Elliott Wave Theory
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Thread: Elliott Wave Theory

  1. #1
    Nesnu0000
    Guest
    Ralph Nelson Elliott developed the in the late 1920s by finding that stock markets, presumed to behave in a somewhat chaotic fashion, in fact, did not. They exchanged in repetitive cycles, which he found were the emotions of investors as a reason for external influences, or paramount plogy of the masses at the moment. Elliott said that the upward and downward swings of this mass plogy constantly showed up at the same repetitive patterns, which were subsequently broken up into patterns that he termed waves.



    The theory is somewhat depending upon the Dow Theory inasmuch as the price movements move in waves. It was known by the technicians at the time that because of the fractal nature of the markets, Elliott managed to divide and examine the markets at considerably greater detail.

    Elliott managed to see unique qualities of wave patterns and also make detailed market forecasts based on the patterns he identified. Fractals are mathematical constructions, which in a ever-smaller scale greatly repeat themselves. The patterns which Elliott found are constructed in the same manner. An impulsive wave, which goes with the principal tendency, always shows five waves in its pattern. On a smaller scale, within each of the impulsive waves of this before-mentioned impulse, five waves may again be found. In this more compact pattern, the same pattern repeats itself ad infinitum. All these ever-smaller patterns are tagged as distinct wave levels in the Elliott Wave Principle. Only much later were fractals recognized by scientists.

    From the financial markets we know that each action creates an equal and opposite reaction for a price movement up or down has to be followed by a contrary movement. Price action is broken up into trends and corrections or sideways movements. Trends reveal the main direction of prices while corrections proceed contrary to the trend. Elliott tagged these impulsive waves and corrective waves.

    The interpretation of this is as follows: Each action is followed by a response. You will find five waves at the direction of the primary trend followed by three corrective waves (a 5-3 move). A 5-3 move completes a cycle. This 5-3 move then becomes two subdivisions of another higher 5-3 wave. The underlying 5-3 pattern stays constant, although the time span of each may vary. Let us have a look at the next chart made up of eight waves (five up and three down) which can be labeled 1, 2, 3, 4, 5, a, b and c.

    http://i.investopedia.com/inv/articl...is/elliot1.gif
    You can observe that the three waves at the direction of this trend are all impulses, so these waves also have five waves. The waves against the tendency are all corrections and are composed of three waves.


    Http://i.investopedia.com/inv/articl...is/elliot2.gif
    From the 70s, this tide principle gained popularity throughout the work of Frost and Prechter. They published a legendary novel on the Elliott Wave, qualified http://www.fxfisherman.com/forums/. Within this novel, the authors called the bull market of the 1970s, and Robert Prechter called the crash of 1987.

    Http://i.investopedia.com/inv/articl...is/elliot3.gif
    The corrective wave formation generally contains three, in some cases five or more, different price movements, two at the direction of the main correction (A and C) and one against it (B). Waves 4 and 2 in the above picture are corrections. These waves have the following structure:

    http://i.investopedia.com/inv/articl...is/elliot4.gif
    Note that the waves A and C go in the direction of this shorter-term trend, and therefore are impulsive and composed of five waves, and this is shown in the image above.




    An impulse-wave formation followed by a corrective wave, shape an Elliott wave degree, consisting of trends and countertrends. Although the patterns pictured above are bullish, the same applies for bear markets, where the principal trend is down.

    The has delegated a series of groups to the waves in order of the largest to the smallest. They're:Grand Supercycle Supercycle Cycle Main Intermediate Minor Minute Minuette Sub-Minuette To use the theory in everyday trading, the trader determines the main tide, or supercycle, goes long and subsequently sells or shorts the place since the pattern runs out of steam and a reversal is distinguished.

  2. #2
    Quote Originally Posted by ;
    one query I NEVER look to find answers to in most videos and posts I have read about the Elliot wave theory is... HOW DO I IDENTIFY THE ORIGIN OF THE WAVES??? I mean... how do I draw or count the waves? Where do I start from? How do I know where to start from? I have seen several examples on charts but nobody ever seems to describe why they picked theirs points since the source of the 1st wave.

    So can someone please explain this to me? I understand quite a bit about the Elliot wave theory today, but all that comprehension is USELESS cos I still can't use anything...
    Where to start is the abstract portion of Elliott Wave Theory. You need to understand that waves are fractals and they are going on at multiple levels constantly. Should you provide me a specific currency and specify what time period you'd like to learn about, then I shall try my best to clarify a few time frames and clarify why I began in which I did on my count. I hope this helps.

  3. #3
    jiSesyntescesCiTi
    Guest
    You know where you're in the count by the higher level, the New
    Rule differentiations of waves, and the current degree, as verified with
    lower levels under.

    Much of the trouble with EW in Forex has to do with inadequate pattern
    growth on the higher degrees of scale. This is just due to this
    enormous scale and at which retail Forex was'pasted' into the worldwide markets.

    On the charts in MT4 you see data back to 1978. In that whole span you
    won't observe a complete pattern which fits the degree demoning that long.
    It's obviously a corrective pattern but it isn't complete.

    With no impulse wave of that same degree or bigger you may not earn
    an absolute starting point. This leaves only smaller scale wave starts and
    doing this in the middle of a correction does not make for great counts.

    Not to say the counts cannot be carried out. You do find yourself quickly
    getting all the way around the largest degree however and operate from data.

    I was able to discover a wave differentiation on Cable and label a 30 year
    stretch. Wave differentiation comes as an comprehension of the The
    New Elliott Wave Rule that I wrote and have only recently published.

    There's a post here about it if you're interested:
    https://www.forexforum.co.za/trading...sd-charts.html

    but that's how technicians begin their counts. Nothing magic there - you
    just absolutely have to have a clearly defined impulse wave of clearly
    bigger degree.

    World markets are in Cycle amount which spans Years to Decades and therefore are
    building Supercycle formations which span Decades to Centuries. To view
    such a clear impulse at next higher to our current one would need
    another 50 to 70 decades or so of data.

    This is similar to a stock IPO which at some stage takes on the sector
    and market dynamics whether right from the beginning or shortly afterwards.
    Forex has been grafted onto world markets at comparative pricing however, the
    pattern at which took away from is corrective.

    Cheers,

  4. #4
    This is the biggest fraud going in trading and I am sick of this. This manure is composed by traders learned and should they discover they can not earn any money from it they begin teaching this crap into other traders.

    It is a load of rubbish touted round by people like Robert Minor another man that teaches traders rather than really make a load of money trading. If its great why does Pretcher, Minor not only make oodles of money with it?

    Because wave theory is just great for instructing its good for trading. Markets don't move in three and 5 waves, it's simply a lie. Grab a chart of almost any currency and look to see how many 5 waves upward followed by three waves you find.

    You won't create a bean with this in trading that I understand that I tried for three decades to utilize elliot waves and dropped money slowly. Then I learned how to do it by viewing a real trader and today I earn money. I cringe when I see people using it and suggest you run a mile when anybody offers to edue you elliot wave theory.

    Its time actual trader on this forum stamped on this drivel

  5. #5
    The only legitimate point that elliot makes is that Price transfers in waves.

    You simply cannot predict price as it isn't a mathematical structure, it is not scientific.

    To understand a chart we need to return to fundamentals bid/ask quote, as these prices are quoted for specific time period we make time frames.

    But What's a chart? It's only a trade record that shows the trades people made....so no FUTURE data could be called from this.

    Nevertheless by looking at what has been going on in the past....we nation all things being equal we could anticipate x

    of course we are anticipating future trades which may or mightn't be as we postulate....

    There is not any secret formula and I believe elliot was searching for you.
    People buy people sell, if you're able to mathematically predict human behaviour then you can predict price. Humans act predictably unpredictable so does the market

  6. #6
    Quote Originally Posted by ;
    the sole valid point that elliot makes is that Price transfers in waves.

    That you simply aren't able to predict price as it isn't a mathematical structure, it's not scientific.

    To understand a chart we will need to go back to basics bid/ask quote, as these prices are quoted for specific time period we make time frames.

    But what is a chart? It's simply a transaction record that shows the trades people made....so no FUTURE data could be called from this.

    Nevertheless by looking at what has been going on in the past....we state things being equal we...
    yes you're able to predict human behavior scinetifically. Of course there's no secret formula - but the market is harmonious. It's not arbitrary. It's irrational - but it is logical, red. Yes you can use a chart to forecast future swings - I do this day

    but then again, you are a quant - a fairly rowdy tough one too lol so yeah we're in a forked path. BUT - I could pretty much state fibonacci ratios are mathemetically a part of pure science and so is planetary movement. . But forked path. U wont belive so - and for one to actually'believe' u gotta read a heck loada material


    take care red - commerce well (as normal hehehe )

  7. #7
    Tknusores
    Guest
    Good Day Everyone,
    I've a fast question, does anyone here use the Elliott Wave if trading?

  8. #8
    CuqwSeszesnes
    Guest
    One question I NEVER look to find answers to in all videos and articles I have read concerning the Elliot wave theory is... HOW DO I IDENTIFY THE ORIGIN OF THE WAVES??? I mean... how do I draw or count the waves? Where do I start from? How do I know where to begin from? I have seen several examples on charts but nobody ever seems to explain why they chose theirs points as the source of the 1st wave.

    So could someone please explain me this? I know quite a bit about the Elliot wave theory now, but all that comprehension is USELESS cos I can't use anything I've heard.

    So a little help PLEASE

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