Elliot wave

This is a discussion on Elliot wave within the Technical Analysis forums, part of the Methods category; Ok, so I'm half way through a book ('High Probability Trading Strategies' by Robert C. Miner) and so far so ...

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Old Jun 17, 2010, 4:51pm   #1
 
megamuel's Avatar
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Elliot wave

Ok, so I'm half way through a book ('High Probability Trading Strategies' by Robert C. Miner) and so far so good. The basic idea of the book is to teach a number of principles that can be used together for high probability trades. The book then goes on to show entry and exit techniques and examples along with money management although I have not read these sections yet.

Anyway, the principles are - Momentum, price, time, and pattern. So for the momentum aspect he basically shows you a dual time frame momentum strategy - easy, its just an indicator on 2 time frames. Price - he uses fibonacci to project possible turning points - easy. Time - again he uses fibonacci time projections from different points to give you a time range where a turning point is likely - easy. Then the part I am struggling with, Pattern. For this part he shows you a basic 5 wave Elliott Wave pattern and a ABC correction pattern. Great, also looks pretty easy. Now, I knew before looking at live charts that the patterns won't look exactly like they do in the nice examples in the book but the trouble is, upon looking at live charts, I can't seem to find these patterns! And for everyone one I find that looks sort of like an Elliott Wave, there are many others that start like one then fail.

Now, the trouble is - without being able to find these Elliott Waves and ABC corrections I can't implement the other aspects of 'Price' and 'Time' as the both use parts of the wave to make the projections! So the only part I am left with is the dual time frame momentum strategy which happens to be one of the first things I tried (unsuccesfully) in trading!

So my question to you, good folk of T2W (medbs that doesn't include you), is do Elliott Wave patterns really exist??? If so, are markets always in one phase of the pattern or are there times when markets are not erm... Elliott Waving. For those of you who subscribe to EW theory - any tips on finding them? For those of you who don't, why? I trust this thread will stay on topic and be full of reasoned and informed debate... Oh no wait, its T2W so it will probably end up with insults then pictures of women with beer or in football kits, or both!

Cheers guys and girl,

Sam.
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Old Jun 17, 2010, 6:52pm   #2
 
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Re: Elliot wave

I don't know too much about Elliot waves but I'm not a fan of it myself. From what I do know there's too much middle ground as to what constitutes a wave and what does not.

Having said that if you did want to investigate further you may want to try putting on a Zig Zag indicator and tweak it to show the waves that you are looking for. I have no idea if this can be done and if it will work, but its worth a go?
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Old Jun 17, 2010, 7:49pm   #3
 
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Re: Elliot wave

I think EW is just a different way of describing the same thing.

One guy might be sitting there looking at a 3,4,5 up/A, B, C down wave pattern and someone else would simply see a head and shoulders.

A 1,2,3 up pattern might just be seen as a double bottom by someone.

A complex wave 4 down could be viewed as a bull flag


Just different names for the same thing!

dd
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Old Jun 17, 2010, 11:10pm   #4
"D"
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Re: Elliot wave

Hello Megamuel,

You are not the first person who has encountered this difficulty. It takes time to train your eyes. If you put the time in eventually the basic structure and patterns will start to jump out at you every time you open a chart. I would suggest using the zigzag indicator as mentioned above. It helped me a lot when I was first learning. Occasionally line charts are helpful too, smoothing things out a bit. The other thing is currency pairs can get a little messy from an Elliott point of view especially on the lower time frames. I would start by viewing the big indexes that are more stable and some of the more stable individual stock issues. You will be able to pick out the patterns easier. If you find a correction or an impulse move donít be afraid to ignore the big picture and just zoom in on the pattern. You may find a beautiful simple 5 wave impulse or abc pattern not visible until you zoom in on it. As your eyes get better you will start to notice nuances in these zoomed in patterns which can alert you to some great set ups and alert you to potential red flags keeping you out of bad trades.

I would scan the different forums for threads concerning Elliott Wave and just keep viewing as many of the posted charts as you can. The labeling will not always be correct, and you need to be aware of this, however, all you are trying to do at this point is train your eyes, not trade the patterns. I would avoid the threads with only a few people posting because if they are not correct with their labeling then you will be learning incorrectly too. I am no expert on Elliott and have no intention of becoming one, but the time is well spent on learning it. I view Elliott as an indicator and like all indicators; they have their weakness and strengths.
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Old Jun 18, 2010, 5:00pm   #5
 
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Re: Elliot wave

megamuel started this thread Cheers guys. I've tried using the zig zag indicator, in fact I always uses that anyway as it helps to block out some of the noise, but it didnt really help me find these patterns. D you are right about the currency pairs, its almost impossible to find this pattern on any pair but I've been looking at some stocks and a few things are standing out a bit more. I will check out the indicies. It just seems that these patterns are so infrequent, and if one does occur it never ends like the book says it is likely to! Ah well I'll stick at it!
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Old Jun 18, 2010, 5:11pm   #6
 
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Re: Elliot wave

Can you post an example of what your looking for?
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Old Jun 18, 2010, 5:52pm   #7
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Re: Elliot wave

Hi.Just thought i would add my two pennys worth ,as like you i had trouble spotting wave formation untill i included stop and reverse on my charts,i can now see them clearly .
Longer term monthly and weekly charts show them up better.
hope that helps in some small way.
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Old Jun 19, 2010, 5:16pm   #8
 
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Re: Elliot wave

megamuel started this thread
Quote:
Originally Posted by Rossini View Post
Can you post an example of what your looking for?
For example, are these valid 5 wave patterns???
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Old Jun 19, 2010, 5:18pm   #9
 
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Re: Elliot wave

megamuel started this thread
Quote:
Originally Posted by ibetyou View Post
Hi.Just thought i would add my two pennys worth ,as like you i had trouble spotting wave formation untill i included stop and reverse on my charts,i can now see them clearly .
Longer term monthly and weekly charts show them up better.
hope that helps in some small way.
Hi, What do you mean by "stop and reverse"?

Sam.
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Old Jun 19, 2010, 6:48pm   #10
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Re: Elliot wave

Well done Megamuel, you are on your way
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