EWT // TRIMMING & RE-ENTRY // TVT STRATEGY GUIDE
THEVALUETRADER RESEARCH
HOW-TO GUIDE — JUL 2026
REF: EWT FRAMEWORK
Elliott Wave Trimming & Re-Entry
A TVT framework for managing position size through the wave cycle
Core Philosophy
Reduce exposure when probability declines. Reincrease exposure when probability resets. Stay disciplined, not emotional.
WAVE 3 TRIM — STANDARD CONVICTION20–30% near 1.618 Fib
WAVE 3 TRIM — HIGH CONVICTIONNone — hold full position
WAVE 4 RE-ADD ZONE0.382 Fib (0.236 in strong trends)
WAVE 5 ACTIONTrim aggressively on rejection
RE-ADD RULERedeploy trimmed capital first
GOVERNING RULEStructure & Fibonacci — never emotion
- Trimming is risk management, not a bearish signal
- The objective is to reduce exposure at statistically extended levels
- Lock in profits while maintaining exposure
- Create capital for higher risk-vs-reward entries
- Never attempt to sell the exact top — it's near impossible
- Trim based on structure and Fibonacci levels, not emotion
- Always have a re-add plan before trimming — example: trim Wave 3 to add in Wave 4
- Conviction determines aggressiveness
φ 03Wave 3 — Trim Into Strength
Why Trim in Wave 3
- Wave 3 is powerful and often the longest wave
- Price often moves far above the moving averages
- Late buyers begin chasing — common late in Wave 3
- Probability of consolidation or pullback increases
Trim Zone & Size
PRIMARY TRIM ZONENear the 1.618 Fib extension of Wave 1
STANDARD CONVICTION20–30%
LOW CONVICTION / PARABOLICUp to 50%
HIGH CONVICTIONNo trim
Conviction Guidelines
High Conviction
Add & Hold Through Wave 3
- Strong fundamentals
- Sector leadership
- Clean EWT structure
- Supportive macro environment
Lower Conviction
Trim More, Confirm First
- Weaker fundamentals
- Extended momentum without base support
Key Points
- Wave 3 is not where trends end — Wave 4 and Wave 5 still lie ahead
- Over-trimming in Wave 3 often leads to chasing re-entries
φ 04The High-Conviction Exception
Exception — Wave 3
For genuinely high-conviction names, the standard Wave 3 trim doesn't apply. I'll hold a full position through Wave 3 on a name like $AMD, for example.
- Hold the full position through Wave 3
- No trimming at the 1.618 Fib
- Wait for Wave 4 to add, on confirmed support, close to the 0.382 Fib
- Reserve the majority of trimming for a Wave 5 rejection
φ 05Wave 4 — Re-Adding After the Reset
Purpose of Wave 4
- Momentum cools
- Structure resets without breaking the trend, and without entering Wave 2 territory
- Wave 4 typically unfolds as three waves down (A-B-C)
Re-Add Zone
IDEAL RE-ADD ZONE0.382 Fib retracement
STRONG TREND VARIATION0.236 Fib — very strong momentum only
Re-Add Rules
- Redeploy trimmed capital first
- Do not add more than what was trimmed, unless conviction is high
φ 06Wave 5 — Aggressive Trimming & Capital Protection
Why Wave 5 Is High Risk
- Retail participation peaks
- Headlines turn overwhelmingly bullish
- Momentum divergences often appear
- Trend exhaustion risk increases
Wave 5 Trimming Strategy
- Trim a large percentage of the position
- Do not wait for a perfect target
- Do not be greedy
φ 07Common Trimming Mistakes
- Trimming too early in Wave 3
- Trimming too much in Wave 3
- Trimming without a re-add plan
- Failing to re-add in Wave 4
- Holding too long after a Wave 5 rejection
φ 08TVT Trimming Framework — Quick Reference
Wave 3 (Standard)
20–30% near 1.618
Wave 3 (High Conviction)
Hold, no trim
Thank you — TVT
This content is for educational purposes only and reflects my personal perspective and experience using Elliott Wave Theory. It is not financial advice, investment advice, or a recommendation to buy or sell any security. All investing involves risk, and you are responsible for your own decisions. Always do your own research.