the wolf-pak method

Discussion in 'Trading' started by wolf-pak, Mar 26, 2009.

  1. wolf-pak

    wolf-pak

    This is a reversal method using price action only. I use it to trade the emini sp.

    When you understand the theory of this method, everything will become clear to you... this is the holy grail.

    the wolf-pak method

    There are 5 things that must be determined to execute this method.

    1. The extreme of the move (extreme)

    2. The mean (mean)

    3. The first counter move (first move)

    4. The test of the mean (mean test)

    5. The second counter move (second move)


    The chart says it all.

    [​IMG]

    But I will give definitions.

    -----------------------------------------------------------------
    The extreme is the extreme of the move you want to fade... this can be the pullback of a larger trend, or the larger trend itself.

    The mean is a point that prices fluctuates around. This is spotted by drawing horizontal lines and connecting multiple open/close and high/low of bars. The more the better. There can be multiple mean points (vertically speaking). The mean can never be the same point as the extreme.

    The first move reverses away from the extreme, this should not be the first bar after extreme, except in pullbacks of a larger trend.

    The mean test goes back to test the mean, it must hit.

    The sencond move should surpass the first move.
    ------------------------------------------------------------------

    The trading rules:

    Enter on the second move when it surpasses the first move.

    Place stop on other side of mean test.


    Trade management:

    Since this is based on price action only, price action should now confirm your entry by continuing in the new move.

    I will discuss targets in another post. For the time being, lets just say take half off at 3x risk and let the other half ride with a trailing stop.



    That is the wolf-pak method. There is more to it than this, since price action is ongoing. However, this provides a framework for understanding price action, as well as a trading system.

    If you cannot get this simple method to work, you are not correctly determining the extreme, mean, firstmove, meantest, secondmove, or you do not have perspective with regards to timeframe.

    Your most difficult task is in determining the correct mean point.

    Your next task is to keep adding rules and exceptions for the entry.

    Then your next task is to simplify the rules by understanding the underlying theory better.

    I have done both of these tasks, but I will post more later.

    This is the holy grail of reversal trading using price action and it is simple and provides the necessary framework for success.

    All good reversals in all timeframes that are not too small, will show the characteristics that I have outlined above.

    There are variations as well as gauges to test the strength of the signal.

    Good luck... I'll post more when I can.

    ps.. basically, the wolf-pak method describes when a higher-high, higher-low is a real trend change. Vice Versa for lower-high, lower-low.
     
  2. You've just describe a head-and-shoulders reversal. Congrats.
     
  3. wolf-pak

    wolf-pak

    I've heard people say that even if you post a working method on ET, nobody will recognize it.

    krazykarl, a head and shoulders is one pattern that this applies to... I am showing people how and why patterns work.
     
  4. the word setup should be banned from the world of trading. really.

    what is it with you people? you really think you see something that others don't? an edge does not come from a setup. it comes from play and money management.

    what happened and what is to happen have no correlation.

    see, this is the problem: you look at the past, and you look at the potential future. you are forgetting the present moment which is unique, from an order flow standpoint.

    when you look back, there is the fake evidence that an event led to another, but it's fake.
     
  5. jim c

    jim c

    All good reversals in all timeframes that are not too small, will show the characteristics that I have outlined above.
    What do you mean by this? Thanks looking forward to the concept. Jim
     
  6. Pekelo

    Pekelo

    Really? You didn't use protection, you gonne be a daddy.

    There was an ascending triangle, we went higher....

    The market remembers, so do we....
     
  7. nice post
     
  8. beyondMP

    beyondMP


    Let me say, this is the best comment I have ever read on ET. If you understand this, you will know how to trade profitably...period.
    Excellent , Alex, my hat's off to you.
     
  9. It's the old floor traders method
     
  10. If only you could understand that a very few people on ET will comprehend what you have just said. 99 % of all the traders still believe in "set-ups", patterns and other similar crap. Unfortunately very few understand that successful trading has nothing to do with those rituals. I clearly understand and support what you have said, but shhhhh .... We need those naive people. After all, it is a zero sum game in the short run :D
     
    #10     Mar 26, 2009