BUY FXO Forum Shares
1316
Shares in the BANK:
We BuyWe Sell
$1.8836$1.9419
Results 1 to 7 of 7

Thread: The Elliott Wave Theory

  1. #1
    Piplet
    Join Date
    Mar 2008
    Posts
    19
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default The Elliott Wave Theory

    One of the best known and least understood theories of technical analysis in forex trading is the Elliot Wave Theory. Developed in the 1920s by Ralph Nelson Elliot as a method of predicting trends in the stock market, the Elliot Wave theory applies fractal mathematics to movements in the market to make predictions based on crowd behavior. In its essence, the Elliot Wave theory states that the market in this case, the forex market moves in a series of 5 swings upward and 3 swings back down, repeated perpetually. But if it were that simple, everyone would be making a killing by catching the wave and riding it until just before it crashes on the shore. Obviously, theres a lot more to it.

    One of the things that makes riding the Elliot Wave so tricky is timing of all the major wave theories, its the only one that doesnt put a time limit on the reactions and rebounds of the market. A single In fact, the theories of fractal mathematics makes it clear that there are multiple waves within waves within waves. Interpreting the data and finding the right curves and crests is a tricky process, which gives rise to the contention that you can put 20 experts on the Elliot Wave theory in one room and they will never reach an agreement on which way a stock or in this case, a currency is headed.

    Elliot Wave Basics

    Every action is followed by a reaction.

    Its a standard rule of physics that applies to the crowd behavior on which the Elliot Wave theory is based. If prices drop, people will buy. When people buy, the demand increases and supply decreases driving prices back up. Nearly every system that uses trend analysis to predict the movements of the currency market is based on determining when those actions will cause reactions that make a trade profitable.

    There are five waves in the direction of the main trend followed by three corrective waves (a 5-3″ move).

    The Elliot Wave theory is that market activity can be predicted as a series of five waves that move in one direction (the trend) followed by three corrective waves that move the market back toward its starting point.

    A 5-3 move completes a cycle.

    And heres where the theory begins to get truly complex. Like the mirror reflecting a mirror that reflects a mirror that reflects a mirror, the each 5-3 wave is not only complete in itself, it is a superset of a smaller series of waves, and a subset of a larger set of 5-3 waves the next principle.

    This 5-3 move then becomes two subdivisions of the next higher 5-3 wave.

    In Elliot Wave notation, the 5 waves that fit the trend are labeled 1, 2, 3, 4 and 5 (impulses). The three correcting waves are called a, b and c (corrections). Each of these waves is made up of a 5-3 series of waves, and each of those is made up of a 5-3 series of waves. The 5-3 cycle that youre studying is an impulse and correction in the next ascending 5-3 series.

    The underlying 5-3 pattern remains constant, though the time span of each may vary.

    A 5-3 wave may take decades to complete or it may be over in minutes. Traders who are successful in using the Elliot Wavy theory to trade in the currency market say that the trick is timing trades to coincide with the beginning and end of impulse 3 to minimize your risk and maximize your profit.

    Because the timing of each sequence of waves varies so much, using the Elliot Wave theory is very much a matter of interpretation. Identifying the best time to enter and leave a trade is dependent on being able to see and follow the pattern of larger and smaller waves, and to know when to trade and when to get out based on the patterns you identify.

    The key is in interpreting the pattern correctly in finding the right starting point. Once you learn to see the wave patterns and identify them correctly, say those who are experts, youll see how they apply in every facet of forex trading, and will be able to use those patterns to trigger your decisions whether youre day trading or in it for the long haul.
    Happy Trading,
    Martin
    by forexgates.com

  2. #2
    Piplet
    Join Date
    Oct 2008
    Posts
    27
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    c an it run on MT4..?/

  3. #3
    In Profit
    Join Date
    Oct 2008
    Posts
    110
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    elliot waves work good with experience

  4. #4
    In Profit
    Join Date
    Aug 2007
    Posts
    103
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    Quote Originally Posted by pipshower View Post
    elliot waves work good with experience
    yeah i second that statment..elliot waves need a great practice and effort..but its a very effective tools and once u master it..your trading will improve dramatically :

  5. #5
    Intraday Master SurFXwave's Avatar
    Join Date
    Dec 2008
    Location
    SurFXwave Solutions, Seremban
    Posts
    276
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    Share your opinion on GBPUSD Elliot wave strategy
    ---> http://forum.fxopen.com/showthread.php?t=48958
    Lets SURF FOREX WAVE together
    SurFXwave Solutions
    No FXOPEN banner on promoted site

  6. #6
    In Profit forexdude's Avatar
    Join Date
    Feb 2009
    Posts
    104
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    use charts to make it clear to noobs

  7. #7
    Piplet
    Join Date
    May 2010
    Location
    Ukraine
    Posts
    12
    FXO Shares
    0
    FXO Bonus
    0.000
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default

    I hear so much about Elliot Waves but never learned it. From what traders say, it seems that it has great profit potential though.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Disclaimer
2005-2017 © FXOpen All rights reserved. Various trademarks held by their respective owners.

Risk Warning:: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgment as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors.

FXOpen Markets Limited, a company duly registered in Nevis under the company No. C 42235. FXOpen is a member of The Financial Commission.

FXOpen AU Pty Ltd., a company authorised and regulated by the Australian Securities & Investments Commission (ASIC). AFSL 412871ABN 61 143 678 719.

FXOpen Ltd. a company registered in England and Wales under company number 07273392 and is authorised and regulated by the Financial Conduct Authority (previously, the Financial Services Authority) under FCA firm reference number 579202.

FXOpen does not provide services for United States residents.

Join us