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Elliott Wave Analysis Works Like Magic PDF
Elliott Wave Analysis Works Like Magic PDF
On page 5 of this document, you will find the article you desired to read. If you like what
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fx
FOREIGN EXCHANGE NEWS, ANALYSIS AND EDUCATION FOR CURRENCY TRADERS
OPTIONS P r i m e r
P s yc h o l o g y o f
Quantum markets
FOREX leverage
TRADER MAGAZINE Friend or foes ?
PPP
return to
va luat i o n
O s c i l l ato r s a s
Trend indicators
unconventional
monetary
policies
APRIL - MAY 2009
CONTENTs FX
12
Unconventional Monetary Policies:
how policy makers are shaping the currency markets through confusing
sometimes frantic decisions
Grammatical
evolution:
09
implementing a Fundamentals
trading model of trading
through a promising psychology:
evolutionary
38
Part 1:
computing approach getting prepared to cope with the
laws of Quantum mechanics
“Can anyone parlay a $10,000 capital into $1,000,000 in a year? In five years?
If so, how do you do it and what are the risks involved?” – Robert Balan
I have been practicing Elliott Wave Analysis for over 25 (We have already reached 1.3498) but the daily chart points
years, and have made some astounding calls that came true. to a significant recovery, perhaps reaching as high at 1.6170
But I cannot honestly say that I was able to turn a mere before down. Of course, there are several risk levels on the
$10,000 into a million dollars. Yet, I can confidently say way, for example, it might run into considerable selling
that there are very few technical approaches to dealing with pressure near 1.4900.
the uncertainties of the market place as efficiently as does But let us first look at the monthly chart and see how the
the Elliot Wave Principle. waves unfolded. Let us suppose that we are now in the early
I am not going to give you 1990s and have already
the rules and guidelines seen the first big move from
governing the practice of 1.0520 to 2.0045 (Point A).
Elliot Wave Theory. There When the second attempt
are ample resources in the failed to sustain above
web that you can access at that level, we should have
the click of your mouse. anticipated a swift move
What I will do, instead, is down. Remember that the
to give you one example third step of any progression
now, and show you how is always a powerful move.
the magic of Elliot Wave We could have easily
Principle works in the calculated that a 61.8%
Forex market. retracement of the Wave
You see here two charts “A” would lie at 1.4158. The
of Sterling Pound (GBP/ move actually finished at
USD). The first is a 1.4063. Next consider the
monthly chart going back “c” wave that went from
to the early 1980s. The 1.7366 to 1.3677. Believe
second is a daily chart going to Oct 2007. The beauty of it or not, but that move was just 7 pips short of the 61.8%
Wave Principle is that it works equally well in the monthly measure of the “a” wave. But the wonder doesn’t stop there.
chart as it does in the 5-minute chart! Having said that, I Wave “B” that went from 1.3677 to 2.1161 was only 2 pips
must also add that you should not try to day-trade using the short of 78.6% of wave “A”. The Elliot Wave Principle asks
monthly chart! For example, the monthly chart suggests us to always be on the look out for Fibonacci relationships
that our long-term target for the Pound is around 1.3300 between alternating waves.
Now let us turn to the daily chart. This is a lot more direction! So what if we don’t get as far as 1.6170. Most
interesting. As you can see from the comments on the traders would be just as happy to catch a move to 1.4900.!
chart, one could have placed a low-risk “buy” trade near Anyway, back to the question. We saw that Wave (2) at
1.7450 as it marked a 161.8% projection of the first wave 2.097 was a ‘simple’ correction. This means there is a high
down. One of the problems that many beginning-analysts probability for wave (4) to be a complex one. We have
face is how to pick a level and call it the end of a certain already seen that the “B” wave (as labeled by me) is an
wave? For example, how did I label the 1.7450 level as a irregular one, with the low coming well below the end of
mini wave 3? With the Wave (3). If you
hind sight it all looks accept this count as
so good, but how on valid (and remain
earth can one figure truthful to that
out that we will not count until proved
break directly down? wrong) then you
(See for example how should look for the
the 261.8% level at Wave “C” within the
1.5628 did not hold). Wave (4) to go well
Welcome to the above the top of the
real world of Elliott wave “A.” Besides,
Waves! The key to the second test of
lasting success in the the low seen AFTER
business of trading is posting the “B” wave
to be honest to your bottom was unable
paradigm. Follow to break the prior
your rules (whatever low. And finally, we
they may be) to the not only saw a strong
letter. The biggest sin that a trader can commit (second only move higher, but it has managed to break above a declining
to not having a stop loss) is to keep changing his rules. (green colored) downtrend line. These are just some of the
Take a look at the chart again. When you get a fast sell reasons why I am looking for Sterling to continue moving
off, you should calculate various projections and keep them higher.
by your desk. I would have known that 1.7450 was a likely It is vitally important to have an open mind about
(but not certain) support. I would not buy there the first these things. Consider this. I have a market reputation
time. Typically in a fast moving market, we will always get a and will look silly if the Pound stops climbing and goes
retest of the lows. If the market stabilized near a Fibonacci down directly. Should I allow that to bother me? If one
projection at the first try, I would place a small ‘buy’ order only worries about being ‘correct’ in making market calls,
near the prior low with a stop just a few pips below that low. one will never be a good trader. A trader has to study his
As you can see, we got a second test of 1.7450 two or three charts and make the most educated prediction about
days after the first try. Since the buying interest was strong what will happen next. He should then execute his plan of
at that level, the trade paid off handsomely. (Another tip: action without wavering one bit. This includes having an
Depend on daily charts more than hourly charts to figure affordable stop-loss, as well as plans to take profits along
out supports and resistances). the way. There is no other way to riches.
Let us look to the future now. Why do I think we could go
higher to around 1.6170? First of all you should understand
that in order to make money, it is not so important to
know the medium term targets as it is to know the general Ramki (N.Ramakrishnan)