My tools span the range of the discretionary spectrum:

  • The Barros Swing (Nature of Trends material) is essentially a reactive set i.e. we wait for a pattern to form on a chart and then respond. There is little by way of anticipating of what the market will do.
  • The Market Profile has some anticipatory elements but largely depends on present tense information for its efficacy.
  • The Ray Wave lies at the far extreme - its nature is largely anticipatory. It’s best to use it only when you have disciplined yourself to judge reality for what it is rather than what you’d like it to be.

To develop this theory, I have borrowed liberally from the Elliot Wave, added an idea from Michael Gur’s ‘Symmetry Waves’, and finally, I inputed my own experiences. The result is a wave theory that is better than most in this respect: Place 10 Ray Wave practitioners in a room and generally, they will all have the same wave count. They may differ on what to do about the count but the count will be the same for all. I don’t know of another wave theory that can claim this.

Why did I develop the idea? Because the tool suits my nature. The Ray Wave provides a road map of how a market structure should develop. When the market does something different, it’s providing information, information we can use to our advantage, For example:

  1. The RW will tell me if I should expect a simple (straight-line or zig-zag) correction or a more complex one e.g. a sideways market.
  2. It will warn when a move is likely to end - whether that move is impulsive or corrective.
  3. It provides a context for my sentiment indicators and so on …

The RW performs best in trending markets; in congestion markets, I prefer to use the Market Profile; so when a market moves into congestion, I use the Market Profile zones etc to trade it until there is a breakout.

I don’t use the RW to define a trend - the Barros Swing does a great job of doing that. On Monday, I’ll introduce some of the essential ideas. You’ll see that my trading edge comes from the synergy between the Barros Swing, Market Profile and the RW.

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Non-Farm tonight. Gold, ES and Crude Oil are in critical phases. Please take care!

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