The is the price at which the rule’s position ends in order to limit the loss. It lies half an below the start of wave 1, is fixed with the entry and applies as soon as the daily low reaches it. How much money is at stake is set by the – not by the stop alone.
Why “provisional”?
As long as there is no signal yet, the page calculates the stop with today’s ATR. Because the ATR changes every day, this moves slightly. It is fixed with the signal candle; after that it stays until the first target.
Invalidation level and stop
Before the entry, the applies: if a candle closes below the start of wave 1, the setup is over; a wick below it does not count (). After the entry, the stop counts, and it already reacts to the candle’s low. The 78.6% level is only the bottom of the zone.
Calculating position size
Decide how much of your capital a stop may cost at most (). Divide this amount by the distance from the entry to the stop. The result is the number of shares, rounded down. Costs and can make the loss larger.
Worked example with the model stock – not a recommendation
Only a worked example with assumed numbers, not a guide to action: capital 10,000 US dollars, risk 1% = 100 US dollars. Entry on Day 35 at the open, 124.90. Stop 98.00 = 100.00 − 0.5 × ATR 4.00. Distance per share 26.90 → 100 ÷ 26.90 = 3.72, rounded down 3 shares for 374.70 US dollars. If the stop is hit, that is about 80.70 US dollars of loss plus costs.
- Stop Stop (stop-loss)The price at which a position is closed to limit the loss. Here it lies below the start of wave 1, with a buffer of half an ATR.Example: Start of wave 1 at 100, ATR 2 → stop at 99.More in the Academy: Lesson stop and risk98.00
- Buy zone Elliott buy zoneBuy zone based on Elliott wave rules: the area the price has to pull back into after a rise (wave 1) before the rule checks an entry. It lies between 61.8% and 78.6% of the rise, measured from the high. Not advice from us, but a help for your own review.Example: Rise from 100 to 120 → buy zone 104.28–107.64.More in the Academy: Lesson buy zone and Fibonacci110.70–119.10
- Rule’s entry Day 35 (open)124.90
- Targets TP1 / TP2 Target 1 and Target 2 (TP1, TP2)The targets (take profit, TP) are at 161.8% (TP1) and 685.4% (TP2) of the length of wave 1, measured from the end of wave 2. At TP1 the rule plans a partial exit (a quarter); the rest runs to TP2, to its trailing stop or to the time exit.Example: Low 100, high 120, wave 2 ends at 105 → TP1 137.36, TP2 242.08.More in the Academy: Lesson trade management194.90 / 456.70
Model numbers, not real prices. Zone, targets and stop calculated with the constants of the current rule. An example for understanding, not a forecast and not investment advice. Real buy zones in the screener