TRADING WITH CORRECTIVE WAVES?
Quoted from Alden's writings!
There is a hard truth that most traders do not want to face: 'They lose not because they lack a system, not because they have the wrong strategy. They lose because they use the right strategy in the wrong circumstances.'
If you pay close attention, you will see that most traders, even with a good system and clear rules, still frequently place orders in low probability situations, especially in corrective waves, trying to trade against the trend to capture all the waves on the chart.
If you pay attention, the main waves run strong and clear, with a clear structure. But corrective waves against the trend often have complex structures and take a long time to form with many variations such as zigzag, flat, sideways triangle, abnormal shape, or even a combination of several shapes. This makes it very easy for traders to encounter risks in those situations.
They trade when the market is uncertain, going against the trend just because the price 'looks like it is about to reverse', entering a trade without clear confirmation, and then wonder why they can't trade consistently.
For Alden, corrective waves are like a trap inviting those who lack patience, especially newcomers.
Corrective waves are the phase where the market is 'pulling back' to prepare for a larger continuation wave. Ironically, it is during this time that a series of false signals are created.
Prices go up and down, creating small retracements, triangles, zigzag patterns, abnormal movements, and sideways fluctuations. It makes you think that the market might reverse immediately, that an uptrend could turn into a downtrend with just one candle, but in reality, these are just necessary accumulation phases before the price continues to run.
But most traders do not pass that psychological test. They worry, they fear missing opportunities, they are tired of waiting, they crave the feeling of entering trades, and so they jump in when the market is unclear. That is when they are depleting their accounts and their own psychology.
There is an uncomfortable truth in Trading, which is:
A GOOD SYSTEM, BUT IF YOU APPLY IT AT THE WRONG TIME, YOU STILL LOSE AS USUAL.
Many people have good trading systems, but in practice, they trade mostly in choppy areas, sideways zones, betting on corrective waves, and in complex retracement price areas. That is:
- The right strategy wins 60-70% if used in the right places, trading in the direction of the trend.
- But they use it in choppy areas, retracement zones, where the probability of winning decreases to 20-30%, even though that is where they should sit still, waiting to trade in the direction of the trend.
- So the result is like shooting a gun into the dark.
This habit gets repeated into a faulty mindset, a reckless action habit. And because each trade only costs a little, they do not see the price they are paying clearly. But over time, the account gradually dwindles, and the psychology wears down.
TRADING 80% IS A GAME YOU NEED TO WAIT PATIENTLY FOR THE RIGHT WAVE.
If you review the waves on the chart and pay close attention, the push waves (i.e., the waves in the direction of the main trend) are usually very strong, fast, and decisive; they move with a large amplitude but require little time. The price moves steadily, with little hesitation, supported by volume, and has clear market momentum.
What about the corrective waves that many people dive into against the trend? They are often slow, sideways, choppy, constantly changing direction, creating traps. They consume a lot of time and also drain your emotional energy.
The truth is: trading is not a discipline that requires high IQ; it requires you to be patient at the right time. You should try this once:
- Do not trade when the market is sideways.
- Do not trade against the main trend.
- Do not catch the bottom during retracement waves.
- Do not predict reversal points.
- Only enter trades when the trend is clear, the push wave begins, and the market has confirmation.
You will see one thing: you enter fewer trades, but they are more stable and certain. Your psychology is also calmer and more profitable.
Alden can still temporarily trade against the trend if it is a wave with a really clear signal, worth making a decision. But if it is normal, then ignoring the opposite direction is something that must be done if one wants to stabilize their psychology and actions.
THE PSYCHOLOGY IS THE CULPRIT OF LOW PROBABILITY TRADES.
We do not lack knowledge; we lack self-control. The essence of low probability trading habits lies in a lack of patience and a craving for action. This leads to overtrading, and Alden has scientifically explained why you overtrade.
Traders feel guilty when they feel they are not doing anything, lacking performance. They fear missing out on opportunities, fear seeing others profit while they have no orders.
So they convince themselves that this order is 'okay', 'what if it turns out right?', and then they enter the trade.
Trading gradually turns into a gamble rather than a planned activity.
Traders do not lose because they do not know what to do, but because they do not wait until the right time to act. You must start by eliminating low probability trading habits.
Wait for the main wave. Ignore corrective waves. Act less but more timely.