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Wolfe Waves is a book written by Bill Wolfe, a practicing trader. In his book you can find a detailed description of the strategy that suggests using of waves formed during a correctional movement.
The author defines the main idea of this trading method in the following way:
“The theory of my Wave structure is based on a law of physics that for every action there is an equal and opposite reaction. This action/reaction often shows a definite rhythm with extremely valuable projecting capabilities to the trained eye.
Many times however, little waves mix with larger waves and the waters become muddied. Sometimes everything is in synch and you will get a rogue wave effect similar to what occurs in the oceans of the world. These can be extremely profitable in the futures and stock market.”
Using this strategy you will get impressive results. A positive expected value can be achieved due to accurate entries and the profit/loss ratio that varies from 2:1 to 10:1.
