🔴 Most Effective "ELLIOT WAVE and FIBONACCI" Price Action Trading Strategy (Wave Trading Explained)

Summary

This trading video teaches viewers about the Elliott Wave theory, which holds that market prices move in repetitive patterns called waves. It explains concepts like impulsive waves that move with the trend vs corrective waves against it. The video outlines rules for identifying valid 5-wave Elliott patterns and recommends entering trades at the end of the 4th wave. It shows examples of Elliott Waves in charts and discusses how to start wave counts, noting it can be subjective. The goal is helping traders use Elliott Wave analysis to identify high-probability entry points and make profitable trades across stocks, forex, and crypto.

Takeaways

• 😀 The video will provide a simple yet profitable Elliott wave trading strategy with practical examples for stocks, currencies and crypto
• 🌊 Elliott wave theory analyzes market trends as a series of impulsive and corrective waves
• 🔢 Impulsive waves move with the overall trend while corrective waves move against it
• ⛰️ Impulsive waves are labeled 1, 3, 5 and corrective waves are labeled 2, 4
• 📈 Wave 2 never retraces more than 100% of wave 1, usually 50-61.8%
• 📉 Wave 4 never retraces more than 100% of wave 3, usually 38.2-50%
• 🚀 Wave 3 always extends beyond wave 1 and is never the shortest wave
• 🎯 The best Elliott wave entry points are near the end of wave 4 to catch wave 5
• 🔍 Start Elliott wave counts at swing highs/lows or end of previous impulsive waves
• 💡 Elliott wave analysis is subjective, experience helps in identifying entry points

Q & A

What are the two main types of waves in Elliott Wave Theory?

The two main types of waves are impulsive waves, which move in the direction of the overall trend, and corrective waves, which move against the overall trend.

What are the basic rules of the Elliott Wave strategy?

The three basic rules are: Wave 2 never retraces more than 100% of Wave 1, Wave 4 never retraces more than 100% of Wave 3, and Wave 3 always travels beyond the end of Wave 1 and is never the shortest wave.

Where is the best place to start an Elliott Wave count?

The best place to start an Elliott Wave count is at an extreme swing high or swing low. You can also start counting from the end of the previous impulsive wave if you want to identify cycles of a higher degree.

What time frames can you use the Elliott Wave strategy on?

In theory, Elliott Wave patterns apply to any time frame. You can use 1 minute, 5 minute, 1 hour, 4 hour, daily or weekly candles depending on your trading style.

Why is wave counting subjective in Elliott Wave theory?

Wave counting can be subjective because different traders may have different interpretations of where a wave begins and ends. The lack of concrete rules means it relies on the trader's skill and experience.

What is the benefit of letting the first four wave sequence unfold?

Letting the first four waves unfold allows you to identify the end of wave four and find a good entry point to catch the final wave of the five wave Elliott Wave sequence.

How can Elliott Wave theory be used for trading?

You can use Elliott Wave theory to help identify potential turning points in the market. It can assist in determining entry and exit points for trades based on the expected wave patterns.

What was Elliott Wave theory inspired by?

Elliott Wave theory was inspired by the Dow Theory and observations of patterns found throughout nature.

Why are impulsive and corrective waves useful?

Understanding the impulse and corrective moves allows traders to identify market structure beyond typical support and resistance. This can increase the probability of successful trades.

What assets can Elliott Wave theory be applied to?

Elliott Wave theory can be applied to any asset with price action, including currencies, stocks, commodities, and cryptocurrencies.