Elliot wave is one of the most popular methods of trading and although originally devised for the stock market swing trading with Elliot wave is very popular with forex traders.
Let's look at swing trading with Elliot Wave in more detail
Elliott Wave theory is named after Ralph Nelson Elliott, who concluded that the markets moved in a repetitive pattern of waves and was a reflection of human nature.
He attributed this action to the mass psychology of the market which never changes and can therefore be predicted with scientific accuracy.
Elliott Wave patterns follow a specific pattern that the markets move up in a series of 3 waves and then down in a series of 2 waves in a bull market. The 3 wave impulse and 2 wave corrective sequences form the basis of his method of a 5 Wave impulse pattern, with the reverse occurring in a bear market.
In Elliot wave theory there is also a use of the Fibonacci number sequence which is specific retracement levels to help calculate the waves.
So by trading these waves, a forex trader can look at his forex charts and swing trade with Elliot Wave and make consistent profits from his forex technical analysis.
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It's a scientific way of making profits according to Elliot waves and his disciples - so does it work?
The answer is it has to be one the biggest myths of forex trading that Elliot Wave Theory can lead you to currency trading success (lets ignore the fact that there is no hard evidence that Elliot made any money from his own theory) and look at why the theory is flawed.
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