About Elliott Wave
Good evening. I am Kitsune no Me (Fox’s Eye).
Todaywe will write aboutthe “Elliott Wave”
Thank you for reading.
Table of contents
1. What is the Elliott Wave
2. The basic principles of the Elliott Wave
3. How to use the Elliott Wave
1. What is the Elliott Wave
The Elliott Wave Theory is a chart theory,the “Elliott Wave”is also called.
It is a historical theory researched and discovered in 1938 byRalph Nelson Elliotta U.S. stock analyst.
This person is “Ralph Nelson Elliott”.
If you were to summarize this theory in one line,it is the idea that market waves are composed of a basic pattern of five advancing waves and three corrective waves in a cycle..
Waves 1 through 5 are called“impulse waves”, and waves A through C are called“corrective waves”.
“Up waves = impulse waves, Down waves = corrective waves”
that’s the gist.
In actual charts, it is rare for them to move exactly like this, and most are not so simple.
Where one wave ends and the next begins, or what constitutes the second wave, varies by trader interpretation, so if I may give my personal view:“Elliott Wave is a post-hoc theory”.
Of course, there are people who profit from Elliott Waves, but I think those people aren’t earning profits solely from the Elliott Wave; they incorporate other bases and add Elliott Wave to those bases.
This is simply my personal opinion.
That is to say,the “Elliott Wave”andthe “Dow Theory”are not robust theories on their own, and I don’t recommend blindly trusting them.
2. The basic principles of the Elliott Wave
・Among waves 1, 3, and 5, wave 3 is never the shortest
・Wave 2 does not go lower than wave 1
・Wave 4 does not fall below the high of wave 1
If drawn as a figure, that is what I mean.
These three are the basic principles.
These are just principles; it is important to keep in mind that exceptions exist as well.
3. How to use the Elliott Wave
Ride the 3rd wave.
If I were to use the Elliott Wave,“Wave 3”and“Wave C”only would be my targets.
That is because you can confirm the trend.
In other words, it falls undertrend-following
This depends on trading style, but I basically“do not go against the trend”, so with a clear direction, I aim for“Wave 3”and“Wave C”.
Wave 3 has the largest upward movement among all five waves, making it easier to target big profits, and Wave C, among all corrective waves, has the largest downward movement, making it easier to target big profits.
Once you confirm the trend from Dow Theory and higher time-frame environment, you aim to capture pips in an advantageous state.
Ultimately, the places I captured just happened to correspond to “Wave 3” or “Wave C,” and only when it reverses did I realize, “Oh, that was Wave 3.” It was Wave C.
So, in the end, it feels post-hoc after all.
That concludes my personal views on the Elliott Wave.
What do you think?
I hope it has been helpful for your trading.
Thank you for reading this far!