How to use Elliott Wave correctly?

Hi,

I am novice about Elliott Wave,How to use it correctly or practise it? I don't know from where to start. Thank you very much!





BEST WISHES!
GUO MINQUAN

dont use it is the best advise i can give

Don't let others tell you that you shouldn't use Elliott Wave until you are not entirely convinced of that. I only use Elliott Wave for about a month, and I have far from extraordinary returns but i feel that i am in the right place at the right time most of the time when taking a trade (my equity feels that too).

You should definately start with something simple like the lesson about Elliott Wave in www.babypips.com and read Elliott Wave Simplified - Clif Droke. After that, it's up to you to find good books. And to practice.. get a demo account and practice. Keep in mind to put tight stop losses.

Save yourself some time by reading Marber on Markets by Brian Marber, this thread, or this blog.

prefer u test some software EW counting

like MTP and Elwave ...

Reading this post in Fti's tread "Technical Analysis Fallacy" got me interested in at least knowing enough about the Elliott principles to understand impulse and retracement waves. I bought a copy of 'The Major Works of R.N. Elliott' and am about 1/2 way through. It is actually interesting, but as Fti states, apart from the usefulness as general knowledge it may have no real value.

http://www.forexfactory.com/showpost...postcount=1289

BTW - If you want a real valuable read - spend some time in Fti's thread. You can ask questions in the TAF Lounge thread in the Members area

not sure if i m right to say that but EW doesn't have much quantitative analysis in it?

The best way to use elliot waves are to draw numbers 1 through 5 on your chart and then guess where the market will go next. If you are wrong, draw A,B,C's or just erase the 1-5's and start somewhere else. It also helps to be arrogant about the entire process. Remember EW traders are never wrong, they just relabel.

Hello

Elliott discovered that these market cycles resulted from investors' reactions to outside influences, or predominant psychology of the masses at the time. He found that the upward and downward swings of the mass psychology always showed up in the same repetitive patterns, which were then divided further into patterns he termed "waves".

Elliott's theory is somewhat based on the Dow theory in that stock prices move in waves. Because of the "fractal" nature of markets, however, Elliott was able to break down and analyze them in much greater detail. Fractals are mathematical structures, which on an ever-smaller scale infinitely repeat themselves. Elliott discovered stock-trading patterns were structured in the same way.

if you want to gett more knowledge about Elliot Wave Theory and uses of it, you have to visit some website ,from where you can get imformation, these sites are ,elliottwave.com, babypips.com/school/the_53_wave_patterns.html ,stockcharts.com etc.

have a happy trading

There was a huge EW thread over at MoneyTec in 2006. I can't remember the guy's name, but it was one of the biggest threads in both posts and views. Like all the big threads, it had equal amounts of sycophants and ball-busters.

Anyway, the OP swore on every thing of value to him that the Eur would not break 1.3 and that we had seen the high in Dec 2004 and that it was on its way down, down, down!. He even swore that he would give up trading if it did. I remember he kept selling right through 2006, along with all his hangers-on.

It was a classic example of being married to a view and absolutely refusing in the face of all evidence to believe that you're wrong.

I wonder how he's doing nowadays?

I think he just served me my BigMac. God I wish I could find a good job like that. Unfortunetley, for USA peeps, this is no joke. Without jobs(of anykind) this American Experiment is headed for history. Good! This joke had to end sometime!

jobs a commin round the corner ..... IMF said today the recession is receding & the world economy is gradually improving, saw it on the telly

the IMF is a group of crackpots and gypsies. the recession is NOT over, especially if we keep bailing everyone out.

as for the elliot wave, you cant really use it to actually predict a future price move. you can use them to analyze past movements though and possibly get a feel for how the currency works. remmeber, as with all patterns, it will NOT always do the same thing every time. thats not how the market works.

elliot wave: They've done studies, you know. Sixty percent of the time, it works every time. it's illegal in nine countries.

And you can use Elliot Wave Theory to predict what kind of day you are going to have ... :-)

A lot of people give up on EWT because it takes a long, long time to begin to get competent at counting them waves.

I like to think of EWT (and it is only my personal metaphor) as a roadmap that prices must use to reach their destination. Without a roadmap, the number of paths would be huge. With a roadmap, that number is greatly reduced. As with a roadmap, when you get to a junction you have a choice of which road to take, only in the case of price, you can't go backwards (i.e. go back in time).

Like most methodologies, EWT doesn't eliminate uncertainty (wouldn't that be great), it just reduces it quite a lot (if used properly).

As Jack Schwager who interviewed the top traders for "Market Wizards" and "New Market Wizards" said, "It really doesn't matter which paradigm you use, there are many that work. You just have to find one that suits you and use it consistently."

I really can't understand why there are so many anti EWTers on an EWT thread. It's a bit like gay bashers who spend their time stalking gays. Shouldn't they be chasing girls?

Seriously, if you have conclusive proof that EWT doesn't work, then write a book about it. You'll make a lot of money. If it is critically acclaimed, I'll buy a copy. But before you do, please make sure you take the time to study EWT thoroughly.

As Jack Schwager says (nothing I write is original), people don't trade the markets, only their belief about the markets. EWT is based on the premise that mass psychology and behaviour follow certain laws (as yet undiscovered) but express themselves in the behaviour of the stock market. (Don't laugh, Copernicius calculated the motion of the planets around the Sun but it took Newton centuries later to come up with the Why).

Think of it, if there were no laws that governed the behaviour of large groups of animals, we would have total chaos. Instead, we have ordered chaos... :-). What creates order ... laws.

Anyway, if you don't believe the basic premise of EWT theory and if you haven't studied and used EWT for at least six months, then there is really no point is talking about it. It would be like a Muslim trying to reason with a Jew, they can't. They have different belief systems and experience. Both are right because they work for the respective followers.

As Dr Van Tharp, a trading psychologist who has interviewed thousands of traders including the very best, says no method is the Holy Grail. The Holy Grail is you and your ability to use your chosen method(s).

I use it and am very happy with it.
You are not always right in your count, but you can set up some very high probability trades if you know how to, with very limited risk, even when your count is wrong. To date this year I have won over 75% of my trades and very low drawdown on an exposure of 3%. Most my trades are 3:1 r/r. Meaning I risk one pip to gain 3.

Plan is that you keep a preferred and an alternate count. At certain points in the market you can trade like a "straddle" style trade and almost 100% guarantee to win the trade.

I use it more for swing trading though, it is also very reliable in telling when the markets are turning.

I keep a blog where I explain the wave count in a newsletter. I update it regularly, log in if you want and see for yourself.
It is not trading advice however.

I've had quite a bit of success scalping with EWT.

When I am disciplined and follow my strategy, a 75+% success rate is possible with the EUR/USD and EUR/JPY. However, you absolutely need a high success rate when you are scalping because your reward/risk can be very low.

I find it best to scalp the above pairs outside the European and U.S. business hours because there are minimal/no news releases to upset the technicals (in the small time frames).

In the 1 min and 5 min timeframes, impulse waves and zigzags show up quite clearly and usually that's all you have to deal with (few triangles, few combinations, etc). It is also amazing how often the fifth wave ends with a 61.8% retracement. The problem with trading this retracement is sometimes (especially with the EUR/JPY), the impulse waves retrace only 23.6% and will keep extending.

I think it is better to get in at the end of the second wave and go with the (mini) trend. That way, if the impulse wave extends you have a bonus. Because EW is a subjective indicator, it is a good idea to back it up with a few objective indicators such as EMAs, Stochastics, etc. I prefer to use EMAs as the primary indicator and EW as the confirming indicator.

Guys, no method will give you a 100% success rate, 100% of the time. Otherwise, some of the world's top traders would be trillionaires by now. The top traders only have a 35% - 55% success rate. They end up profitable because they trade long term (the reward/risk ratio can be much higher). They also have superb money and risk management.

Whereas long term trading is like surfing tsunamis, scalping is like surfing ripples. You get more action scalping but you expend more energy and don't get as much in return as you do with long term trading (assuming that you are doing both of them correctly).

HenryAuck,
Ilovepippin, can you give some advice on Trading with EWT? what time frames could I (as a beginner) be trading with Elliott waves (IE, are the higher time frame waves harder to count or lower ones)?

Wow. I've seen comments recommending not to use the EWT. I disagree. I've had great results with it. However, I spent nearly 3 years committed to learning and trading with it before I became successful. You have to put the time in and learn it.

First, I recommend reading "Elliott Wave Principle" by Robert R. Prechter, Jr.& A.J. Frost. Read the first two chapters. That's all you need to learn. That's all I used. It's the bible. You probably need to read it 100 times before it all soaks in. Even today, I still reference it.

Second, you need to belong or subscribe to a group that practices EWT religiously. I belong to Elliott Wave International. Why? So you can get a different perspective of the how to count the waves. Couting waves is much art as it is science.

Third, you will find out that EWT is just the beginning. Other factors, such as volume and trading sentiment play a factor too. As with anything, there is no one solution.

If you are committed and recognize that you will not be successful in the short term then you'll be fine. It's hard work and requires a massive committment.

ewt_guy

EWT guy, have you tried the EWI currency special service?