Introduction to the Wave Principle – Trading Systems – 16 January 2022

Ralph Nelson Elliott was one of the first people to believe that he could predict the stock market by studying recurring price patterns in a price series. Elliott wave theory states that wave patterns of different scales repeat and overlap each other, creating complex wave patterns. If the harmonic pattern focuses squarely on the short five-point patterns, the wave theory, developed by Ralph Nelson Elliott, describes how the financial market evolves to meet equilibrium with recurring wave patterns, fractal equilibrium waves. The advantage of Elliott Wave Theory is that it is comprehensive as the theory provides multiple trading entries in different market conditions. Using Elliott Wave Theory, traders can perform both momentum trading and retracement trading. One of the disadvantages of Elliott Wave Theory is that it is more complex compared to other trading techniques. In addition, there are still some loose ends in detecting Elliott wave patterns. For this reason, many traders are highly critical of the lack of scientific methods for Elliott Wave counting.

The Elliott Wave Theory has received a lot of attention from many traders and investors for several decades. Elliott Wave Theory is a useful technique for dealing with the financial market with the dominant balanced fractal wave process. For the financial market with strong equilibrium wave operation (2 second abbreviation, 3 research and development and 4 y columns in the price patterns table), traders should use an alternative methodology on Elliott wave techniques because Elliott waves theory is not intended to deal with the wave process. Seasonal or other cyclical fluctuations can be better handled with other techniques. For example, seasonal exponential smoothing, Fourier transform, principal component analysis, or wavelet transform might do better for such a case. Some literature review and empirical research can yield useful insight into which market trader can best trade with Elliott Wave Theory. In our book we will introduce the basics of wave theory. At the same time, we will introduce a Pattern and Pattern approach towards more scientific wave counting for traders.

About this article

This article is the portion taken from the draft version of the book: The Scientific Guide to Price Action and Pattern Trading (Trend Wisdom, Cycle, and Fractal Wave). The full version of the book can be found at the link below:

Elliott Wave Trend is the most advanced Elliott Wave trading software, which helps you to trade with different Elliott Wave patterns such as .12345 Wave Pattern, .ABC Wave Pattern, Wave .ABCDE, etc. Elliott wave trend is built on the concept of precise trading using points of Elliott wave structure. Our Elliott wave trend is a professional tool for the professional trader. Elliott Wave Trend is available on both MetaTrader 4 and MetaTrader 5 platforms.

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Elliott Wave Trend is available in both MetaTrader 4 and MetaTrader 5 versions. Below are the links to Elliott Wave trend.

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