Elliott waves are one of the few studies that able to tell where the market is now, where it is likely to go next and, of course, what are the opportunities there for traders.
However, it's not a secret that to many traders Elliott waves theory is one the most difficult studies whether it comes to understanding, using it or following someone's forecast. We'll discover why.
Elliott Waves Basics
Elliott Wave Patterns
Elliott Wave Rules
Elliott Waves Indicators
Elliott Waves - Beginner steps
Elliott Waves - Trading plan
Elliott waves and Fibonacci
Elliott waves - Fibonacci click-by-click
Elliott waves and Bollinger bands
Idea behind Elliott Waves
Elliott Waves were introduced by Ralph Nelson Elliott in the 1930s for stock trading.
The theory is based solely on the phenomenon of mass psychology, which more often than not predetermines the outcome of the market behavior.
mass behaviour => market behaviour
Elliotticians, among which are many top tier technical analysts from banks and leading investment institutions, like to use the knowledge of Elliott wave principles to understand mass investor behaviour and thus make forecasts about the market behaviour.
Polar opinions on Elliott Wave theory
|Elliott waves have a huge degree of subjectivity. If you ask a group of Elliotticians to identify Elliott waves on the same chart they will most likely come up with several different wave counts.
||The key to trading Elliott waves lies in not being always correct on the wave count, but rather finding the ways to get the least penalty for being wrong. While there are certain small windows in each price move, which promise some amount of profit regardless the actual wave count as long as direction is known, and that's what the Elliott wave theory does.
|Elliott waves have a complex myriad of patterns and rules.
Elliott wave traders look for an entry price that is close to support & resistance levels. Then if the level is broken, they exit with minimal losses and the wave pattern will be nullified. However, if the wave count was correct, it will make profits two to five times the amount risked.
|There are only 3 hard-coded unbreakable rules recognized in Elliott Waves theory, while the rest of the rules can have alterations, exceptions and are allowed to fail, which makes it the endless world of possibilities.
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