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Advanced G ann E lliott T echniques ‘With an Optionetics View’

Advanced G ann E lliott T echniques ‘With an Optionetics View’. Denver Trading Group Ken Sheppard 303-420-5508 Ken.Sheppard@attbi.com. Optionetics Principles. Leverage and control Limited-risk protection Getting paid for that protection. Agenda. Review Elliott Wave Theory

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Advanced G ann E lliott T echniques ‘With an Optionetics View’

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  1. AdvancedGannElliottTechniques‘With an Optionetics View’ Denver Trading Group Ken Sheppard 303-420-5508 Ken.Sheppard@attbi.com

  2. Optionetics Principles • Leverage and control • Limited-risk protection • Getting paid for that protection

  3. Agenda • Review Elliott Wave Theory • Examine AGET confirmation studies • Analyze hi-probability trading setups • Research risk/reward ratios • Search for possible trades • Real-time analysis of your favorites • Stocks • Futures • Indices

  4. What’s up with this?

  5. Elliot Wave Basics – Impulse Pattern Wave 5 Wave 3 Wave 3 is never the shortest Missing out? Profit taking decline Traders now buying with a strong rally Wave 4 Will not overlap Wave 1 Stops taken out Stops Wave 1 Vicious sell off Wave 2 Wave 2 will not make new lows

  6. 5 5 3 3 4 4 1 1 2 2 Elliot Wave Basics – Alteration Rule Simple Complex Complex Simple

  7. Elliot Wave Basics – Corrective Pattern Wave B: Usually 50%-75% of Wave A 5 3 B A Simple correction: Zig-Zag 4 C 1 Wave C: Either 1 x Wave A or 1.62 x Wave A or 2.62 x Wave A 2

  8. Elliot Wave Basics – Corrective Pattern 5 3 B A Complex corrections: Flat Irregular Triangle 4 C 1 2

  9. Elliot Wave Basics – Fractal in Nature 5 3 v iii iv 4 i 1 ii 2

  10. 5 3 2 1 4 4 1 3 2 5 Elliot Wave Basics – Works Both Ways

  11. Elliot Wave Basics – Works Both Ways

  12. Wave 3 Fibonacci Extensions 3 2.62 80% of w3’s end here 1.62 1 0.00 2

  13. Wave 4 Fibonacci Retracement 3 0.00 0.38 60% of w4’s end here 0.50 4 15% of w4’s end here 0.62 1 1.00 2

  14. Wave 5 Fibonacci Extensions 1.00 5 w5’s usually end here 3 0.62 0.00 4 1 2

  15. AdvancedGET Studies AdvancedGET generates the appropriate Elliot Wave counts for us and adds additional studies for statistical significance. • Momentum (Elliott) Oscillator • Profit Taking Index (PTI) • Wave 4 Channels • Ellipse • MOB (Make or break) • Triggers using regression channel or 6,4 DMA • ROI using Fibonacci extensions

  16. 3 4 1 1 2 2 Elliott Oscillator Wave 3 Wave 5 By comparing the oscillator peaks, we can distinguish between w3 and w5

  17. Elliott Oscillator

  18. Elliott Oscillator • In all the data since 1960, the Elliott Oscillator in w4 has pulled back to zero 94% of the time!

  19. Profit Taking Index (PTI)

  20. Profit Taking Index (PTI) 3 4 1 2

  21. Profit Taking Index (PTI) • Calculated in the early stages of w4 • Compares the current w4 against w3 to see if normal profit taking is taking place • When PTI is > 35, expect new highs • When PTI is < 35, there is a lot of selling coming in which reduces the odds for a w5 • PTI only grows smaller as w4 completes

  22. Wave 4 Channels

  23. Wave 4 Channels • If the w4 retracement holds below the first channel (blue), the odds are better than 80% for a strong w5 decline. • If the w4 retracement holds below the second channel (green), the odds are only 60% for a strong w5 decline. • The third channel (red) is a final stop. The few times a w5 is generated it will be long, slow and drawn out.

  24. Ellipse(a continuation tool)

  25. Make or Break (MOB)(a reversal tool)

  26. How Can We Trade This?

  27. How Can We Trade This? 5 Waves 3 & 5 are trending rallies easilyidentified 3 + = Waves 1-2 & 4 are corrective patterns which are hard to label Type 1 Buy 4 1 2

  28. - 5 - 3 45 38% 4 50% 1 62% 2 Rules: Type 1 Trade(Buying at the end of a w4 retracement) • Oscillator pullback • > 38% retracement • PTI > 35 • W4 channels holding • Use trend channel or DMA for trigger • Place stop • Look for w5 target • Calculate ROI Reverse logic applies for a declining impulse wave

  29. How Can We Trade This?

  30. How Can We Trade This?

  31. How Can We Trade This? Type 2 Sell 5 5 3 3 B + = A 4 4 C 1 1 2 2

  32. Rules: Type 2 Trade(Selling at the end of a w5 rally) • Prices near w5 projection • Oscillator divergence • Use trend channel or DMA for trigger • Place stop • Expect w4 target • Calculate ROI - 5 - 3 4 ? 1 2 Reverse logic applies for a declining impulse wave

  33. How Can We Trade This?

  34. Set-ups • Trend channel • Hi-Lo Flip regression • with ± 2 standard deviation channels • DMA • 6 period MA • with 4 period offset • Alert when bar[1] closes outside set-up • then trigger when bar[2] moves past extreme hi/lo of bar[1]

  35. Triggers Buy level First bar that closes above trend channel Stop at low

  36. Triggers

  37. Triggers

  38. - 5 - 3 45 38% 4 50% 1 62% 2 Risk vs. Reward 1.618 Reward 1.000 Risk 0.000

  39. AdvancedGET Studies AdvancedGET generates the appropriate Elliot Wave counts for us and adds additional studies for statistical significance. • Momentum (Elliott) Oscillator • Profit Taking Index (PTI) • Wave 4 Channels • Ellipse • MOB (Make or break) • Triggers using regression channel or 6,4 DMA • ROI using Fibonacci extensions

  40. Examples • Let’s look at some examples • Hotline recommendations • AdvancedGET searches • Your favorites…

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