TRADING WITH CORRECTION WAVES?
Excerpted 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 or a correct 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 during correction waves, trying to trade against the trend to capture all the waves on the chart.
If you pay attention, the main waves run strongly and clearly, with a clear structure. But the correction waves against the trend usually have a complex structure and take a long time to form with many different variations such as zigzag, flat, triangular sideways, abnormal, or even a combination of multiple forms. This makes traders very susceptible to risks in those situations.
They trade when the market is uncertain, against the trend just because the price 'looks like it's about to reverse', entering trades without clear confirmation, and then wonder why they can't trade consistently.
For Alden, correction waves are like a trap inviting the impatient, especially newcomers.
Correction waves are the phase where the market is 'pulling back' to prepare for a larger continuation wave. Ironically, it is during this time that many false signals are created.
Prices go up and down, creating small retracements, triangles, zigzag patterns, abnormalities, and sideways movements. This makes you think that the market can reverse immediately, and an uptrend can turn into a downtrend with a single 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 are anxious, they fear missing opportunities, they are bored waiting, they crave the feeling of entering a trade, and so they jump in when the market is unclear. That is when they are eroding their accounts and their own mentality.
There is an uncomfortable truth in trading, which is:
A GOOD SYSTEM, BUT IF YOU APPLY IT AT THE WRONG TIME, YOU WILL STILL LOSE AS USUAL.
Many people have a good trading system, but in practice, they trade mostly in choppy areas, sideways zones, trading correction waves, and complex retracement price areas. That is:
- The right strategy wins 60-70% if used in the right places, trading with the trend.
- But they use it in choppy areas, retracement zones, where the probability of winning drops to 20-30%, even though that is where they should sit still, waiting to trade in accordance with the trend.
- The result is just like shooting into the dark night.
That habit gets repeated into a wrong mindset, a mindless action habit. And because each order only costs a little, they do not see clearly the price they are paying. But over time, the account gradually diminishes, and the mentality also wears out.
80% OF TRADING IS A GAME THAT REQUIRES YOU TO BE PATIENT AND WAIT FOR THE RIGHT WAVE.
If you review the waves on the chart and pay close attention, the push waves (which are the waves in the main trend) are usually very strong, fast, and decisive, moving over a large range but requiring little time. The price moves in a straight line, with little hesitation, supported by volume and clear market momentum.
And what about correction waves that many people dive into and trade against the trend? They are usually slow, sideways, choppy waves, constantly reversing and creating traps. They consume a lot of time and additionally 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. Just try 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 guess 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 place fewer orders, but more stable and certain. Your mentality is also calmer and more profitable.
Alden can still take a counter-trend position if it is a wave with very clear signals worth making a decision. Otherwise, ignoring the opposite direction is a natural thing to do if you want to stabilize your mentality and actions.
THE PSYCHOLOGY IS THE CULPRIT BEHIND 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; the reason why you overtrade has been scientifically explained by Alden.
Traders feel guilty when they do nothing, feeling a lack of performance. They fear missing out on opportunities, afraid to see others profiting while they have no orders.
So they convince themselves that this order is 'okay', 'what if it's right?', and then they enter the trade.
Trading gradually turns into a gambling game rather than a planned activity.
Traders do not lose because they do not know what to do, but because they refuse to wait until the right moment to act. You must start by eliminating low-probability trading habits.
Wait for the main wave. Ignore correction waves. Act less but more timely.
