings play. Okay. Um, but I know it was an earnings play. Earnings plays can be very, very tricky. So I trade very, very small. I'm willing to take a shot at it because I may be right and I'll see a big return, but trading earnings are very tricky. Be careful with that. So but gaps come out of the blue; they do happen. And sometimes you have to take your lump. Sometimes you need to be careful though that you're not too reactive, because many times what will happen, I see this in my own trading, I'll take a position, maybe Thursday, Friday, and I like the upside, and then Monday comes and there's selling pressure on Monday, and it makes you, it sykes me out. I think I'm wrong, so I'll go ahead and cut the position loose, and then my two o'clock that day later that day I'm back in the money and going strong. I should have held the position. That's where we go back to again, psychology. The weakest link in a successful trading equation is the individual. You have to trust yourself. Okay. Don't let date it, you know, hour by hour price action distract you or or dissuade you or erode your confidence in work that you may have done over the weekend or work that you've been doing all week or all month on, say, taken in position and XYZ stock or futures or crypto or 420 or whatever. So more questions? Yeah. In the book AJ by Ajay Frost and Robert Tractor, it says the rule is that wave B must retrace 90% of wave A. By looking at some illiquid markets in futures markets and currency markets, I find that 80% is a better guideline. So as long as wave B of a flat retraces at least 80% of wave A, I'm comfortable calling it wave B of a flat. I'm sorry, a flat will have a sideways type movement or a very shallow slope movement. Zigzags are a bit more or what we fall into what we call a sharp corrective type family. Absolutely. Absolutely. And that's another key thing that will help you identify waves better is to look at the proportionality of structure and also look at the personality. I'm not going to try and call that anything but corrective because the slope, it's shallow, very shallow slope, very contained within parallel lines. The larger trends to the upside. I don't like to treat triangles. Triangles are very tricky patterns. Sometimes when you think you have a triangle fourth wave, it actually turns out to be a triangle B wave, meaning you know you'll look up, it'll come down sharply and then go back up. Great example is Starbucks on the daily, weekly chart level. We were doing a beautiful triangle, and I thought I was going to break out to the upside. What happened? It came down on earnings, bottoms, and then we continued to rally to new highs. Scaling into position of a triangle that I, that I can understand because, you know, as the market commits to you, you can then commit to the market, and that's what I refer to as um market compression or moving average compression. If you have multiple moving averages, whenever you start seeing them come together, that's gonna, that's very, very important, and you can actually utilize an option strategy for that, something like a spread or a straddle to take advantage on that from an options perspective. So I think that's about it for my time, is that right, guys? Okay. Thank you so much. Thank you for joining me. Now we're gonna track down some coffee.