Learn Elliott Wave Theory

Elliott Wave Explained


Elliott Wave Theory

What is Elliott Wave Theory? Brought into the mainstream through the publication of the Elliott Wave Principle by Frost and Robert Prechter, wave analysis is now a very popular form of technical analysis that can be applied to stock charts to forecast the future direction of prices.

....but what IS the Wave Theory and what can it do for you and me?

Successful application of Elliott Wave theory can substantially improve a traders profitability. An ability to recognise where the market is a cycle at a given point in time can help to pinpoint high probability trade entries and exits, thus reducing the frequency of any losing trades and allowing the trader to run positions for longer so as to maximize profits from every trade.

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Elliott Wave Theory

Contents Index


Elliott Wave Theory Basics

A Complete Elliott Wave Theory CycleThe image on the left shows a complete cycle but how do you recognize which wave the market is in at any given point?

You do not need to be an expert to benefit from using the wave theory, as even by gaining an understanding of the basics of wave formation will prove itself to be time well spent as you will soon start to see your charts in a whole new light and it will very quickly be reflected in the bottom line of your trading results.

Start here to Learn Elliott Wave Theory basics where you will learn the basics of wave formation, the variations on the wave patterns, and how to recognize where the market is in its current cycle.

  Image: Complete Elliott Wave Theory Cycle

Elliott Wave Principle - Now Available Free

Elliott Wave Principle Free Online

Learn all you need to know about EW and its practical application with this Free online edition of Frost and Prechters Elliott Wave Principle.

It is one of the all time best sellers for technical traders and you can be reading the 248 pages of this classic investment analysis manual in minutes.  This complimentary online edition of ElliottWave Principle, has recently been released by Robert Prechter and EWI.

Elliott Wave Principle: Find out how to access Robert Prechters best seller online for free.

Prechter's best seller will help you learn the 13 wave patterns that can occur in the charts of the financial markets along with the basics of counting waves, and the simple rules and guidelines that will help you to apply EW for yourself.

Who Uses Elliott Wave Theory


     Image: Robert Prechter    
Robert Prechter, Elliott Wave Principle AuthorElliottwave analysis today is used by traders and investors of all levels within the spectrum of the markets. From the small private investor who is trading from his spare room, to the managers of multi billion dollar investment funds.

As with all Technical Analysis, one of the major benefits of applying Elliott Wave Theory to our stock charts analysis is that it can be applied equally as well at an intraday level as it can be applied to a multi decade chart.

I doubt that any fund manager these days would make any investment decisions without first considering where the market could be within an Elliottwave cycle, even if only in its basic form.

Free Guide

Elliott Wave PDF


Free to download, the Traders Day Trading free Elliott Wave Theory PDF quick start guide. Download it free now for a quick overview of the basics.

It is a handy reference guide to the basics of the wave patterns and wave formation.

Elliott Wave Double 3 Combination Corrective Wave

Learn Elliott Waves Basics - Free

Often, basics is all you need to know - Courtesy of ElliottWave International

Understand the basics of the subject matter, break it down to its smallest parts -- and you will have laid a very good foundation for proper application of... well, anything, really. That is what we had in mind when we put together our free 10-lesson online Basic ElliottWave Tutorial, based largely on Robert Prechter's classic "Elliott Wave Principle -- Key to Market Behavior." Here is an excerpt:

Successful market timing depends upon learning the patterns of crowd behavior. By anticipating the crowd, you can avoid becoming a part of it. ...the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. In markets, progress ultimately takes the form of five waves of a specific structure.
The personality of each wave in the Elliott sequence is an integral part of the reflection of the mass psychology it embodies. The progression of mass emotions from pessimism to optimism and back again tends to follow a similar path each time around, producing similar circumstances at corresponding points in the wave structure.

These properties not only forewarn the analyst about what to expect in the next sequence but at times can help determine one's present location in the progression of waves, when for other reasons the count is unclear or open to differing interpretations.

As waves are in the process of unfolding, there are times when several different wave counts are perfectly admissible under all known Elliott rules. It is at these junctures that knowledge of wave personality can be invaluable. If the analyst recognizes the character of a single wave, he can often correctly interpret the complexities of the larger pattern.

The following discussions relate to an underlying bull market... These observations apply in reverse when the actionary waves are downward and the reactionary waves are upward.

1) First waves -- ...about half of first waves are part of the "basing" process and thus tend to be heavily corrected by wave two. In contrast to the bear market rallies within the previous decline, however, this first wave rise is technically more constructive, often displaying a subtle increase in volume and breadth. Plenty of short selling is in evidence as the majority has finally become convinced that the overall trend is down. Investors have finally gotten "one more rally to sell on," and they take advantage of it. The other half of first waves rise from either large bases formed by the previous correction, as in 1949, from downside failures, as in 1962, or from extreme compression, as in both 1962 and 1974. From such beginnings, first waves are dynamic and only moderately retraced. ...

Read the rest of this 10-lesson Tutorial online now, free! Here is what you will learn:

  • What the basic Elliottwave pattern looks like
  • Differences of impulsive and corrective waves
  • How to estimate the expected length of future waves
  • How the Fibonacci sequence fits into wave analysis
  • Practical application tips and strategies
  • More
ElliottWave International (EWI) is the world's largest market forecasting firm. EWI's 20-plus analysts provide around-the-clock forecasts of every major market in the world via the internet and proprietary web systems like Reuters and Bloomberg. EWI's educational services include conferences, workshops, webinars, video tapes, special reports, books and one of the internet's richest free content programs, Club EWI.


Related Elliott Wave Theory Content Pages

Impulse Waves - Part 1 of the Elliott wave theory basics guide. Learn the basics of wave structure and how impulse waves are formed....

Corrective Waves - Part 2 of the Elliott wave Theory basics guide. Learn the basics of wave structure and how corrective waves are formed....

Trading Wave Theory - The practical application of trading wave theory, find out how to put the theory into practice in reality. Which wave do I buy? What are the Elliott wave rules?...

Fibonacci Sequence - Learn the basics of Fibonacci trading. Find out how the Fibonacci sequence works hand in glove with Elliott Wave theory to form a combination of technical indicators that provides us with an extremely powerful trading tool.
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