Welcome, Readers

Welcome Readers,

 

Have you ever wondered how someone can enter the financial markets as a trader with zero experience and survive the bloodbath long enough to develop a trading plan and trading system that allows them to be consistently profitable whether it be in individual stocks, ETFs & Indices, or commodity and indices futures? I have as well. That is why I have decided to create this electronic trading journal to document my analysis, trades, and overall trading system development.

Over the next year, I will be posting long and short-horizon market analysis on mainly the U.S. stock indices and metals markets. I will be documenting my personal trades, the analysis and decision making that goes into them, and any updates I make to my trading system at each step along the way.

Now, I won’t be starting completely from ground zero and neither should you if you are ready to begin risking your hard-earned cash. Instead, I have already completed a significant amount of reading related various forms of technical analysis which will weigh heavily into my analysis and trading decisions. So, if technical analysis does not interest you, then you need not proceed further. You will not find me relying on quants or fundamentals (although I may reference them from time to time in my long horizon analyses). Instead, my preferred trading tools, which I have back-tested from 2020-2023 and forward tested for the last three months using a paper account, heavily follow the methods outlined in books on technical analysis by Constance Brown, CFTE, MTFA. If you are familiar with her methods, then much of my discussion will be familiar to you. If you are not, then be prepared to learn about Fibonacci analysis, hidden signals in oscillators, the Elliott Wave Principle, and a small introduction to rudimentary Gann analysis (this is an area I know little about at this time). If this interests you, then you will find a list of reading material below. I have read each of these books at least once, and some, multiple times over the last year. Most can be found online for free (something Connie references several times in her most recent writing) with the exception of “Trading Market Dynamics Using Technical Analysis”. In no particular order, these are:

“Mastering Elliott Wave Principle: Elementary Concepts, Wave Patterns, and Practice Exercises” by Constance Brown, CFTE, MFTA

“Trading Market Dynamics Using Technical Analysis” by Constance Brown, CTFE, MFTA

“All About Technical Analysis” by Constance Brown, CFTE, MFTA

“Technical Analysis for the Trading Professional (2^nd edition) by Constance Brown, CFTE, MFTA

“Fibonacci Analysis” by Constance Brown, CFTE, MFTA

“Elliott Wave Principle: Key to Market Behavior” by A.J. Frost and Robert Prechter

“Think and Trade Like a Champion: the Secrets, Rules, and Blunt Truths of a Stock Market Wizard” by Mark Minervini

 

Of these titles, I would consider “Elliott Wave Principle: Key to Market Behavior”, Fibonacci Analysis”, and “Trading Market Dynamics Using Technical Analysis” as required reading for truly understanding what I will include in my analysis and trading decisions.

While Connie’s system is heavily rooted in technical analysis, Fibonacci analysis, and Gann (and Elliott Wave) Analysis, I lean more heavily on the Elliott Wave Principle to time the changes in market sentiment. This is mostly due to my limited knowledge and understanding of the methods employed by W.D. Gann. Perhaps this will change as I develop my understanding and trading system. As such, I have sought out several sources related to the Elliott Wave Principle and have followed many analysts who employ such techniques. If you wish to learn Elliott Wave Analysis from successful professionals, my endorsement would be Avi Gilbert and his team at Elliott Wave Trader (Yes, I am a member of his service, but the analysis you will be seeing here is my own work that may or may not align with their analysis). They have several articles and webinars as well as a beginner’s circle in their trading room that are all devoted to helping newcomers to the trade practice and hone their Elliott Wave counting skills. You can find several of the educational webinars hosted by him or his analysts on the Elliott Wave Trader Youtube Page (links below). These will serve as a good introduction to Elliott Wave Analysis so that you will understand what I am talking about when I reference obtuse phrases such as “the third of the third” or “the vicinity of the fourth wave of one lesser degree”. If you desire to know more, I encourage you to you try the free trial at Elliott Wave Trader. You do not even need to provide your payment information to use the trial, a rarity in today’s world.

 

https://youtu.be/Gm2Ly9KxqWE?si=W68zvDJx-F-gqFFy (an intro to Elliott Wave, part I)

https://youtu.be/dJimU0Qkn60?si=EZzagVWfMkpG06po (an intro to Elliott Wave, part II & Fibonacci Mathematics)

 

Finally, a little about myself. I have zero formal educational training in financial markets, analysis, or trading. Everything I have learned has come from reading the above materials, asking questions to more experienced traders, or through trial and error. What I do have is a doctorate in chemistry, an ability to analyze data, numbers, and patterns very quickly, and a passion for reading, learning, and perfecting my skills. Most of my trading is a combination of swing trades using options (commonly call/put debit spreads since Elliott Wave and Fibonacci projections can give you accurate price targets), or shorter intra-day trades using index futures. My primary analytical skills were developed using the Russell 2000 index (IWM) or RTY/M2K futures and that is where most of my initial posts will be focused as I believe the IWM will lead the decline in the U.S. markets that I believe is forming throughout 2024. As a final note, if it is not clear yet, I am not a financial or investment advisor nor am I a personal accountant. I have no professional certifications and nothing that I discuss in this blog should be taken as investment or financial advice. All of the discussion rendered is my own speculation and could be (even frequently) incorrect.

As I work on my first official post to be released, I encourage you to review the videos and books noted above. Until then, I look forward to beginning my trading journey here.

 

Best,

DW