Elliott Wave Theory

[RajK]

What is Elliott Wave Theory & how do I use it ?

Any investor or trader using Elliott Wave Theory or any software or trading platform for Elliott Wave ?

How does it work/perform compared to technical analysis and technical analysis indicators?

Would appreciate some feedback.

Thanks

 

[andy]

Elliott Wave Theory

Elliott Wave is a technical indicator that purports to offer buy and sell signals.

It appeals to the silly notion held by many investors that repeating wave patterns exist and counting them will make you money.

Elliott Wave systems and software make statements like:

You can have mathematical models generate objective and precise wave counts.

You can compare current markets with historical patterns to generate Elliott Wave counts.

You can receive price projections showing the most likely price range that a wave will reach.

The Claim: You count the waves. Then once you have the waves counted you will be able to pick when to buy and sell stocks and futures.

The Truth: Basing your trading off subjective patterns has proven time and time again useless. You can find a pattern in anything if you stare at it long enough. Also, projecting a price into the future is baloney.

Elliott Wave might hold some academic interest, but in terms of a trading approach -- -- --

 

[sh50]

I have recently started training under a professional trader who swears by Eliot wave. He seems highly successful. He uses by a software called Advanced Get which being very expensive by Indian standards would be used only if it were useful. How do you explain that. Any comments traderji?

 

[Traderji]

I have recently started training under a professional trader who swears by Eliot wave. He seems highly successful. He uses by a software called Advanced Get which being very expensive by Indian standards would be used only if it were useful. How do you explain that. Any comments traderji?

Market price movement is highly random with a trend component.

Unsuccessful and frustrated traders want to believe there is an order to the markets. They think prices move in systematic ways (Elliott Waves) that are highly disguised. They want to believe they can somehow acquire the "secret" to the price system that will give them an advantage. They think successful trading will result from highly effective methods of predicting future price direction. They have been falling for sureshot methods and systems since the beginning of civilization (or when markets started trading).

Those who try to anticipate changes in trend rather than follow establish trends are doomed to failure.

Frustrated traders are constantly looking for some secret that successful traders use to make money. The only secret is that there is no secret.

The truth is that the markets are not predictable except in the most general way. Luckily, successful trading does not require effective prediction mechanisms. Successful trading involves following trends in whatever time frame you choose. The trend is your edge. If you follow trends with proper money management methods and good market selection, you will make money in the long run. Good market selection refers to selecting good trending markets generally rather than selecting a particular situation likely to result in an immediate trend.

There are two related problems for most traders. The first is following a good method with enough consistency to have a statistical edge. The second is following the method long enough for the edge to manifest itself.

 

[arun]

Unsuccessful and frustrated traders want to believe there is an order to the markets. They think prices move in systematic ways (Elliott Waves) that are highly disguised. They want to believe they can somehow acquire the "secret" to the price system that will give them an advantage. They think successful trading will result from highly effective methods of predicting future price direction. They have been falling for sureshot methods and systems since the beginning of civilization (or when markets started trading).

Frustrated traders are constantly looking for some secret that successful traders use to make money. The only secret is that there is no secret.

The truth is that the markets are not predictable except in the most general way. Luckily, successful trading does not require effective prediction mechanisms. Successful trading involves following trends in whatever time frame you choose. The trend is your edge. If you follow trends with proper money management methods and good market selection, you will make money in the long run. Good market selection refers to selecting good trending markets generally rather than selecting a particular situation likely to result in an immediate trend.

There are two related problems for most traders. The first is following a good method with enough consistency to have a statistical edge. The second is following the method long enough for the edge to manifest itself.

Exactly my sentiments Traderji!

When I started off in trading/investing I was convinced by a salesperson of a well known data service provider company to purchase Advances Get by giving me some BS on how the top traders and investors used this software.

I forked out 160K to purchase this software and tried UNSUCCESSFULLY to make any profits out of this for over 2 years. I lost money!!

I realized that the program changed its wave count every time a new price bar was added. Of course if anybody saw just that it looked very good but if you traded the system one would not know what to do. The only thing good about this software was is MOB levels.

After losing money heavily I followed my friends advise and subscribed to a trend trading newsletter from tradersedgeindia.com (about 6 months back). Subscribing to this newsletter has changed my life. I have now recovered my past losses and hopefully should be in the GREEN once again.

I use the trend trading newsletter and also the swing trading newsletter with great discipline. One thing good about this newsletter is that they give you proper money mangement rules that has helped improve my trading confidence.

I love their swing trading newsletter. Which gives short term trades. I devote 60% of my capital to Trend trading and 40% to swing trading.

I was a frustrated trader looking for some secret to make money in the markets, but now I know better...

 

[Neal]

There are two related problems for most traders. The first is following a good method with enough consistency to have a statistical edge. The second is following the method long enough for the edge to manifest itself.

Most novices just do not have the sustaining power and get wiped out in the first few months itself.

I was one of them, but as I kept a dairy of all my trades, it helped me study my mistakes and get back into the markets (with less capital).

 

[minukrishna]

Hi,
Traderji, Arun ,Neal all of u are right.Predicting markets have often lead to pitfalls of failure.As traderji says following of trend always keeps us in the direction of the market.Many analysts do not accept a recourse of the trend which they have predicted and wait for long in losing position.I have had a bitter experience of having been in the opposite direction of trend and ending up in loss.
As Arun said the trend trading newesleteer is a trading system that reaps astounding returns in trending markets.

 

[a_n_i_l]

Dear Arun,
In one of your replies yoy have mentioned the uselessness of Advance Get Trading software. Are you interested to sell that software to me Pl. quote yr, price .

 

[sh50]

I have been reading a book on world famous traders where they make contradictory claims of what is good and what is bad. For instance, one chap is all for MACD but says to hell with RSI and Stochastics and he is famous.

The real problem is that one man's meat seems to be another man's poison so one never knows who is bullshitting and which software/concept etc is the real bullshit.

Arun has said MBO is good but my friend says MBO , Ellipse are used rarely, JTI and RSI are used only to explore, XTL is quite good but he swears by Type 1 and Type 2 sell and wave 3 buy and sell.

Arun, If I submit the details of what all I have learnt, would you comment on it please. Right now, it is in tabular form. The software and its source should either be properly disproved or proved by somebody knowledeable so that beginners do not suffer.

 

[arun]

Dear Arun,
In one of your replies yoy have mentioned the uselessness of Advance Get Trading software. Are you interested to sell that software to me Pl. quote yr, price .

I have already gotten rid of it!