1. Advanced Gann Elliott Techniques ‘With an Optionetics View’
Denver Trading Group
Ken Sheppard

2. Optionetics Principles
Leverage and control
Limited-risk protection
Getting paid for that protection

3. Agenda Review Elliott Wave Theory Examine AGET confirmation studies
Analyze hi-probability trading setups
Research risk/reward ratios
Search for possible trades
Real-time analysis of your favorites
Stocks
Futures
Indices

4. What’s up with this?

5. Elliot Wave Basics – Impulse Pattern
Wave 3 is never the shortest
Missing out?
Profit taking
decline
Traders now buying with a strong rally
Wave 4
Will not overlap Wave 1
Stops taken out
Stops
Wave 1
Vicious sell off
Wave 2
Wave 2 will not make new lows

6. Elliot Wave Basics – Alteration Rule1 2 4 5 3 1 2 4 5 3
Simple
Complex
Complex
Simple

7. Elliot Wave Basics – Corrective Pattern
Usually 50%-75% of Wave A 5 3 B A
Simple correction:
Zig-Zag 4 C 1
Wave C:
Either 1 x Wave A
or 1.62 x Wave A
or 2.62 x Wave A 2

8. Elliot Wave Basics – Corrective Pattern5 3 B A
Complex corrections:
Flat
Irregular
Triangle 4 C 1 2

9. Elliot Wave Basics – Fractal in Nature5 3 v
iii iv 4 i 1 ii 2

10. Elliot Wave Basics – Works Both Ways1 2 4 5 3 5 4 2 1 3

11. Elliot Wave Basics – Works Both Ways

12. Wave 3 Fibonacci Extensions
2.62
80% of w3’s end here
1.62 1
0.00 2

13. Wave 4 Fibonacci Retracement3
0.00
0.38
60% of w4’s end here
0.50 4
15% of w4’s end here
0.62 1
1.00 2

14. Wave 5 Fibonacci Extensions
1.00 5
w5’s usually end here 3
0.62
0.00 4 1 2

15. AdvancedGET Studies Momentum (Elliott) Oscillator
AdvancedGET generates the appropriate Elliot Wave counts for us and adds additional studies for statistical significance.
Momentum (Elliott) Oscillator
Profit Taking Index (PTI)
Wave 4 Channels
Ellipse
MOB (Make or break)
Triggers using regression channel or 6,4 DMA
ROI using Fibonacci extensions

16. Elliott Oscillator Wave 3 Wave 5 1 2 4 3 1 2
By comparing the oscillator peaks,
we can distinguish between w3 and w5

17. Elliott Oscillator

18. Elliott Oscillator
In all the data since 1960, the Elliott Oscillator in w4 has pulled back to zero 94% of the time!

19. Profit Taking Index (PTI)

20. Profit Taking Index (PTI)3 4 1 2

21. Profit Taking Index (PTI)
Calculated in the early stages of w4
Compares the current w4 against w3 to see if normal profit taking is taking place
When PTI is > 35, expect new highs
When PTI is < 35, there is a lot of selling coming in which reduces the odds for a w5
PTI only grows smaller as w4 completes

22. Wave 4 Channels

23. Wave 4 Channels
If the w4 retracement holds below the first channel (blue), the odds are better than 80% for a strong w5 decline.
If the w4 retracement holds below the second channel (green), the odds are only 60% for a strong w5 decline.
The third channel (red) is a final stop. The few times a w5 is generated it will be long, slow and drawn out.

24. Ellipse (a continuation tool)

25. Make or Break (MOB) (a reversal tool)

26. How Can We Trade This?

27. How Can We Trade This? 5 3 + = Type 1 Buy 4 1 2 Waves 3 & 5 are
trending rallies
easily identified 3 + =
Waves 1-2 & 4 are
corrective patterns which are hard to label
Type 1
Buy 4 1 2

28. Rules: Type 1 Trade (Buying at the end of a w4 retracement)
Oscillator pullback
> 38% retracement
PTI > 35
W4 channels holding
Use trend channel or DMA for trigger
Place stop
Look for w5 target
Calculate ROI 45 1 2 4
- 5 - 3
38%
50%
62%
Reverse logic applies for a declining impulse wave

29. How Can We Trade This?

30. How Can We Trade This?

31. How Can We Trade This?
Type 2
Sell 5 5 3 3 B + = A 4 4 C 1 1 2 2

32. Rules: Type 2 Trade (Selling at the end of a w5 rally)
Prices near w5 projection
Oscillator divergence
Use trend channel or DMA for trigger
Place stop
Expect w4 target
Calculate ROI
- 5 - 3 4 ? 1 2
Reverse logic applies for a declining impulse wave

33. How Can We Trade This?

34. Set-ups Trend channel DMA Alert when bar[1] closes outside set-up
Hi-Lo Flip regression
with ± 2 standard deviation channels
DMA
6 period MA
with 4 period offset
Alert when bar[1] closes outside set-up
then trigger when bar[2] moves past extreme hi/lo of bar[1]

35. Triggers Buy level First bar that closes above trend channel
Stop at low

36. Triggers

37. Triggers

38. Risk vs. Reward - 5 - 3 Reward 45 Risk 4 1 2 38% 50% 62% 1.618 1.000
0.000

39. AdvancedGET Studies Momentum (Elliott) Oscillator
AdvancedGET generates the appropriate Elliot Wave counts for us and adds additional studies for statistical significance.
Momentum (Elliott) Oscillator
Profit Taking Index (PTI)
Wave 4 Channels
Ellipse
MOB (Make or break)
Triggers using regression channel or 6,4 DMA
ROI using Fibonacci extensions

40. Examples Let’s look at some examples Hotline recommendations
AdvancedGET searches
Your favorites…