If I had a quarter for every time someone said they wished they had a crystal ball to predict stock prices, I’d be rich. But what if I told you there was a crystal ball? Unlike other chart patterns, the Wolfe wave forecasts where the price is going and when it will get there. What other patterns will do this for you? The Wolfe Wave pattern is as close to a crystal ball you’re going to get in trading. If you’re wondering how to make money trading this pattern, you’ve come to the right place.
First identified by Bill Wolfe and his son Brian, these patterns are a game-changer. Occurring naturally in all markets, if you learn to spot them and ride em, you’ll be laughing all the way to the bank.
Obviously, the key word being spot as not all crests meet the Wolfe Wave criteria. That said, to ensure you’re seeing a WW roll out, you must identify a series of price oscillations that correspond to the following criteria:
Yes, you read that correctly! Let me explain. By drawing a line between the first and fourth points, you create a profit target line.
In other words, the extension shows you where the price will go. I’m not lying; this stuff works. If you want to know how to predict when a stock will go up, then check this pattern out!
The chart below shows an ideal case of a bearish WW pattern and is quite simple to trade.
To trade, you simply:
The chart below shows an ideal case of a bullish Wolfe Wave pattern. And just like it’s partner in crime above, it’s quite easy to trade.
To trade, you simply:
We talk a lot about risk management as it’s the cornerstone of a healthy trading plan. Without a doubt, the most important thing you can do as a trader is to cover your butt.
When trading the WW, place your protective stop loss below the last wave or wave 5. Doing so will give you a very tight stop loss as a break below wave 5 invalidates the pattern.
It’s a great momentum trading play. You can watch Rose trade it in our Futures room as well as our regular room on Thursday mornings.
Another thing to be on the look for is how quickly the price goes back into the channel. As a general rule of thumb, only trade waves that quickly retrace back into the range.
Luckily it’s not hard to spot wolf wave patterns. Did you know that some trading platforms have the Wolfe Wave indicator built-in for those lazy (i.e. me), or shall I say, efficient traders!
However, if your trading platform doesn’t, don’t despair. You can simply use the channel indicator to help you better visualize the Wolfe Wave pattern.
Fundamentally, the wolf wave trading strategy is an excellent market timing tool that every trader should know how to use. And we want to help you succeed in trading the Wolfe Wave strategy.
But to make it work, it’s essential to pay attention to it’s rules. Otherwise, the pattern may just be a product of random price oscillations.
For the most part, Rose exclusively trades the Wolfe Wave pattern in the futures trading room. That’s a photo taken directly from her chat room. So if trading Wolfe waves is what you are after, I highly suggest joining her in the trade room today!