The Fundamental Error of Elliott Wave Theory

DailyFx has a good ew thread too. Check also Jamie Saettele's ew analysis on the same forum.

Btw, what is the best ew software currently? Advanced GET was highly rated a couple of years ago, but are there any new rivals (at a reasonable price)?

R

We live in a world of highly deluded traders.
There is no such thing as a public method based on technical analysis which works and there's no book which will teach a profitable method.
If there would be one then people with more resources than you can imagine would profit from it before you'd even know it.
The market is being moved by institutions with a lot of money. If they don't base their trading decisions on the same fancy indicators as you do then they are useless and you're fooling yourself thinking that they have some predictive value. Making billions using fractals, go tell it to a respectable hedge fund.

That's a good laugh.
- Why did you collectively panic, Joe?
- Because the Elliott Wave Theory said so!

Only at the beginning, when the method has enough momentum and the amount of people who use it didn't reach the critical mass. Nevertheless, it is hard to impose your method to those who can move the market, disclosing it on this forum where the majority is either on demo or uses a market maker will not transform it in a self-fulfilling prophecy.

elliott wave works, i have been trading live since march.

This thread has developed a familiar pattern of responses to the opening post. First, a few people try to provide honest answers or responses to the question or issue that is being developed by the author of the thread. Next, the negative comments flood in followed by an agrument that has little or nothing to do with the opening post (don't worry, this thread will get there soon). I participated in one of these a few months ago on .618 fibs, and it went to hell pretty quickly.

Let me try to provide a response to the opening post. EW (along with fibs, S/R, etc) are not suppose to "work". There are many people here who can prove that they do not "work", and they have ugly looking trading accounts to prove it, and many can provide copies of research articles and papers written by experts who also can prove that these techniques do not and can not "work". However, there are a few traders here who can show you how you can use these tools in trading, along with proper MM to mitigate the risk of trading in the event you start using one of these tools at the wrong time, or to maximize the advantage the use of these tools can give you when they use these tools correctly. Its simply that there are people who do not know how to use these things, and there are people who know when and how to use them. Simple as that.

Very good post IMO.

I have a number of technical tools that I use. None of them necessarily "works" in itself. But when I put them all together in a certain way, creating a "road map" through which I interpret the price action; fashion a suitable method of entries and exits around them; manage risk appropriately; and apply patience, nerve, and some common sense...... well, the end result is that I've been on-balance profitable 7 of the last 8 months. Admittedly, I trade only a very small account, but I'm talking percentages.

I completely agree, and congrats on your performance.

I have no intention or desire to change anyones mind in here,,,,,but God it is funny reading posts from failed, failing, and will fail demo traders expounding on here what works and what doesn't...so some of you tried to trade wave action...which waves did you trade and why? what was your trigger that made you decide you needed to trade, if trading wave action was easy, everyone would do it....It's not, so they don't, and thats just fine by me.....

The EW debate is lot like the PC / MAC argument.

I love the "I'm a MAC I'm a PC," adds.

Especially this one.

"I'm a MAC and and I do this and that etc etc."

"I'm PC, play any games recently or run any charting programs?"

I work with computers and I am constantly amazed how people who have never used "the other platform" become passionate about how bad it is.

Why do intelligent people make some really stupid comments about topics that they have no experience with?

I never understood EW until I read the Bill Williams Books and they turned my trading around nicely. Unfortunately, not everyone understands the books or the method. People who have never done the required reading and study but still talk about EW are just windbags. You can't talk about a complex subject until you have studied it intensely.

If you want to learn EW go to the Chaos thread or the Profitunity thread and read all of the posts form start to finish. Take an open mind with you.

By the way, the best software for learning EW with is ElWave. It applies the rules in a very mathematical way and produces excellent results - these often match the counts that you get from the simple Bill Williams method of counting the waves.

Advanced Get essentially uses the same method of wave counting as Bill Williams and it is more subjective than ElWave in my opinion.

ElWave is expensive and has a steep learning curve but not as expensive as ignoring the wave and trying to trade. ElWave will teach you EW like nothing else can.

I am off on vacation until next week, but i will post some ElWave Forex charts when I get back.

Thanks, and I am looking forward to reading your posts. Have a good vacation.

I have started the ELWAVE BW FX thread...stop over and visit.

Very few EW practitioners will share their counts before the fact.

I will and I hope you will find it interesting and educational.

I find this thread very amusing LOL. I am an EW trader and it does provide an excellent map and rule by which to go by. The frustration most people feel from it(and why they are on a mission to make everyone disprove it) is that they can't get through their head that it is not 100% accurate. They are also people that try to search through low volume markets looking for wave patterns, don't know by which timeframes to use, don't know the variations of wave counts, and probably most of all try to "force" wave counts and don't follow the rules. I just got done reading several posts where people think we are in a wave 4 of a certain cross and they actually have the support level 200 pips past wave 1. Rule Broken, count invalid. Actually, one of the most important things I will mention is that people just try to trade based off wave counts without proper intermarket analysis. Lets take an example. Suppose someone see's what appears to be 5 waves down on the 4 hour chart of the usd/cad. They then see 3 waves up into a nice fib retrace and decide to sell the pair. However, they do not look into the hourly, 30 min, and 15 min charts to break down the a-b-c retrace. Then, the pair drops below the start of the retrace(we will call it wave 2) and they get really excited. Once again, they do not go back and confirm their count. They also fail to realize that what appears to be wave 1 of 3 that drops below the start of a of 2 is a 3 wave structure on the the shorter term charts subdivided into 3 waves. Immediately, the price reverses above what they had labeled 2 and unfolds in 5 waves and rockets upwards. Oh , going back, they did not realize that what they had labeled wave 2 was also a 3 wave subdivided into 3 wave structure(anyone see where I am going). They got trapped in a 3-3-5 flat which is in fact an x-y-z structure. So where did they fail to look. Well, maybe they didn't look at oil(relative to this pair bigtime) , or weren't paying attention to huge china production data, or realize that oil had made a corrective wave 2 and was headed into a massive wave 3. The biggest problem is that people do not bother to do intermarket analysis really. They don't make what if scenarios out. obviously the person that started this thread hadn't read Prechters detailed Intermarket analysis or for that matter doesn't know his track record. Another thing, just basing EW trading off math is un-disciplined and incorrect. If it was all math and perfect, an automated trading platform would already be invented . It is a combination of math, fundamentals, knowing the pulse of the market, intermarket analysis, and is somewhat of an artform as well. This person is probably under the impression that medicine is perfect as well. Any doctor will tell you it is as much science as it is an artform. As I am writing this , one thought came to me, a big problem with people learning ew and why they quit early is they get in at the WRONG TIME. They trade wave 4 triangles, try to trade wave 1's , instead of confirming 1 and 2 is complete and going after the 3 of 3 on a larger scale. if you keep it simple, your wins will be larger your losses smaller, and your big trades where you up your position size is where you really hit the big pip scale. EW traders were all over the collapse years back, while the fundamentalists got caught in the grinder. Nuf Said there.

In my opinion, for those who are interested in Elliot Wave could consider Advanced GET or MTPredictor that will independently find trade setups based on its Elliott wave interpretation of the market. You would not alter any of the variables in the program. You would have to let it do its wave counts, and come up with its own analysis. It will be frustrating because the software will change its wave counts and trade setups as the market changes. But at least it will be consistently and independently frustrating. It will be consistent in its interpretation of market conditions. Although the approach is subjective, its delivery to you will be objective.

i know a cme broker from twitter he uses elliot wave very succefully

esp todd gordon
he uses ew ,fibos,r/s and fundementals to analyse his charts and is mostly right,liek always right

EW is basically a well covered scam.

so you've been trading a couple years....max.....and you have the authority to make that statement.........yep, this place hasn't changed any.......

Most on here will never take the time to understand what you typed.....well done, you have done your work and I am sure a profitable trader........

MTPredictor looks at EW in isolation, as do many other price action techniques, mostly without "knowing" that they are, for instance, a 1-2-3 pattern setup, market opening range breakout systems, to name a few.

So, tankokjian, you never see price action like this? Your markets, just go straight up or straight down?

Lucky for you!