A lot people have been sitting on the fence and wondering if the Elliott wave theory does really work or helps. Well I was like one of those people until I decided to find out for myself. Today, I am glad that I did. All I would say now is be sure to read this article in full to find out for yourself. Let's get started.
First let us dig into the meaning of the phrase "Elliott wave does work or help."
Meaning Of Elliott Wave Does Work
Really, it means one has used the Elliott wave principle, and it has met one's expectations.
So if I am expecting the Elliott principle to make money for me, and it does not then I can say that it does not work. If I expect it to fire buy and sell trading signals like an automated trading robot and it fails then it does not meet my expectations. If I consider the Elliott wave forecast as an exact science, but it does not come near that consideration then it is not good for me. Isn't it. That is right.
Imagine that I truly trust an Elliott wave guru and purchase his Elliott wave forecast service, but the price went down in the short term taking me first out my position before rising without looking back. In that instance I may argue that the application of the Elliott wave theory to forecast the financial markets is just a mumbo jumbo. We all agree? Good!
Now I have a question. What are your expectations in regard to the application of the Elliott wave principle in the financial markets?
Please write them down on a piece of paper please. If you are like me, I just like to write things down. Would you agree that those expectations will determine whether one considers the Elliott wave theory helpful or not?
Do not feel let down about what I have pointed out so far because it will help one to engage in a more rational application of Mr Ralph Elliott's wave principle.
Contrary to the first expectations, imagine that I understand the following:
1/ Elliott wave principle is not an exact science but a guide. 2/ The Elliott wave forecast is an expectation derived from the price structures using Elliott wave rules therefore it must be confirmed by the price-action which is the number technical indicator. 3/ One must learn how to use the Elliott wave forecast even if one has purchased the forecast.
With those new expectations, I am more likely to to take my responsibility and get the wave principle work for me.
Will you say that is a fair statement?
Certainly, either expectations will determine whether one concludes that the Elliott wave does work or not.
As I am trying to answer that question, I reckon that it is time that I tell you my answer to that question.
My Answer To: Does Elliott Wave Work
Yes, the Elliott wave principle does help to become a more advanced technical trader if one considers it first as an essential guide.
I have been using the Elliott wave principle for years, and I am lucky to have mastered it.
Before you say thank you George, I believe you and that is all I want to hear, I want you to stay with me because you would like to know the whole truth. Don't you? I will tell you all.
The truth is that the Elliott wave principle will not replace one or trade for one, but one will pour onto the Elliott wave theory and understand every rules. One will also begin to ask questions that will help one deduct other hidden rules that others failed to uncover. Check Y-wave.
Then one will separate the theory from the real practical application of the Elliott wave theory. And one will make sure that one always combines the Elliott wave forecast and top-down trading method (always).
Therefore, there is nothing like a purest Elliott wave analyst but advanced technical trader who can look inside the price instead of looking at it. The wave theory will work for one if one never disobeys the price-action (number one indication). The price must confirm the Elliott wave forecast otherwise it is just an expectation.
Consequently, one should never buy or sell without those confirmations. The whole truth about whether the Elliott does work or not comes to one thing. It works for one when one becomes a fully fledged Elliott wave analyst. Nothing else.
It is like asking: do a carpenter's tools work? Yes they work, but only for the carpenter and carpenter's students who have mastered them. The truth is also that one can learn to become a better Elliott wave trader. It may not happen in six months, but nothing can stop one that truly wants to become an intelligent Elliott wave trader.
So all in all, I will recommend the Elliott wave principle and analysis. Elliott wave principle does work if one knows how to apply it.
Why People Call Elliott Wave Analysis Mumbo Jumbo?
Take it from me. It is only a mumbo jumbo for the Elliott wave analysts who refuse to combine the Elliott wave principle and fundamental analysis. It does not work. In fact it is crazy to be an Elliott wave or technical trader who shamelessly ignore the economic news and financials.
If you come one of those types of technical traders just run away. I mean it, leg it big time. Feel free to quote me on that.
Having said that, fundamental traders who are calling the Elliott wave analysis mumbo jumbo are either very lucky if they are making money or stupid. Please do not mock something that you do not understand. It is really stupid. Without getting into a fighting spirit with my fellow fundamental investors, I would say that the Elliott wave does help fundamental traders or investors improve their market timing.
One example is to stop buying like a donkey because the fundamentals are still robust in the fifth wave (especially the ending diagonal).
Here it comes my friend. "A competent and intelligent Elliott wave analyst or trader is not an ordinary market player."
Today, they talk about sophisticated investors. Oh yes, those are fundamental investors who combine Elliott wave, financials, economic news and Fibonacci strategies. Before they were talking about value investors as intelligent investors. The good news is that those value investors or intelligent investors have only turned into highly sophisticated market players after they have embraced both Elliott wave and Fibonacci.
That is I why I said that an Elliott wave trader who is not combining the Elliott wave forecast with the economic news and fundamental analysis is letting himself or herself down badly.
In fact one of the reasons why people say that the Elliott does not work is because they are not combining it with the fundamental analysis. I think I have made my point on that matter now.