Wave validity — the equation a + b = c

Core idea

The market is a teacher setting a problem: it only gives us unknown A (the first impulse wave). We have to wait for unknown B (the correction wave) to form to confirm whether A's force is still intact, and only then do we get to eat C (the continuation wave). Absolutely do not enter a trade right at A while the wave is still running strong.

Details

The three unknowns

• A — the wave that runs first. This is the fact the market hands us for free. It tells us buying (or selling) pressure has entered the market.
• B — the correction wave right after A. This is confirming evidence, the thing we have to wait patiently for.
• C — the continuation wave in the same direction as A. This is the part we actually get to eat.

If you only know A and jump straight in, expecting both B and C to go your way, "you'll be wrong 90% of the time" — the teacher says outright that this is when the market is playing a nasty trick on you.

Measuring B with Fibonacci

The discipline of using this tool (when you're allowed to measure, the two classic mistakes, why the number isn't the entry) lives in its own note: fibonacci a ruler for force. This section only covers the part about reading the result within the a+b=c framework.

Pull Fibonacci from the foot of wave A → the top of wave A (for a rising wave), then look at where B corrects to:

• Shallow correction — around 0.382 or above, hovering in the upper half of wave A → A's validity is preserved → enter in A's direction, stop placed below B's low.
• Deep correction — down to 0.618, 0.786, 0.8 → A's force is very weak, almost wiped out → don't enter in that direction anymore.
• A cross-reference from wave logic: in a genuine uptrend, the correction wave doesn't drop past 0.5 of the previous wave.
• An example the teacher uses: a 1D rising wave corrects down to ~0.8 fib → treat the 1D rising wave as having nearly lost all its validity.

Switching roles when A is wiped out

When the correction wave drops too deep and completely wipes out the rising force, then that falling wave becomes the new A:

• A = the falling wave
• B = the bounce wave, but it still keeps the character of a fall (can't break the falling structure, can't reclaim the resistance zone)
• C = the continued fall → this is when you're actually allowed to short.

→ This is the reason for the rule: only short when there's a falling A wave + a B bounce that preserves the falling force. If the previous rising wave's validity is still intact, shorting is wrong, no matter how good the falling pattern looks on a smaller timeframe.

Two scenarios for waiting for B

1. B arrives right away: wave A finishes running and corrects immediately → B is shallow → enter, eat C.
2. A keeps running before it corrects: A extends further first, and only then does B appear → wait for that new B; if it preserves the validity, enter, eat C.

In both cases, our job doesn't change: always wait for the correction wave to confirm the strength of the wave before it.

Wave-force progression

If wave A in a later leg is stronger than wave A in the leg before it, then the following continuation wave C is also longer — because the force is preserved and carries forward. An important consequence for your thinking:

There's no such concept as expensive/cheap, only the concept of position.

Buying at a higher price but right after a shallow B wave (good position, clear stop) is far better than buying at a lower price with no confirmation yet.

The psychology behind B

A shallow B wave shows: buying pressure is resting, but there is absolutely NO selling pressure involved to pull price down. When price crawls back up to A's high zone, the group that already took profit at that high sees price come back → they buy in again, strongly → C runs.

Supporting evidence when checking validity

• Price structure: later highs higher than earlier highs, later lows higher than earlier lows, support zones preserved and gradually climbing → real buying pressure is coming in (clearest on the 5m/15m timeframe when the wave first kicks off).
• Volume (the teacher calls it "extra seasoning," not required): volume is not a quantitative tool, but a tool for comparing/relating to nearby areas. The main wave should have better volume than the area right before it; a sideways stretch should see volume shrink.
• RSI: RSI's advantage over looking at raw candles is that it filters out noisy signals in choppy zones, helping you avoid getting stopped out wrongly on shaky legs.

Accepting getting stopped out on one leg

There are cases where you enter on B exactly by the book but still get your stop swept, and then the next leg you re-enter and it works. That's normal — what matters is that the stop always has a clear place to sit (below B's nearest low).

Follow whichever timeframe has a pattern

When this timeframe hasn't decided yet, don't sit around guessing "will H1 decide, or should I wait for H2 to decide." Whichever timeframe currently has a pattern is the one to focus on tracking; if H1 can't decide, hand it off to 90m/H2 — this is wave progression across timeframes.

Do not: FORBIDDEN to measure Fibonacci before it's a trend

Fibonacci and the a+b=c equation are only valid on a clearly trending wave. Pulling Fibo inside a range on a higher timeframe and inferring a target from it is misunderstanding its nature.

• A case the teacher corrects: a student pulled Fibo on a rising wave, saw price bounce to 0.618 and still break past the high, and thought "the market broke the rule." In reality that stretch wasn't a trend — its nature was a range on the 1D timeframe, buying pressure only slightly edged out selling pressure, not enough to create a trend → Fibo has no measuring power there the way it does in a trend.
• Don't infer C from A + Fibo alone. You have to wait for B to finish bouncing first (how far B bounces is decided by the buy/sell force relationship, not decided by a Fibo number), and only then can you get to C. Doing it like "pull Fibo on A and announce price will come back to 26k" is skipping ahead, missing unknown B.
• The closing line: getting the wave wrong + using Fibo on the wrong shape → the risk comes from yourself, not from the market.
• A quick way to check whether the parent wave can still be pulled: look at the force on the smaller timeframe. For example, an H1 rising wave sits inside an H4 wave; if H1 fails to create new momentum and instead crosses down → H4 has lost its trend and continues sideways. Don't just look at Fibo alone. → See identifying a range zone to recognize the shape BEFORE picking up Fibo.

Putting it into practice

Checklist before every trade:

1. Has wave A been identified yet? (the impulse wave that just finished running)
2. Has B formed yet? — without B, absolutely do not enter.
3. Measure A with Fibo: does B correct shallow (≤ ~0.5, ideally around 0.382) or deep?
4. Is price structure still preserved (later low higher than earlier low, for a rising wave)?
5. Is the adjacent higher timeframe out of phase? If it's out of phase, even a pretty A+B only earns a small position / gets skipped.
6. Stop placed below B's low; take-profit at the nearest high, or based on the nature of the wave on the timeframe you're trading.

When you see a strong rising wave and you have no position yet: the right answer is neither "wait to buy" nor "wait to short," it's "wait and see how the bounce wave moves" and only then decide long or short. Putting yourself into a "waiting to buy" mindset has already anchored your reasoning to one side.

What the teacher stresses / common traps

• FOMO-ing into the middle of wave A = wrong. Shorting into the middle of wave A = suicide ("standing in front of a train").
• No "catching a falling knife" — you have to wait for a clear signal.
• Don't let the market trick you: it gives you A and then baits you into making up B and C yourself.
• Every wave will have a correction, you just don't know where it is — so the only job is to wait patiently.
• A sideways, quiet market is exactly when a professional observes and prepares, it's not a time to get bored and drop down to a small timeframe to trade recklessly.
• During a range phase, close out short, take short profits, don't expect far-off targets.
• On books (the teacher's advice from roughly session ~49–50 onward, once you're fluent in the system): buy and read technical-analysis books from other schools of thought (Dow theory, price action, Wyckoff...), not to supplement the system but to see that every school ultimately comes down to the same answer — buying pressure/selling pressure — which deepens your understanding of your own system. After that, move to trading-psychology books (the teacher mentions "The Way of the Trader" and other trading-psychology titles), then expand into finance books. Read books rather than watch videos, because reading is active absorption. In the early stage, before you're solid, don't read other schools of thought — you'll get confused.

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