In part 3 of the harmonic indicators series we will discuss the Wolfe Wave Pattern and how it is used in discretionary trading with a view to producing an automated trading system
It is often important to establish the set of rules that accompany an indicator, only the simplest systems trade one indicator. There are thousands of indicators available but all are indicators not signals, if someone is trading successfully using an indicator it is the confirmation signals that the trader uses that act as filters in both discretionary and algo trading that will make the difference between an okay system and a great one.
Introduction To Wolfe Waves
The wolfe wave strategy is a trading strategy with high-profit loss ratio above 90%. Wolfe waves were introduced by veteran trader and market wizard Linda Raschke.
These types of patterns were originally discovered by Brian and Bill Wolfe who, after analysing a considerable amount of data, realised major price changes frequently occur after four minor waves.
The wolf wave is a naturally occurring trading pattern that can develop across all financial instruments. This chart pattern is made of five alternating waves. This is the same as the Elliott Waves. Supposedly, it highlights the supply and demand imbalances in the market and possible equilibrium price points.
The wolf waves can appear on all time frames from the 5-minute intraday chart up to the weekly chart and are best traded in the FX market at time frames of 1 hour or above. Unlike other chart patterns, the wolf waves are used to forecast where the price is going. And also how much time it will take to get there.
How To Trade Wolfe Wave Patterns – Basics
How To Trade Wolfe Wave Patterns – Investment Banking Approach
This is a pattern that I trade using the Eurhythmic Patterns ProRealTime indicator from ALE Automatic Trading
Alessandro has kindly agreed to provide a 15% discount to Robofuturestrader members, this is a one off discount that will discount the whole basket. Personally I have found him to be very helpful and prompt when fielding support questions