Elliott Waves Can Be Your Crystal Ball In Forex Trading
As you might have already discovered forex market moves in phases. It trends, and then it consolidates and after some time consolidating again starts trending. With the knowledge of the Elliott Wave Principles, you can develop the skill to be on the right side of the market most of the time and capture big moves in the market with surgical precision. Using the Elliott Wave Principles can help you make winning trades more times than not!
Elliott Waves have their origin the stock market but they apply to the forex market really well. No matter what your style of trading, you can use this principle in your trading. Whether you are a day trader, swim trader or a position trader, you can apply the Wave Principle in your trading with surgical precision.
Elliott Wave Principle has been found to be a universal law of the markets that is applicable to all the markets whether it is the stock market, forex market, commodities market, futures market or whatever. A cycle in Elliott Waves comprises from the bearish to the bullish market or for that matter bullish to the bearish market and it always consists of eight waves. Five of these waves are in the direction of the main trend and are known as the Impulse Waves. The remaining three waves are counter to the main trend and are called Corrective Waves.
It is important for you to understand that there can be patterns within patterns. A wave pattern might be sub patterns of a larger wave patter while at the same time contain its own sub wave patterns. But the most important thing to understand is that all these patterns follow the 5/3 rule meaning each pattern comprises five impulse waves and three corrective waves.
Wave one is the shortest impulse wave. Wave two is a corrective wave that should never reach the start of the wave one.
Wave Three is the strongest and the longest of the five impulse wave. Wave four is a corrective wave while wave five is again a impulse wave in the direction of the main trend and represents the peak of the bullish or bearish sentiment in the market.
This is very important for you to understand. A wave is a wave. Elliott Wave Theory works on longer term charts as well as on the intraday charts. It doesn’t matter what timeframe you trade, you can use the wave principle in your trading. So a five wave count on the hourly chart when converted to a weekly chart may only be a one wave count. In the same way, a five wave count on a 5 minutes chart when converted on a daily chart might just compose only one wave.
Mr. Ahmad Hassam has done Masters from Harvard University. Get this highly profitable Magic Breakout Forex Strategy by Tim Trush and Julie Lavrin FREE. Get these Correlation Trading Cheatsheets FREE.
Tags: elliot wave, elliot wave principle, elliot waves, elliott wave, elliott wave analysis, elliott wave principle, elliott wave trading, elliott waves, Forex