Hopefully most traders here are familiar with Major League Baseball. Let me make an analogy that I find pertinent to this discussion. These questions and more will be discussed in detail as we progress forward in our study. So the question is, where do I enter the trade? What criteria should I use? What tools should I use? And where should my stop loss be placed? I'm glad you asked. Sweet zones can be anywhere from 3 to 300 pips depending on the steepness of the wave and/or the time frame being traded. Understanding the parameters of the sweet zone is paramount to getting the best possible entry price. It baffles me that traders rarely discuss this topic. In my opinion, the sweet zone is the most important part of the Wolfe Wave trading strategy. The reason being is that most traders are likely very familiar with the AB=CD concept and it is an important tool used here in determining the entry price for our trades. Note: I use XABCD to describe the wave instead of the normal 12345. I put this diagram together as a quick reference as to what constitutes a valid CWW. I think it's best to fully delve into the CWW structure first before discussing the HWW. Do you enter at the trend line break, half way into the sweet zone, at the bottom of the sweet zone, or do you wait for a clear reversal with some sort of confirmation tool? This is the paramount question that we are trying to answer.įor ease of discussion the following acronyms will be used: There are a few free online resources, but other than regurgitating the basic wave structure along with a fleeting mention of the sweet zone, I haven't seen any real discussion as to how you locate the best price to enter into the trade. Most of what I have learned has come from pouring over 1000's of charts for the past 6 months. Just to clarify up front, I don't claim to be a Wolfe wave guru. In addition, the very nature of the Wolfe wave structure allows you to mitigate your risk through very well defined stop loss areas. These trades have a high probability of success. In either case, Wolfe wave analysis provides a mechanically simplistic method to enter a trade in the so called "sweet zone". Or, if you are a seasoned professional, this strategy might simply be a nice addition to your trading tool box. If you're a struggling trader, frustrated and ready to give up, or just an all out system hopping, account blowing, psychotic indicator junkie, then this strategy just might be the perfect antidote for your trading endeavors.
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