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Elliott Wave Mastery

Let’s Settle Some Important Pointers First

▸ All sessions are recorded and will be uploaded to the Online Academy

▸ All slides, materials and toolkits will be provided after the session

▸ These sessions are meant to be interactive, so don’t be shy to ask


questions and interact

▸ Strongly encourage everyone to take notes as we progress through


the sessions together

▸ Have you joined the EW Mastermind Group?

▸ https://www.facebook.com/groups/ewmastermind/

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Elliott Wave Mastery

DIRECTIONAL
BIAS

RECO
PATTE N
FOREC ET
AST
MARK

GNITIO
RN
S CON
I N T I O N FIR
O
P INA T FRA MAT
M CTA ION
TE R L

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Elliott Wave Mastery

Lesson Objectives
DIRECTIONAL
BIAS 1. Impulse vs Correction

RECO
2. 3 Market Scenarios

PATTE N
FOREC ET
AST
MARK

GNITIO

T S N
1 CON
FIR
RN
3. Impulse Move Psychology

4. Corrective Move Psychology

O IN
P INA T I O FRA MAT 5. Why We Trade the Impulse
M CTA ION
R L
TE 6. Be Patient with Correction

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Elliott Wave Mastery

There are only 2 ways price can move

▸ Impulse and correction

▸ Impulse is a strong direction move

▸ Correction is a slow and/or sideways move

▸ This is the building blocks Elliott Wave

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Elliott Wave Mastery

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Elliott Wave Mastery

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Elliott Wave Mastery

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Elliott Wave Mastery

3 Market Scenarios
▸ Impulse wave provides the recent directional bias

▸ And we prefer to trade in the direction of the recent impulse

▸ With Impulses and Corrections, there are only 3 combinations in the market

▸ Impulse then correction

▸ Impulse then impulse

▸ Impulse then crawl

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Elliott Wave Mastery

3 Market Scenarios
▸ Impulse then correction

▸ Direction follow the previous impulse

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Elliott Wave Mastery

3 Market Scenarios
▸ Impulse then impulse

▸ Be patient and not trade

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Elliott Wave Mastery

3 Market Scenarios
▸ Impulse then crawl

▸ Look to trade the reversal direction

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Elliott Wave Mastery

Impulse Move Psychology


▸ Price moves impulsively when there is a catalyst

▸ A catalyst can come from many different factors

▸ Fundamental shift

▸ News / risk events

▸ Sentiment shift

▸ Catalyst provides volatility, not direction

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Elliott Wave Mastery

Corrective Move Psychology


▸ A correction is when the market pause and take a break

▸ This usually happen after an impulse move

▸ During this period, there is no clear sense of direction, and ‘everyone’ is


waiting for the next catalyst

▸ Corrective move are usually choppy, and the price move tends to overlap one
another significantly

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Elliott Wave Mastery

Chart Analysis Psychology


▸ It is perfectly okay to say it’s “NOT CLEAR” at the moment

▸ Give time the market to develop into a clearer combination / pattern

▸ And just move on to the next chart

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Elliott Wave Mastery

Why We Trade the Impulse

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Elliott Wave Mastery

Why We Trade the Impulse

That’s a strong move down,


let’s sell before we miss it

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Oh no, price is going against us

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Luckily we manage to get back in profit,


better close this trade with profit

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Good that we closed the


trade with small profits

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Elliott Wave Mastery

Why We Trade the Impulse

That’s a strong move down,


let’s sell before we miss it

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Oh no, price is going against us

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Luckily we manage to get back in profit,


better close this trade with profit

Sell

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Elliott Wave Mastery

Why We Trade the Impulse

Good that we closed the


trade with small profits

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Elliott Wave Mastery

Why We Trade the Impulse

Oh no, we missed the move again

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Elliott Wave Mastery

Why We Trade the Impulse


▸ It’s psychologically easier to ride the impulse

▸ Because in the shortest time possible, we are able to see our trades in
profits

▸ And managing it is easier

▸ When you are trading in a correction, your emotions will be affected by the
ups and downs

▸ When we enter a trade, we want to see an impulse move develop in the


shortest time possible

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Elliott Wave Mastery

Be Patient with Correction


▸ Understand that correction takes a longer time to develop

▸ Suppose the impulse move took a day to move

▸ Give at least 2-3 days for the correction to develop

▸ If the impulse move took 2 hours to move

▸ Give at least 4-6 hours for the correction to develop

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Elliott Wave Mastery

Be Patient with Correction


▸ In the FX context, Asian sessions are usually corrective in nature

▸ Most impulses are developed during UK session

▸ That’s around 3pm / 4pm based on Malaysia, Singapore timezone

▸ When there is a major economic data for that week, usually price will be
corrective leading into the news

▸ For example, NFP on Friday, the USD will be corrective for most of the week
leading into Friday

▸ When there is a major central bank decision, usually price will be corrective
leading into it as well

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Elliott Wave Mastery

Lesson Objectives
DIRECTIONAL
BIAS 1. Impulse vs Correction

RECO
2. 3 Market Scenarios

PATTE N
FOREC ET
AST
MARK

GNITIO

T S N
1 CON
FIR
RN
3. Impulse Move Psychology

4. Corrective Move Psychology

O IN
P INA T I O FRA MAT 5. Why We Trade the Impulse
M CTA ION
R L
TE 6. Be Patient with Correction

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sell any part of this document unless you have written permission.
Elliott Wave Mastery

Let’s Practice Together


1. Open any chart, any instrument you want on TradingView

2. Click on “1M” at the bottom left

3. Categorize the price movement as impulse or correction

1. Line to highlight impulse

2. Box to highlight correction

4. Share the chart in the Mastermind Group

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Elliott Wave Mastery

Lesson Objectives
PATTERN 1. Flag / Flat
RECOGNITION
BIAS L

2. Channel

CONFI
TIONA

FRACT ON
RMATI
2
3. Wave Expectation of Flag & Flat
DIREC

AL
4. Diagonal

AS T TER POIN 5. Wave Expectation of Diagonal


R C
E ET MIN TS
FO ARK ATI
ON 6. Double Top / Bottom
M
7. Head-and-Shoulder

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Elliott Wave Mastery

Why Pattern Recognition is Important

▸ What do you think?

▸ Share your answers with us

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Elliott Wave Mastery

How many of you know which engine or car


won the F1 Championship in 2019?

Year Car / Engine

2014 Mercedes

2015 Mercedes

2016 Mercedes

2017 Mercedes

2018 Mercedes

2019 ?

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Elliott Wave Mastery

Why Pattern Recognition is Important

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Elliott Wave Mastery

Why Pattern Recognition is Important

▸ You don’t need to know a lot or be a specialist in the field

▸ All you need is a pattern

▸ And you can confidently predict what’s the likely outcome

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Elliott Wave Mastery

Why Pattern Recognition is Important

▸ Patterns tend to repeat over and over again in the market

▸ The key is to be able to identify and capitalize on the patterns

▸ If historically out of 100 times, there are 60 times the pattern repeat itself

▸ What would you do the next time you see a similar pattern?

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Elliott Wave Mastery

Flag / Flat

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Elliott Wave Mastery

Flag / Flat

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Elliott Wave Mastery

Flag / Flat

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Elliott Wave Mastery

Flag / Flat

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Elliott Wave Mastery

Channel

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Elliott Wave Mastery

Channel

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Elliott Wave Mastery

Channel

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Elliott Wave Mastery

Channel

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Elliott Wave Mastery

Wave Expectation of Flag & Flat


▸ Always anticipate a minimum 3 wave moves for flags & flats

▸ Sometimes we might see 7 or even 11 wave moves

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

1 3

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

1 3

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

3
1

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Elliott Wave Mastery

Wave Expectation of Flag & Flat

3
1

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Elliott Wave Mastery

Diagonal

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Elliott Wave Mastery

Diagonal

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Elliott Wave Mastery

Diagonal

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Elliott Wave Mastery

Diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

3
5

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Elliott Wave Mastery

Wave Expectation of Diagonal


▸ Always anticipate a 5 wave moves for diagonal

3
5

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Elliott Wave Mastery

Double Top

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Elliott Wave Mastery

Double Top

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Elliott Wave Mastery

Double Bottom

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Elliott Wave Mastery

Double Bottom

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Elliott Wave Mastery

Head-and-Shoulder H

S S

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Elliott Wave Mastery

Head-and-Shoulder H

S S

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Elliott Wave Mastery

Head-and-Shoulder

S S
H
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Elliott Wave Mastery

Head-and-Shoulder

S S
H
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Elliott Wave Mastery

Master One Pattern


at a Time

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Elliott Wave Mastery

Lesson Objectives
PATTERN 1. Flag / Flat
RECOGNITION
BIAS L

2. Channel

CONFI
TIONA

FRACT ON
RMATI
2
3. Wave Expectation of Flag & Flat
DIREC

AL
4. Diagonal

AS T TER POIN 5. Wave Expectation of Diagonal


R C
E ET MIN TS
FO ARK ATI
ON 6. Double Top / Bottom
M
7. Head-and-Shoulder

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Elliott Wave Mastery

Let’s Practice Together


1. Open any chart, any instrument you want on TradingView

2. Click on “1M” at the bottom left

3. Identify the pattern(s) you can see in the chart

4. Share the chart in the Mastermind Group

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Elliott Wave Mastery

Lesson Objectives
FRACTAL 1. Price Pattern Fractal Nature
CONFIRMATION
2. Larger Timeframe Provides More

TERM TS
Reliable Patterns
NITION
RECOG RN

POIN
PATTE

INATI
3
3. Lower Timeframe Provides

ON
Confirmation

FOR 4. Fractal Confirmation Increases


I A S AL MA ECAS Probability
B TION RK T
C ET
DIR
E 5. Fractal Confirmation Increases Reward
Ratio

6. Fractal Confirmation Provides Us Clarity

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Elliott Wave Mastery

Patterns Repeat in Different Scale

▸ These patterns can be applied in small timeframes as well as longer timeframes

▸ We want to work on at least 3 timeframes to gain an overall clarity of the


market development

▸ See the different timeframes as building blocks / lego pieces

▸ To build a house, we want to know how does the final design look like

▸ During construction, we want to make sure the bricks are placed properly
too

▸ If the bricks are not placed properly, the final design will not be ready

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Elliott Wave Mastery

Patterns Repeat in Different Scale

▸ Larger timeframe like Daily and Weekly provides more reliable patterns and
directional bias

▸ Lower timeframe like H4, H1, M15 provides confirmation that the price may
be ready to move

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Elliott Wave Mastery

Daily Timeframe

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Elliott Wave Mastery

Daily Timeframe

▸ Corrective Channel Pattern

▸ Daily suggest downside bias

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Elliott Wave Mastery

Daily Timeframe
▸ Zoom in to H4 timeframe

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Elliott Wave Mastery

H4 Timeframe

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Elliott Wave Mastery

H4 Timeframe
▸ Double Top, Channel

▸ H4 suggest downside bias

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Elliott Wave Mastery

H4 Timeframe
▸ Zoom in to H1 timeframe

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Elliott Wave Mastery

H1 Timeframe

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Elliott Wave Mastery

H1 Timeframe

▸ Channel, Diagonal, Flag

▸ H1 suggest downside bias

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Elliott Wave Mastery

H1 Timeframe

▸ Larger timeframe provides reliability -> downside bias

▸ Lower timeframe provides confirmation -> downside bias

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Elliott Wave Mastery

Fractal Confirmation Increases Probability

▸ When the Daily, H4 and H1 all suggesting downside bias, the odds and
probability stack up to our favor

▸ Taking a short trade from here not only provide us with an alignment with
the larger direction from daily, but also indicating that the timing is ready
from the lower timeframes

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Elliott Wave Mastery

Risk Reward Ratio


Stop Loss

Sell Here

Where will you put your Take Profit?

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Elliott Wave Mastery

Risk Reward Ratio


Stop Loss

Sell Here

What are some emotions and thoughts


you will be having?
C

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Elliott Wave Mastery

Risk Reward Ratio


Stop Loss

Sell Here

What are some emotions and thoughts


C you will be having?

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Elliott Wave Mastery

Risk Reward Ratio


Stop Loss

Sell Here

What are some emotions and


thoughts you will be having?
C

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Elliott Wave Mastery

Fractal Confirmation Increases Reward Ratio

▸ Often trader cut themselves short by taking profits too early, especially if we
are trading based on just one timeframe

▸ Some traders also cut themselves short based on the concept of support
and resistance, taking profits at the previous highs or lows

▸ With fractal confirmation and Elliott Wave, we want to ride the move as
much as we can

▸ Taking trades with risk-to-reward ratio of 1:5, 1:7, 1:10 is possible

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Elliott Wave Mastery

What is Risk Reward Ratio


Stop Loss

Sell Here

For Target A, the reward is 0.5 times of the Risk

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Elliott Wave Mastery

What is Risk Reward Ratio


Stop Loss

Sell Here

For Target B, the reward is 1.2 times of the Risk

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Elliott Wave Mastery

What is Risk Reward Ratio


Stop Loss

Sell Here

For Target C, the reward


is 3 times of the Risk

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Elliott Wave Mastery

Why is Reward Ratio Important

Reward Ratio Win Rate Required

0.5 67%

1 50%

1.5 40%

2 33%

2.5 29%

3 25%

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Elliott Wave Mastery

Leveraging on Higher Timeframe

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Elliott Wave Mastery

Leveraging on Higher Timeframe

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Elliott Wave Mastery

Leveraging on Higher Timeframe

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Elliott Wave Mastery

Leveraging on Higher Timeframe

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Elliott Wave Mastery

Leveraging on Higher Timeframe

Stop Loss
Sell Here

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Elliott Wave Mastery

Clarity from Fractal Confirmation

▸ Can you still take a trade that is against the higher timeframe?

▸ Yes, but it will be a short term trade

▸ And more importantly, now you have clarity when taking this trade

▸ For me, I do not take trades that are less than reward ratio of 3

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Elliott Wave Mastery

Lesson Objectives
FRACTAL 1. Price Pattern Fractal Nature
CONFIRMATION
2. Larger Timeframe Provides More

TERM TS
Reliable Patterns
NITION
RECOG RN

POIN
PATTE

INATI
3
3. Lower Timeframe Provides

ON
Confirmation

FOR 4. Fractal Confirmation Increases


I A S AL MA ECAS Probability
B TION RK T
C ET
DIR
E 5. Fractal Confirmation Increases Reward
Ratio

6. Fractal Confirmation Provides Us Clarity

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Elliott Wave Mastery

Let’s Practice Together


1. Open any chart, any instrument you want on TradingView

2. Analyze the chart based on Daily, H4 and H1

3. Are the different timeframes align in same direction or not?

4. Share the instrument and “Yes” or “No” in the Mastermind Group

‣ For example, AUDUSD. Yes

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Elliott Wave Mastery

Lesson Objectives
TERMINATION 1. Why this is important
POINTS
2. Price Tends to Break High & Low
TION
CONF TAL

FOREC
MARK ST
IRMA
FRAC

3. Price Tends to Touch 3 Times

IT I O
4
N
DIR BIA
ET
A
4. Be Patient for Correction to Confirm

5. Price Tends to Go Back to Where the


N
G ERN ECT S
C O ION Correction Started
R PATT
E
AL
6. Taking Trades Near Termination Points

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Termination Points

1. Price tends to break high and low

2. Price tends to touch 3 times

3. Be patient for correction to confirm

4. Price tends to go back to where the correction started

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Breaking High and Low

▸ Price tends to gravitate towards previous significant high and low

▸ We always anticipate it to break it

▸ But we don’t trade just because it broke

▸ We always ask “HOW” did it break?

▸ This are keep areas to look for entries

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Breaking High & Low

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Breaking High & Low

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Elliott Wave Mastery

Breaking High & Low

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Elliott Wave Mastery

Breaking High & Low

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Elliott Wave Mastery

Breaking High & Low

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Breaking High & Low

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Breaking High & Low

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Breaking High & Low

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Breaking High & Low

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Breaking High & Low

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3 Touches

▸ The 3rd touch of a pattern (often the diagonal) is where the correction is
likely completed

▸ We want to be ready to pull the trigger at the 3rd touch

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3 Touches

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3 Touches

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3 Touches

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3 Touches

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3 Touches

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3 Touches

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3 Touches

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3 Touches

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Be Patient with Correction

▸ Wait for at least 2 to 3 times the duration of the impulse move

▸ Correction are always taking more time to develop

▸ After the correction, is where we want to be ready to pull the trigger

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Be Patient with Correction

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Be Patient with Correction

▸ End of impulse

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Be Patient with Correction

▸ Wait at least 2 to 3 times the


duration of the impulse

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Be Patient with Correction

▸ Start identifying and


anticipating patterns

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Be Patient with Correction

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Be Patient with Correction

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Be Patient with Correction

▸ End of impulse

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Be Patient with Correction

▸ Wait at least 2 to 3 times the


duration of the impulse

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Be Patient with Correction

▸ Start identifying and


anticipating patterns

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Be Patient with Correction

▸ Price is still correcting

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Be Patient with Correction

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Move Back to Start of Correction

▸ Price tends to head towards where the correction started

▸ This will be the Target Profits we will be setting

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Move Back to Start of Correction

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Move Back to Start of Correction

▸ Start of correction

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Move Back to Start of Correction

▸ Start of correction

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Move Back to Start of Correction

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Move Back to Start of Correction

▸ Start of correction

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Elliott Wave Mastery

Move Back to Start of Correction

▸ Start of correction

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Move Back to Start of Correction

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Move Back to Start of Correction

▸ Start of correction

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Move Back to Start of Correction

▸ Start of correction

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Putting it Together

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Putting it Together

‣ Diagonal Pattern -> Upside Bias

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Putting it Together

‣ Diagonal Pattern -> Upside Bias

‣ 2 touches -> Anticipate 3rd touch

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Putting it Together

‣ Diagonal Pattern -> Upside Bias

‣ 2 touches -> Anticipate 3rd touch

‣ Anticipate market to break low

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Putting it Together
‣ Price broke the low and impulse up

‣ Price completed the 3rd touch

‣ Wait for correction

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Putting it Together
‣ Correction forming

‣ Start identifying pattern

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Putting it Together
‣ Flat forming

‣ Breakout entry of the pattern

‣ *We will share more about the entry


details in the next chapter

Buy Here

Stop Loss

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Putting it Together

‣ Price made an impulse up move

‣ We can now shift SL to reduce risk

Buy Here

Stop Loss

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Putting it Together

‣ Target start of correction


TP

Buy Here

Stop Loss

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Putting it Together

‣ Target start of correction

TP

Buy Here

Stop Loss

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Elliott Wave Mastery

Lesson Objectives
TERMINATION 1. Why this is important
POINTS
2. Price Tends to Break High & Low
TION
CONF TAL

FOREC
MARK ST
IRMA
FRAC

3. Price Tends to Touch 3 Times

IT I O
4
N
DIR BIA
ET
A
4. Be Patient for Correction to Confirm

5. Price Tends to Go Back to Where the


N
G ERN ECT S
C O ION Correction Started
R PATT
E
AL
6. Taking Trades Near Termination Points

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Elliott Wave Mastery

Let’s Practice Together


1. Open any chart, any instrument you want on TradingView

2. Identify any potential termination points to key an eye on

3. Share the chart in the Mastermind Group

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Lesson Objectives
MARKET 1. Why We Forecast
FORECAST

DIREC
POINT N

2. How We Prepare Weekly


NATIO
S

BIAS
TIONA
3. Your Go-to-Setups

5
TERMI

L
4. Trade Management
N REC
ATI O OG 5. Risk Management
I R M AL PAT NIT
N F CT TER ION
CO FRA N 6. How to Scale In

7. Your Trading Psychology

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Why it’s Important to Forecast

▸ Forecasting is a process to prepare ourselves

▸ Just like running a business, we want to plan out the various scenarios,
budgeting, targets, milestones, etc.

▸ This process not only help us in the mental state, but also in the execution
state

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How We Prepare for the Week

▸ We focus on QUALITY instead of quantity

▸ The idea is to plan, aim, aim, aim… aim again, fire

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What goes into Trading / Investing

▸ Planning ▸ Managing risk

▸ Researching ▸ Mastering psychology

▸ Analysis ▸ Understanding the market

▸ Forecasting ▸ Managing the trade / investment

▸ Taking that trade / investment ▸ Journaling

▸ Reviewing ▸ Tracking

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How We Prepare for the Week

▸ We focus on QUALITY instead of quantity

▸ The idea is to plan, aim, aim, aim… aim again, fire

▸ Focus on the near term opportunities, with long term profit targets

▸ Lookout for instruments that are near (1) high or low, and (2) 3rd touch on
higher timeframe

▸ Establish your watchlist for the week to keep yourself focus

▸ A good start will be around 5 to 8 opportunities for the week

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How We Prepare for the Week

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How We Prepare for the Week

▸ AUDUSD

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How We Prepare for the Week

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How We Prepare for the Week

▸ EURUSD

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How We Prepare for the Week

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Elliott Wave Mastery

How We Prepare for the Week

▸ USDJPY

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How We Prepare for the Week

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Elliott Wave Mastery

How We Prepare for the Week

▸ Microsoft

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How We Prepare for the Week

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Elliott Wave Mastery

How We Prepare for the Week

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How We Prepare for the Week

▸ Hang Seng Index

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Your Go-To-Setup

▸ It’s important to know what you are looking for to give you the reason to pull
the trigger

▸ The framework is based on the flag and diagonal pattern

▸ This will help you establish your go-to-setup

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Flag Framework

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Flag Framework

1
3

Be patient with
correction

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Flag Framework

Entry

1 Stop Loss
3

Expectation is for price to break


out of the flag impulsively

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Flag Framework

Entry

1 Stop Loss
3

Price broke off impulsively

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Flag Framework

2
Stop Loss

Entry

1
3

We can now shift SL to Breakeven

The rational is we wouldn’t want price to


come back down after this impulse move

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Flag Framework

2
Stop Loss

Entry

1
3

Price continue to move higher

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Flag Framework

2 Stop Loss

Entry

1
3

We can now trail our stops


to protect our profits

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Diagonal Framework

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Diagonal Framework

5
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Diagonal Framework

Expectation is for price to break


2 out of the diagonal impulsively

Entry
1

3
Stop Loss
5
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Diagonal Framework

Price broke off impulsively

Entry
1

3
Stop Loss
5
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Diagonal Framework

We can now shift SL to Breakeven

The rational is we wouldn’t want price to


come back down after this impulse move

4
Stop Loss

1 Entry
3

5
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Diagonal Framework

Price continue to move higher

4
Stop Loss

1 Entry
3

5
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Diagonal Framework

We can now trail our stops


to protect our profits

4
Stop Loss

1 Entry
3

5
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Application of the Framework

▸ Higher timeframe

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Application of the Framework

▸ Higher timeframe

▸ Downside bias

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Application of the Framework

▸ Lower timeframe
impulse move down

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Application of the Framework

▸ Lower timeframe
impulse move down

▸ Flag pattern setup

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Application of the Framework

Expectation is for price to break


out of the flag impulsively

Stop Loss
Entry

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Application of the Framework

Price broke off impulsively

Stop Loss
Entry

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Application of the Framework


We can now shift SL to Breakeven

The rational is we wouldn’t want price to


come back up after this impulse move

Entry
Stop Loss

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Application of the Framework

Price continue to move lower

Entry
Stop Loss

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Application of the Framework

We can now trail our stops


to protect our profits

Entry

Stop Loss

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Application of the Framework

▸ Using MTF to set target

▸ And manage our trade trailing stops as


price continue to move lower

Stop Loss
Entry

Target

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Let’s Practice Together


1. Identify the one instrument you will be monitoring for the coming week

2. Share the chart in the Mastermind Group

‣ For example “AUDJPY”

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Risk Management

▸ “It’s not whether you’re right or wrong, but how much money you make
when you’re right and how much you lose when you’re wrong.”

▸ As traders and investors, there will be times we are wrong

▸ And it is those times that are crucial

▸ How we manage our losses

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https://youtu.be/
zyErqQ3yhzg

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How to Manage Your Risk

▸ First you need to know your risk tolerance, your risk profile

▸ Are you more conservative or are you more aggressive?

▸ What is your maximum comfortable drawdown?

▸ Maximum drawdown is the amount of total losses you experience

▸ For example, if you lost a total of $2,000 from a $10,000 account, that’s
a 20% drawdown

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Framework to Manage Your Risk

▸ As traders, we always prepare for the worst case scenario

▸ And plan on survive even when that happen

▸ How many of you know what’s the worst case scenario for trading /
investing?

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Framework to Manage Your Risk

▸ Plan for worst case: 20 consecutive losses

▸ Assume your maximum drawdown is 20%

▸ Means for each trade, your maximum risk is 1%

Maximum Drawdown / Worst Consecutive Losses = Risk Per Trade

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Managing Your Risk Exposure

▸ Take note of your total risk in the same or similar instrument

▸ For example

▸ Buying AUD/USD and NZD/USD at the same time

▸ Buying SPX and DJI at the same time

▸ Buying XAU/USD and XAG/USD at the same time

▸ Selling AUD/USD and AUD/JPY at the same time

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Scaling In

▸ The idea is to maximize our profit in a single trade idea, while maintaining or
reducing our risk

▸ Only scale in a trade after the first trade is “risk-free”

▸ Remember to be PATIENT with your scale in

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1st Entry

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Risk Reward Ratio Realized Return

Total return after scaling in: 2.91 + 3.43 = 6.34 R

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1st Entry

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2nd Entry

1st Entry

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Risk Reward Ratio Realized Return

Total return after scaling in: 1.67 + 1.80 + 0.33 = 3.8 R

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Trading Psychology

▸ Risk management is managing your money

▸ Trading psychology is managing your mental emotions

▸ The 4 key emotions / psychology

1. Resentment will lead to Fear

2. Guilt will lead to Altruism (benefiting others at its own expense)

3. Pride will lead to Narcissism (everything about me only)

4. Infatuation will lead to Fantasy

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Checking on Your Mental State

▸ How are you talking to yourself?

▸ What beliefs are you holding?

▸ How are you feeling / reacting / responding to positive and negative events?

▸ Tip here: See yourself from a 3rd person’s perspective

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This has helped me a lot in my journey

▸ Being aware of my own thoughts, emotions and feelings

▸ Acknowledge and accept the emotions or thoughts at that moment

▸ But not letting them dictate my next action

▸ Only then can I be in control of myself

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Elliott Wave Mastery

Visualize this
▸ You just won a trade

▸ How are you feeling? What are you telling yourself?

▸ You just lost a trade

▸ How are you feeling? What are you telling yourself?

▸ Which of these are you in? How can you neutralize it?

1. Resentment will lead to Fear

2. Guilt will lead to Altruism (benefiting others at its own expense)

3. Pride will lead to Narcissism (everything about me only)

4. Infatuation will lead to Fantasy

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Elliott Wave Mastery

Visualize this

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Elliott Wave Mastery

Visualize this

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Elliott Wave Mastery

Visualize this

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Elliott Wave Mastery

There will be there “bad” month(s)

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Elliott Wave Mastery

▸ My stock portfolio in the


last quarter of 2019

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Elliott Wave Mastery

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Elliott Wave Mastery

▸ If you can’t go through


this period

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Elliott Wave Mastery

▸ How to enjoy this period?

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Elliott Wave Mastery

The Success Factor in Trading

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Elliott Wave Mastery

How Much Return to Expect per year?

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Elliott Wave Mastery

References

▸ Brett Steenbarger

▸ Trader Psychology: Every Elite Trader Has These Six Qualities With Dr.
Brett Steenbarger - https://youtu.be/lsmnlIoH5qA

▸ How to master trading psychology | Brett Steenbarger - https://youtu.be/


rD5nQzbm0iI

▸ One Good Trade by Mike Bellafiore

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Elliott Wave Mastery

Lesson Objectives
MARKET 1. Why We Forecast
FORECAST

DIREC
POINT N

2. How We Prepare Weekly


NATIO
S

BIAS
TIONA
3. Your Go-to-Setups

5
TERMI

L
4. Trade Management
N REC
ATI O OG 5. Risk Management
I R M AL PAT NIT
N F CT TER ION
CO FRA N 6. How to Scale In

7. Your Trading Psychology

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Elliott Wave Mastery

Let’s do a Crystallization Process

▸ This process is important to help you firm up what you have just learned

▸ Write down 3 biggest takeaways you got from this session, and share your
them in the Mastermind Group

▸ Be specific in how you are going to apply these 3 takeaways and how they
benefited you

▸ Take some time to also read what others have shared

▸ So that you can also pick up on the lessons that you might have missed

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