Elliot Wave Theory for Beginners

Elliot wave strategy is extremely popular today. Elliot believed that the stock market was less chaotic compared to what many traders thought it to be. He described the patterns as different kinds of waves. He noticed that the market can be traded in 3 or 5 waves. He thought that these waves can offer more predictability and detail compared to other strategies. This theory can be applied to all markets and all time frames. So, it is a universal trading strategy. It looks for a pattern of five consecutive waves prior to making any trade decision. This theory identifies two kinds of waves; impulsive and corrective.

Impulsive waves move in the direction of the overall trend and corrective waves, on the other hand, move against an overall trend. These two waves are completely opposite to one another. The trading theories, which make them useful, stay unchanged. The impulse move against correction move is the underlying principle of a market structure. Recognizing the wave patterns in an Elliot Wave Trading Theory can be challenging. However, with forecasting service of Neowave, you will learn the way to improve the market predictions, and you can become a better trader. Additionally, you will be able to create accurate forecasts without any contradictory scenarios.

Learn to trade Elliot Wave

One of the reasons behind the popularity of Elliot Wave is it combines fundamental and technical news. This theory depends on the patterns of market events. Even if there is a recession, the existing conditions revert back. The basic principle in this theory is that over a certain time period, prices move in definite patterns. Elliot’s theory resembles the Dow Theory. According to him, stock prices move in waves. These waves happen in a repeating pattern move up a partial down, move up, a retracement, and finally move up. Then there is a complete retracement, followed by a partial retracement and then complete move downward.

This theory gained a lot of popularity and the practitioners of Elliot wave forecasting theory stresses that just because a market is fractal, one does not make it a predictable one. These concepts improve the analytical skills of a trader or improve his trade timing. This theory is a complicated one because it is not easy to isolate the three and five wave patterns. This pattern may not be always present in an individual stock but is applicable to the heavily traded stocks. The concept of corrective and impulse waves is applicable to all stock markets.

NeoWave Theory

NeoWave Theory was created by financial analyst and author Glenn Neely. This theory is an expansion of Elliot theory and it has its individual technique for analyzing waves. It aims to minimize the perceived and subjectivity contradictions of the Elliot theory but it aims to improve the predictive power of Elliot. Neowave is a separate discipline and contains additional rules and corrective chart patterns. Time plays an integral role and according to this theory, a pattern does not take too little or too much time to decide whether the pattern was completed or not.

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