Each and every trader has their own favourite technique and method of trading the markets and there will always be vendors available to sell the latest and greatest technical indicator. There is
however, a difficulty with indicators in as much that many will only
plot once bars have completed and as such really only indicate where
price has been. They can oscillate and move around intra bar and quite
often leave a trader wondering where they are finally going to plot.
They also provide a limited view of the market by showing what is
happening on the current bar and yet often fail to take into account the
market as a whole. Elliott Wave provides an all-encompassing method of
trading the markets by not only providing high probability trade entries
but also high probability targets.
Many traders will have heard the age old saying of ‘The
Trend is Your Friend’ and yet, the Elliott Wave principle can define a
major trend by way of identifying a five wave pattern within a market.
Trading with the trend sees a trader entering positions along with
market direction as well as travelling the path of least resistance. For
the braver trader, opportunities do present themselves to trade counter
trend as we find that all trends will correct themselves over time.
Elliott had discovered that corrective wave patterns form within the
major trend and these allow traders to reposition themselves or find an
opportunity to enter the market along with the major trend.
One of the fundaments of the Elliott Wave principle is
that price waves are evident throughout all timescales of trend. It may
be seen that Wave 1 of a given timescale may be subdivided into 5
smaller waves of a lesser timeframe and this helps a trader to identify
the maturity of any given trend. Knowing the maturity of a trend helps a
trader to position themselves better in the markets for existing
positions or even to close a trade completely. In contrast to this an
Elliott Wave practitioner will also be able to easily identify when a
trade fails due to the rigid rules laid out by the principle. Elliott
theorised and derived a set of rules pertinent to each wave and
documented the constraints applicable to each.
One of the most useful aspects of Elliott Wave, and one
that is not offered by many technical indicators, is that of defining
high probability price targets. Elliott theorised that the Fibonacci
sequence was a basic fundament of the principle and seen in mathematical
evidence in both impulsive and corrective waves. He discovered and
documented that the retracements and price extensions of waves
terminated at significant Fibonacci levels. This information allows a
trader to set price target objectives for existing trades as well as
determine high probability turning points within the market. At Alpha
Wave Trader we have streamlined the principles of Elliott Wave and
combined it with Fibonacci to provide high quality trades.
Our
all-encompassing methodology allows us to trade any instrument on any
timeframe and we demonstrate it daily in our Live Trading Room.
Good Luck – Good Trading !
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