Live: Tuesday, Feb. 13, 2018

2/13 – 3;15 p.m. New York time

I exited one position today, FXE, and entered none.

2/13 – 2:05 p.m. New York time

I have updated FXE with results.

2/13 – 11:15 a.m. New York time

The countertrend correction to the upside that began Feb. 9 continues, making trades conceptually difficult to suss out. The major trend is down, and in my experience countertrend moves are those most likely to cause losses. For that reason every experienced trader will solemnly intone, at one time or another, “The trend is our friend.” Indeed it is.

And yet, to trade against the correctional rally is also a countertrend play.

I turn to R.N. Elliott, developer of Elliott wave analysis, and his pre-eminent modern advocate, Robert Prechter, for guidance. The markets are fractal in nature, each price movement, or wave, being composed of a set of smaller waves, and so on down to the most minuscule levels, or degrees, and up to the grandest degrees that are accessible to us.

The Fisher Transform, when analyzing a daily chart and on which I rely on for trading signals, comes in at roughly the Minuette degree, which I think of as being about a week or two, depending upon the speed of change in the markets. The present countertrend correction to the upside is at the Minuette degree, and is contained within a downtrending Minute degree, one degree higher.

So in considering trades, I am caught in a contradiction. When that happens, I turn to the wise advice of a trader who mentored me many decades ago: “You never have to take a trade.” A professional trader, he said, needs to trade often, in order to show the boss he’s doing his job. But private traders, like  you and I, have the luxury of waiting for the right trade at the right time.

And that’s what I propose to do today: Wait for the Minuette wave to come back into alignment with the higher degree trend. I anticipate entering no new positions today.

2/13 – 9:40 a.m. New York time

I have exited FXE for a loss after the Fisher Transform metric gave an uptrending signal.

By Tim Bovee, Portland, Oregon, Feb. 13, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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