Sunday, December 2, 2007

Questions and Comments

"I recently subscribed and just want to say how great your charts are. I have never seen such an accurate market forecast.

I am still a little fuzzy on your buy/sell probe comments and how to best use them. Can you send me something that will give me an understanding of how to best use your material.

I am not a day trader but like to trade multi-week trends. Also, can you recommend which articles in your archives that would give me help on trading?"

EWT's Reply:

Thanks for your feedback and inquiry regarding “probes,” and how to best utilize our material.

In addition to the chart notation definitions page included with each NTO publication, much of what you are seeking can be ascertained at our blog page at the “Trading Questions” link under the “Topic Links” heading at the top of the page.

In short – all probes, be they KP (key-pivot/longer-duration “swing-trades”), or IP (interim-pivot/shorter-duration “day trades”) are “counter-trend” in nature.

As such, one would begin considering counter-trend probe campaigns in attempt to anticipate a reversal of trend by way of “fading” an extreme (or perceived to be extreme) move relative to ones trading-time-horizon.

Though it has happened on numerous occasions, rarely do such campaigns catch exact tops or bottoms without some level of drawdown, or succession of small-measured losses prior to the anticipated reversal coming to fruition and “paying-off.”

As a general-rule, predetermined money management strategies (risk/reward projections) should be adopted prior to embarking upon such campaigns.

In addition, probes are generally “early” as a result of their anticipatory/intuitive nature. The best scenarios arise when a single or series of “trade/pattern-triggers” elect in support of the otherwise “early” (prone to drawdown and outright failure)counter-trend probes.

Once this begins to occur, one gains a much higher level of confidence that this particular probe entry was likely “the one” they were looking for in the first place.

Thereafter, since probes in general do not have specified targets, (they are more for “timing turn pivots”) one must then rely upon the current array of price-targets, and marginalization boundaries in order to profitably exit, lock-profits, or mitigate losses in the event of failure to follow-through to a satisfactory price objective.

Thanks again for the much-appreciated feedback!