Let’s try to solve most of the problems you have been having with trading in one single article.

First, a practical example and then the theories later.

This bottom had developed by the morning:

I was busy in the morning and missed out on the long entries, although I knew what the target was going to be. You see, there is no random stuff here, things happen methodically and with a reason.

I put in some pending orders and traded on the fly while I was commuting home from work.

Knowing the things I know can virtually guarantee you daily 5-10% gains, and nominally this is more what a Plant Room Assistant makes on a daily basis – believe me, I know. This in on a 1k basis – I would be closing the week with 1,652.61.

So, what are the reasons behind the generic unconscious incompetence?

1. Not knowing / not acknowledging the type of market you are in.
   There are markets with edges, which are the embedded markets and markets with no edges / leveled play field.

When a market is embedded, that means that either the bulls or the bears have advantages over one another. This imbalance in the game rules results in bull or bear market.

Whenever people yell bear market on TV, they clearly do not know what they are talking about. 25% correction? Based on what? Price of the index/stock? 25% compared to the range top-range bottom in the last year? Losing the overbought status gives the opportunity to the bears to utilize their surprise/time advantage and make some major damage by i.e. taking the ball from the overbought court to the oversold one, but this move does not have to result in a bear market setting in: for the embedding to develop price not only has to go down, but also stay down for a prolonged period. Becoming freshly oversold does not give bears any advantages, it is quite the opposite that is true.

for more on this please refer to my articles based on my Comfort Levels indicator

1. Not understanding the rules of embedding.

Let’s discuss the EUR/USD that has been in bear market for a month.
What rules apply here for the bulls?
They are playing with handicap. In bear land, the objective of a bull is to score a Wave 1 out of the first 3 tries. Their time is restricted for each leg, they get less than 3 hours of try below E16. Once the 3 attempts are up, the bears get to go hard for 5 waves (3 pushes) down.
The bears objective is to keep making lower lows.

Let’s talk about what went down after the market printed an end of wave 5 of Wave 5. There was a strength/measure attempt. It did not qualify. Although this is not a wave that gets a count, it still has a wave-like structure to it.

A Sign Of Strength is what it’s name says, a visible measure of buying, yet since it falls short from being able to fake out Mr. Maroon, it is a short term, immediate sell signal (all the attempts to the upside got broken 3 times in a row) for five legs down – which aren’t expected to get very far, after all.

Mr. Maroon is the 135 High and Low EMA pair on 30 min. A fake out on the upside is a hit between -3 and +8 pips of the High EMA.

What happens next? 3 opportunities for the Bears to try to push this down. The shallowest kind of pullback would merely do some faking out on the Low end of Mr. Maroon, and there would be the bulls turn again for Wave 3 up, all five legs of it. I don’t expect the E16 violated by much on the following 2 more attempts down, but we shall see. 3 pips below is the algo buy area. The Bulls have registered a right for a Wave 3 and a Wave 5 to the upside. And this time with the 2.5 hours per leg time restriction lifted.