What is Neely River Trading technology?
by Glenn Neely, founder of NEoWave and Neely River Trading technology

We all want to make money trading.
But is mastering the forecasting process a prerequisite?

For the first 25 years of my trading career, my primary focus was improving my forecasting abilities. Initially, I approached markets the way most people do. You get excited by something, and you get involved in the market. In my case, it was the 1980s Gold market, which was going crazy. Gold skyrocketed from $35 to $800 an ounce, and it was the talk of the town so to speak. That got my attention.

As I approached the markets, I did what just about everyone does: I assumed that if I'm going to trade a market, I have to be able to predict what the market's going to do in order to make money. In other words, I assumed the prediction process is a prerequisite to making money trading.

This is what I believed for at least 25 years – and what most people still believe. Over the course of two-and-a-half decades, I kept getting better and better at forecasting using Wave theory (which I improved by adding logic and rules and eventually called NEoWave).

However, if you were to graph my forecasts you would notice that my accuracy kept increasing almost logarithmically, but my trading results were only progressing arithmetically. You would see that my trading results were getting better over time – but only little by little. Despite my forecasting accuracy, I'd have good periods and bad periods of trading.

After about 25 years, I realized something wasn't right. I had to figure out what the problem was. This realization occurred sometime around 2001. Based on my NEoWave forecasts, I knew we had started a 20- to 30-year corrective environment from the high in 2000, which meant we'd be going through 20 to 30 years of corrective price action.

Under Wave theory, corrective price action is very difficult to predict and trade. Knowing we were entering such a challenging environment, I had to figure out some other way to approach trading. I would need to figure out how to survive in a trading environment where I could not consistently predict what was going to happen.

My goal, then, was to create a trading approach that would not require forecasting and would be founded on logic (the same way I approach Wave analysis). This was my thought process in 2001, and this is when Neely River Trading technology began to evolve.

Keep in mind that Wave theory is based on tracking psychology. Neely River Trading technology is based on tracking the different types of traders, determining which type of trader is in control of the market, and learning how to enter markets based on the current trading environment. It's a completely different approach to trading. Neely River focuses on reducing the noise of a market. You only pay attention to situations in which there is a financial impact on circumstances, not an emotional impact. Trading based on emotion is generally very unproductive. It's detrimental to your bottom line.

Keep in mind that Wave theory is based on tracking psychology. Neely River Trading technology is based on tracking the different types of traders, determining which type of trader is in control of the market, and learning how to enter markets based on the current trading environment. It's a completely different approach to trading. Neely River focuses on reducing the noise of a market. You only pay attention to situations in which there is a financial impact on circumstances, not an emotional impact. Trading based on emotion is generally very unproductive. It's detrimental to your bottom line.

Instead, you want a process that's logical, unemotional, objective. A process that allows you to know what to do and why you're doing it. A process that offers a very specific way to determine how to pick trades, how to pick the timeframes, and how to pick the strategies. All these things have to be spelled out in a very objective way, so you remove all the emotionalism of trading. This allows you to get out of what I call the forecasting paradigm and into an objective trading paradigm. In a nutshell, this is what Neely River Trading technology is all about.

Wave theory can be useful for warning you of major turns in a market and major risk factors, but for day-to-day trading, it's not the best way to make money. So why should you switch your emphasis from the forecasting paradigm to the trading paradigm? Because the goal is to make money.