Change text size

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Brent Harris is the President of Brent Harris Elliott Wave. BHEW is located in Fountain Hills, Arizona. BHEW provides a daily advisory service via the internet, and other electronic delivery systems, and has been operating since 2003. Brent has been actually been running a daily advisory service since 1989—first, with a company called Timing financial and then, between 1993 and 2003, as the president of Harris-Mann, Incorporated.   

This is the final installment of my interview with Brent Harris.

Optionetics: How would you characterize your technical approach to the markets?

Brent: I''m a firm believer in having a strong grasp of the price-history of any market under scrutiny. After all, it''s hard to know where you''re going, if you don''t know where you''ve been.  Since the main precept of ELLIOTT WAVE is to label ALL price-history up to the current time-frame, the main objective is to use the past in order to try and predict what is going to happen next. So, while my forecasts are obviously not always right, I think that this great attention to detail allows me to quickly recognize when I''m wrong. In fact, some of my better trades have actually resulted from an incorrect forecast. When well established wave-patterns are proven wrong, the resulting move in the opposite direction tends to be substantial.   

Optionetics: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Brent:  Aside from the inevitable losses that will occur, most new traders are not prepared to deal with the psychological aspects associated with daily equity swings. That is why it is so important to go into each trade with a predetermined risk, and a general plan for managing the open profits....when you get them.

Optionetics: What kind of advice would you give a person who is just starting to trade the markets?

Brent: Aside from the inevitable losses that will occur, most new traders are not prepared to deal with the psychological aspects associated with daily equity swings. That is why it is so important to go into each trade with a predetermined risk, and a general plan for managing the open profits....when you get them.

Also, I''ve had numerous clients that have opened accounts just to try and make a "big hit" in some market that, for whatever reason, they believe is going to the moon. While these types of ventures certainly can work, experience suggests that one has a better chance of success by opening your opportunities to a larger array of commodities.

Optionetics: Can you describe what your average trading and analysis day entails from preparation to execution?

Brent: Since my forecasts are longer-term oriented, they do not change that frequently. Thus, I already know in advance what markets I''m interested in trading. It''s just a question of whether or not that particular market will reach a key point that prompts me to either make a new trade, add to an existing trade, or exit a trade. To that end, I spend a great deal of time with my calculator. It is very important in "wave-analysis" to have a clear understanding of where the long-term, Fibonacci retracement projections come into play. Some of them stem from highs and lows that occurred as much as 30-years ago.

Thus, when the more recent Fibonacci retracement calculations are viewed in context with the old numbers, as well as the more immediate wave-pattern, you can get a really good idea of where the critical areas are at in each market.  At any rate, the bottom line is, IF I believe that a given market has significant potential, AND prices "correct" to my critical support/resistance area(s), then I will attempt to enter, using a predetermined stop.  It is imperative that a given market comes to me. I do NOT chase markets. If I miss it....so be it.

Optionetics: What type of analysis methodology do you employ to find great trading opportunities?

Brent:  The "core" of my form of analysis stems from the Fibonacci number sequence, AND the resulting percent-ages. I will spare you the details as to why these numbers work, as that is another seminar. The useful Fibonacci numbers are: 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, etc.  The key Fibonacci percentages, which is what I use  A LOT are: 5.568%, 9.1%, 14.58%, 19.1%, 23.6%, 30.9%, 34.55%, 38.2%, 44.1%, 50%, 55.9%, 61.8%, 69.1%, 76.4%, 80.9% and 85.4%.

To give you an idea of how I use the Fibonacci percentages to identify resistance, lets use the silver market as an example.  The first step is to identify the highest-high ever achieved in silver''s history, which was the 1980 top of $50.35. Then, we want to identify the lowest-point that followed the peak. This, in this case, would be the 1993 low of $3.505.

Subtract the low from the high, multiply the sum by the above Fibonacci percentages, add those numbers to the low, and you have your first set of very important, long-term resistance numbers. The next step is to repeat the same process, using more recent highs of significance, and thier subsequent lows. In this case, the second most important High/low occurred between the Mar 2008 top of $21.38, and the May 2008 low of $15.995. After making this set of calculations, the idea is to then compare them to the original set. IF they tend to "cluster" in a relatively close proximity, then the importance of these areas increases significantly. By the way, the 30.9%-38.2% and 34.55%-61.8% retracement combinations from the 1980 and 2008 highs just happen to occur at $17.98-$18.05 and $19.32-19.69 basis the nearby silver contract. So, these areas should prove to be very "pivotoal". Anyhow, in order to find support, you simply reverse-the process, by subtracting the Fibonacci percentages from the highs of important advances. In the case of silver, measure the distance from the 1993 low, to the 2008 high (which was a move up of $17.875), and then subtract the Fibonacci percentages from the high.

Optionetics: Thanks Brent for sharing your thoughts about the trading business with our Optionetics reading audience.

To read previous installments of this interview, please click here.


Jeff Neal 
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
Visit Jeff’s Forum
Listen to Jeff at www.ProfitStrategiesRadio.com

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Recent Articles by Jeff Neal, Optionetics.com

• November 19, 2008
  Outside the Box: The Virtue of Risk Management
• November 18, 2008
  Tech World: American Superconductor Going Strong
• November 12, 2008
  Outside the Box: Managing the Emotional Aspects of Trading
• November 11, 2008
  Tech World: Encore Wire Gathering Earnings Momentum
• November 7, 2008
  Interview Central: Shane Johns, Part III