Glenn Neely Bucks Traditional Elliott Analysis
Glenn Neely locks horns with traditional Elliott wave theoreticians and has developed his own approach to trading the markets, which he calls NEoWave Theory. Neely first encountered the Elliott wave theory back in the early 1980's while he was working off-shore in the oil industry. At that time, Neely became interested in the stock market and read many books on the subject, "but that wasn't quite exciting enough" he said, and he started exploring commodities. His first actual experience trading in commodities was via a trading system.
"I had paid a few thousand dollars for this magical Holy Grail trading system ... My first big lesson was that no matter how much you spend for a system, it doesn't guarantee success," Neely said. Neely continued to study on his own. "For about a year, I had studied all sorts of stuff. I just came to realize that it was a lot more complicated that I had thought," Neely said. However, "it just clicked right away when I read the synopsis of Elliott wave," he said.
Traditional Elliott wave theory says that markets advance or decline with five waves-three up (or down) waves with two intervening corrections, according to Technical Analysis of the Futures Market, by John J. Murphy.
Neely immediately honed in on Elliott wave. "I started studying everything I could get my hands on ... but I realized there was a great deal missing," he noted.
"There are just too many ways to interpret this. It's not objective. It's not scientific ... I couldn't stand the flexibility of it. I've spent most of my career so far adding techniques to make it objective," Neely said, describing his initial frustration with traditional Elliott theory. "My primary focus for most of my career has been perfecting a form of technical analysis that is logical, systemic and not open to interpretation," Neely said.
"Elliott wave is primarily based on Fibonacci relationships and price patterns-the visible appearance of price patterns. NEoWave adds on top of that a whole process of logic, with some connection to vector physics," Neely explained.
In order for Neely's NEoWave theory to work properly, "you have to pick markets that fit certain criteria," he noted. First, "you need a market that is a nonconsumable item-that has perpetual life. Corn-it's grown, it's eaten, it's gone," he said.
Other factors are that "current value builds on past, time does not automatically have a negative effect on value, affordable to thousands and prices readily available," Neely explained.
Additionally, Neely believes "for wave analysis to be accurate, you have to use cash data." Many traders and analysts use futures price data in their Elliott wave analysis, but "a great deal of the confusion related to Elliott wave is that they are using the wrong kind of data," Neely said.
In terms of time frames for this trading, Neely doesn't have any hard and fast rules. "The time frame I want to trade is the time frame that is the clearest to interpret," he said. "I let the market dictate the time frame. I don't want to force wave counts when they aren't justified," he added. A key to successful trading is that "you need to be able to control your emotions".
"It took 10 years to comfortably manage emotions," he noted. "Which for me, can only be done by having a concrete understanding of how markets behave and knowing how much to risk."
"I had paid a few thousand dollars for this magical Holy Grail trading system ... My first big lesson was that no matter how much you spend for a system, it doesn't guarantee success," Neely said. Neely continued to study on his own. "For about a year, I had studied all sorts of stuff. I just came to realize that it was a lot more complicated that I had thought," Neely said. However, "it just clicked right away when I read the synopsis of Elliott wave," he said.
Traditional Elliott wave theory says that markets advance or decline with five waves-three up (or down) waves with two intervening corrections, according to Technical Analysis of the Futures Market, by John J. Murphy.
Neely immediately honed in on Elliott wave. "I started studying everything I could get my hands on ... but I realized there was a great deal missing," he noted.
"There are just too many ways to interpret this. It's not objective. It's not scientific ... I couldn't stand the flexibility of it. I've spent most of my career so far adding techniques to make it objective," Neely said, describing his initial frustration with traditional Elliott theory. "My primary focus for most of my career has been perfecting a form of technical analysis that is logical, systemic and not open to interpretation," Neely said.
"Elliott wave is primarily based on Fibonacci relationships and price patterns-the visible appearance of price patterns. NEoWave adds on top of that a whole process of logic, with some connection to vector physics," Neely explained.
In order for Neely's NEoWave theory to work properly, "you have to pick markets that fit certain criteria," he noted. First, "you need a market that is a nonconsumable item-that has perpetual life. Corn-it's grown, it's eaten, it's gone," he said.
Other factors are that "current value builds on past, time does not automatically have a negative effect on value, affordable to thousands and prices readily available," Neely explained.
Additionally, Neely believes "for wave analysis to be accurate, you have to use cash data." Many traders and analysts use futures price data in their Elliott wave analysis, but "a great deal of the confusion related to Elliott wave is that they are using the wrong kind of data," Neely said.
In terms of time frames for this trading, Neely doesn't have any hard and fast rules. "The time frame I want to trade is the time frame that is the clearest to interpret," he said. "I let the market dictate the time frame. I don't want to force wave counts when they aren't justified," he added. A key to successful trading is that "you need to be able to control your emotions".
"It took 10 years to comfortably manage emotions," he noted. "Which for me, can only be done by having a concrete understanding of how markets behave and knowing how much to risk."
