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Elliott Wave Theory and Patterns
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Elliott Wave Theory and Patterns

  #61 (permalink)
Market Wizard
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OK, here is a revised ES example. Obviously the 1408 (previous high) did not hold (so much for EWT).

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  #62 (permalink)
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aligator View Post
OK, here is a revised ES example. Obviously the 1408 (previous high) did not hold (so much for EWT).

I am really only interested in trading wave 2-3, which seemed to work just fine

Mike

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  #63 (permalink)
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Can you help me understand the impact/importance of selecting an important low or important high, vs selecting an impulsive leg, when defining the start of a brand new wave formation? (also, what is the correct terminology for a "brand new" wave formation?)

I see you've said that an Impulse leg needs to be 50-100% of the average daily range. During the last EWT webinar, Steve never mentioned an impulsive leg (that I recall), instead focusing on an "important" low or high. I'd like to understand the significance of the difference when looking at a new formation, according to the EWT philosophy I of course have my own opinions...

Mike

I am not an EWT expert, I just have taken enough, a snapshot of a strong wave, preferably Wave 3, to project the next likely move using the ABC correction. The most common motive wave is the impulse wave and as such starts at an established high or low within another higher degree wave structure. For day trading and scalping, the 50-100 % ADR for the length of the impulse leg is not science, but it is arbitrary and typical of an instruments' range of a persistent move before an appreciable retracement and correction is expected, i.e 100 ticks for CL.

For EWT, the historical highs and lows are the anchors and define the whole structure, thus they are significant. Once you revise one of the higher or lower level waves the whole structure is impacted. Often, one ends up revising the structure backward if the lower level projections do not materialize.

Assuming infinite data, theoretically, for every wave there is a larger wave and many smaller waves, so there is no telling when a wave starts or ends. However, within a certain size, once the 5th wave is completed a new 3 or 5 wave starts. I don't know what the new wave is called, but conventionally, EW waves are divided into 9 degrees starting from the Grand Supercycle to Subminuette.

For anyone interested in EWT, Elliott Wave Principle by Frost and Prechter is the best and an easy read.

Sorry for the long answer, more of a refresher for me than a lecture.

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  #64 (permalink)
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Hi Everybody

An interesting thread, and one that I would like to contribute to, as the way that Elliott Wave is taught by many Gurus (in my personal opinion) does lead to confusion………..

In my personal opinion, the best way to look at Elliott Wave patterns is in “isolation”, as this then removes the normal confusion of conflicting wave counts. The idea is that (as Traders) we are only interested in identifying a “low risk” trade setup.

The best of this setups is where we can get into a new trade as the Wave (2) swing is ending, to then be able to trade the strongest and longest of all the Elliott Waves – the Wave (3)

Please see the chart below, where there was a great example of this on a 3min Chart of the 6E just yesterday…..

I have added the Wave counts manually on this NinjaTrader chart…..

Thanks,

Steve

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  #65 (permalink)
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I assume that with EWT, like most methodologies, it is better to look at higher time frames to find key areas of support, resistance, trendlines, etc.

If this holds true for EWT, then do you only plot your patterns on the higher timeframe and not the lower time frame? Because otherwise, I could see confusion introduced where the two time frames produce independent and conflicting signals.

Mike

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  #66 (permalink)
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Hi everyone! Just wanna to give my 2 cents opinion in my FIRST post.

I will recommand using AdvanceGet from eSignal. AdvancedGet has a complete EW analysis tools. It has the analysis tool to determine when W3 has started or when is W5 has ended.

Well, EW analysis is subjective and it is subject to change if the predicted wave formation failed. So you need some skill to acess the validity of the predicted wave and flexible to accept the wave formation changes. Example, wave 1-2-3 can changed to be wave A-B-C.

Sad to said, MTPredator is no way near in term of EW analysis. It only use Fibo on pivot. However, MTPredator has more to offer in term of position sizing.

Cheers!

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  #67 (permalink)
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Hi Everybody,

Exactly, that is why Elliott Wave is best used “in isolation”, then only use the best (and most obvious) wave counts, so this then removes all the subjectivity and confusion with normal Elliott Wave Analysis.

There was a great example on the 3min NQ yesterday, where we had a clear 5 wave rally off the lows yesterday. As you can see form the chart below, the high was at the end of this 5-wave rally.

Yes, you are also correct, in that Position Sizing is the key, as correct Position Sizing keeps the inevitable loses small, but still allows Profits to run.

Thanks

Steve

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  #68 (permalink)
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Hi Steve, can you explain how MTPredictor quantify EW?

Looking at your chart, the W1 length (23.75) is longer than W3 length (14.25). How could this possible?

Even EW analysis is subjective, but the core basic EW principle does not allow W3<W1. This is inaccurate and misleading.

Kingsley

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  #69 (permalink)
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Hi,

Thanks for your reply.

What EW says is that "Wave 3 cannot be the Shortest Wave in a completed 5 wave sequence", so that is the filter we include...

I hope this helps ?

Steve

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  #70 (permalink)
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Hi

As a PS to my posts earlier.....

This is a better example, on the 5min YM from yesterday, where the Wave 3 is clearly the longest wave .....

But the same principle applies, it is still much easier to use Elliott Wave "in isolation" and then only to find a "low risk" tarde setup, then use Position Sizing to keep the initial risk small.

Thanks

Steve

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