label an Elliott wave

This is a discussion on label an Elliott wave within the First Steps forums, part of the Reception category; Hello, I came here searching for a simple clear answer on how to label an Elliott wave - I mean ...

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Old Apr 26, 2008, 9:15am   #1
Joined Nov 2006
label an Elliott wave

Hello, I came here searching for a simple clear answer on how to label an Elliott wave - I mean what constitues a wave? what defines the beginning of a wave and what defines the end of a wave?
thank you, george
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Old Apr 26, 2008, 9:48am   #2
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Hi George

Elliott wave is in the eye of the beholder.The more pints you have the easier it is to see those waves.lol
The best place to start is at Elliott Wave International: Expert Market Forecasting using the Elliott Wave Principle
They have a free booklet you can download, if you like that you can purchase Robert Prechter's classic book, Elliott Wave Principle. It's a great little book and will get you up to speed in a few weeks.
Actually the basic patterns are pretty simple to learn, but seeing the wave count in real time is another story and you can get carried away with counts, especially in a choppy market.
Any questions let me know.

Enjoy surfing the waves man!

regards,

A
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Old Apr 26, 2008, 10:19am   #3
 
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Originally Posted by forex99 View Post
Hi George

Elliott wave is in the eye of the beholder.The more pints you have the easier it is to see those waves.lol
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Old Apr 26, 2008, 3:18pm   #4
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glebecki started this thread Hi, 0007. I am laughing at your reply. Thanks.
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Old Apr 26, 2008, 3:29pm   #5
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glebecki started this thread Hi, A -- Thank you for your reply. I guess I am not making myself clear. I am studying the book you recommended but it occurred to me that a wave is not defined in the book as far as I can see; I mean what marks the beginning of one wave and its end. Maybe it's too simple but I just don't understand. In any case, thank you, for taking the time to offer help. I am going to go to the website you recommended. And I did like your "wave in the eye of the beholder" definition -- george
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Old Apr 26, 2008, 4:44pm   #6
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glebecki: " what marks the beginning of one wave and its end. "
the beginning, Price changes direction; the end, Price changes direction

you might try working with the fibo tool to obtain Price targets, and also
try a Time target method, plus a parallel trendlines tool

some swear by 'Mastering Elliot Wave: Presenting the Neely Method'
but be warned - 'it makes my head hurt'
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Old Apr 26, 2008, 4:58pm   #7
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glebecki started this thread Hey, Trdr. Now that is a very cool response! Thank you - simple and clear. I have gone all over the place to get an answer to that question - Google, books on Elliott, etc. I wonder why "wave" is not defined in the books on Elliott. Thanks for the suggestions.
George
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Old Apr 26, 2008, 11:03pm   #8
 
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Originally Posted by glebecki View Post
I mean what marks the beginning of one wave and its end. Maybe it's too simple but I just don't understand.
A seismologist can look at the trace from a seismograph and he can identify the time, duration, amplitude and epicenter of an earthquake but could that same seismologist make money by betting on where and on which day the next big quake will hit ?


dd

Last edited by dick_dastardly; Apr 26, 2008 at 11:51pm.
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Old Apr 27, 2008, 8:00am   #9
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glebecki started this thread
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Originally Posted by dick_dastardly View Post
A seismologist can look at the trace from a seismograph and he can identify the time, duration, amplitude and epicenter of an earthquake but could that same seismologist make money by betting on where and on which day the next big quake will hit ?


dd
Thank you, Dick. I do like the analogy. I guess what I was looking for is a simple definition of what constitues a "wave" so I could begin labeling waves. I wanted to know what to look for. Too obvious I guess but not to me. Where a wave is going or how far, as I see it, is the next step.
I appreciate your response, thank you, -- george
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Old Apr 27, 2008, 8:11am   #10
 
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I studied EW for about a year.

I found that I could look a chart and easily label the waves, but then, as the subsequent price action invalidated my wave count I ended up going back and relabeling the chart.

Pity you can't go back and invalidate your trades and refund your account in a similar fashion.

Of course, I'm only talking from my own experience, there may be those here that can apply EW successfully, I am not one of them.

dd
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Old Apr 27, 2008, 11:20am   #11
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glebecki started this thread Thanks, dd, for the genuine response. I want to incorporate Elliott into a my trading approach and not rely on it entirely. I understand every once in a while a clear wave count appears that helps in making a trading decision. -- george
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Old Apr 27, 2008, 3:16pm   #12
 
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You have had some excellent replies to your inquiry. Perhaps i can offer a little insight that has not been presented yet.

TRDR gave you a very good definition on the beginning and ending of waves. His answer should take care of one question you had. His answer takes in all time frames and wave cycles.

FOREX99 sent you over to Elliottwave Int'l to get some more info which was good. Expanding upon his info, you might want to consider joining their CLUB EWI (free membership) this will get you daily emails that contan some excellent info and access to their forums where they answer questions. The commentary by Jim Martens and Steve Hochberg @ EWI is great and you should learn plenty from them.

The book "Elliott Wave Principle" by Frost & Prechter is excellent, but confine your studies to the first two chapters so that you can concentrate on learning waves only. It should help to clarify.

Allow me to share some of my observations & things I've learned over the years.

1...Never force a wave count! Either it is simple to see or move on!
2...When counting waves use a line chart so that the noise is eliminated
3...The impulse wave set;
typically waves 1 & 5 are of the same magnitude and wave 3 is the strongest & longest
waves 2 and 4 are about the same on magnitude, BUT they are different in makeup. Meaning if wave 2 is simple (a/b/c) then wave 4 will be complex (a/b/c/X/a/b/c) and vice versa. They are usually opposites of each other
wave 4 should not overlap wave 1, but remember to use closing prices not candle shadows. During R.N. Elliott's observations line charts were the most common used of the period.
wave 5 can be a failed wave (truncated) meaning that it may not extend beyond wave 3.
wave 1 is usually not spotted by traders because they do not believe the move has changed direction.
wave 2 will usually retrace 60% or greater of wave 1 for the above reason

4....the retracement wave set (a/b/c);

wave a usually retraces only a small percentage of wave 5
wave b will sometimes extend beyond wave 5 in what is called a "running flat triangle"
when the wave set is complete, usually it will be to the end point of wave 4

It is usually a good idea to trade waves 3 and c as they are usually the strongest and most easily identified. The markets are dynamic so do not look for perfect wave sets. Learn to identify a couple wave patterns and scan your charts looking for those. Do not spend excessive time trying to identify a wave as this is an exercise in futility.

DICK_DASTARDLYmakes a very valid point that wave counts can be off. This in my experience comes mostly from one thing...trying to force a wave count when one is not clear and perception by the person making the count.

Hope This Helps!

Last edited by da-net; Apr 27, 2008 at 6:01pm.
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Old Apr 27, 2008, 4:46pm   #13
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glebecki started this thread Wow! da-net, thank you for all the help regarding Elliott waves. I do appreciate your observations, especially the general ones like 'use a line chart' (I had not thought of that before), 'learn to identify a couple of wave patterns' and 'trade waves 3 and c'. Your other observations point to the heart of the matter. I will study them carefuly.
I agree, the replies to my question have been great. I came to Trade2Win as a last ditch effort in search of a definition of a 'wave' and I have received excellent replies conveying far more information than I had expected.
Now I have to get down to learning what you have sent me. -- george
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