Thursday, April 17, 2014

Elliott Wave Forex in English

MT4 RSI | Relative Strength Index Indicator Chart Breakouts – Forex Trading Strategies Trading Multiple Time Frames Forex Range Trading Strategies How to Trade Forex Successfully? Forex Trading Robot Failure Swing Ichimoku | Reading Ichimoku Charts | Ichimoku Trading Strategies Stochastic Oscillator |

Elliott Wave

Elliott Wave theory states that prices move in waves. These waves occur in a repeating pattern of a (1) move up, (2) then a partial retracement down, (3) another move up, (4) a retracement, (5) then finally a last move up. Then, there is a (A) full retracement, followed by a (B) partial retracement upward, then (C) a full move downward. This repeats on a macro and micro time frame. A visual illustration of the basic pattern of the Elliott Wave is given below. A real life example of Elliott Wave in action is given further down:
elliott wave price retracements

Elliott Wave is based on crowd psychology of booms and busts, rallies and retracements. Traders often use fibonacci numbers (see: Fibonacci) to anticipate where a retracement is likely to end and thus the place where they should place their trade. The chart below illustrates the Elliott Wave pattern applied to crowd psychology (i.e. S&P 500) and Fibonacci Retracements:
elliot wave pattern on the S&P 500

Trading the Elliott Wave

In the example above of the S&P 500 ETF, if the Elliott Wave theorist recognizes that he/she just completed a the leg from (2) to (3) and the market is beginning to retrace, the trader might put a buy order at the 38% Fibonacci retracement. In the example above, that trade would have failed and the trader would have been stopped out of their long position. The trader then might consider putting an order in at the 50% retracement. In the example above, that would have been an extremely profitable trade, making up for the previous loss and more.
Next, realizing that the latest trend was the (4) to (5) upmove, the Elliot Wave theorist would next expect a downward move to (A). This retracement is larger than the previous (1) to (2) retracement and (3) to (4) retracement. A reasonable guess as to where the retracement (5) to (A) will end is the 0.618, the golden fibonacci ratio.
Selecting the 61% retracement would have proved profitable for a little while, assuming the trader didn't have extremely tight stop losses in place, but the retracement turned out to be a head fake. Subsequently, the next often used Fibonacci retracement is 100%. This trade would have been very profitable, given the S&P 500 retraced almost perfectly at 100% of the move from (4) to (5).
A likely profit target to exit at least part of the trade initiated at point (A) is the 38% Fibonacci level. This also happened to be the turning point for the next leg down from (B) to (C).
Suggested further reading is Fibonacci tools (see: Fibonacci).

MT4 Stochastic | Stochastics Bollinger Bands Exponential Moving Average Shooting Star Candlestick Pattern Three Black Crows Candlestick Pattern Three White Soldiers Candlestick Pattern Hanging Man Candlestick Pattern Harami Cross Harami Candlestick Pattern Inverted Hammer Candlestick Pattern Hammer Candlestick Pattern Doji Candlestick Pattern Bullish Engulfing Candlestick Pattern Candlestick Charts


  1. eToro is the #1 forex broker for novice and established traders.


Pleas Comments And place ADD

Pleas  Comments  And place ADD

Click on the image and make your Account free forex

Risk Warning

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial adviser if you have any doubts.