Elliot wave theory enjoys massive popularity – becoming described as sophisticated technical analysis, by several brokers and publishers.

 

Elliot wave concept has a huge and devoted following – shame the theory has no basis of sound logic that may assist you make money!

 

Let’s examine Elliott wave concept in a lot more detail and then take a look at sensible marketplace analysis.

 

The concept was named following Ralph Nelson Elliott, who concluded in his book “natures law” how the movement of monetary markets might be predicted by observing, and identifying a repetitive pattern of waves.

 

Elliott’s Profound Observation

 

Elliott came to the stunning conclusion that all natural phenomena are cyclical – and this includes the financial markets. This is true, but we realize that anyway – we realize that at some time in our lives, we will feel rain when we venture outside, the question is when exactly?

 

So, markets are cyclical – huge deal! What we want from an investment principle, could be the probability from the event – i.e. when is it most likely to occur.

 

Elliott wave concept is an objective expense principle – but there isn’t any objectivity in it whatsoever!

 

It’s all a subjective interpretation of peaks and troughs, in any time frame you like!

 

Does this sound a logical predictive concept to you?

 

The Theory

 

Based on rhythms found in nature, the concept suggests the fact that market moves up inside a series of five waves and down in the series of 3 waves.

 

The difference between the Elliott wave principle and other cyclical theories is the fact that the concept suggests no absolute time requirements for a cycle to complete – nicely that’s lots of aid!

 

The subjectivity is so great in Elliott wave, that like most theories, every thing is explainable in hindsight – but the difficulty is in fact predicting the long term.

 

You will find so many interpretations of the actual peaks and troughs in numerous time frames, that everyone will see them differently, this is hardly the basis of a predictive concept.

 

Elliott wave concept claims to be capable to predict the industry – but gives no objective way of doing it in practice.

 

Who uses Elliott Wave Principle?

 

1. Investors who want an simple way to make money, and are attracted for the mysticism of such equipment as the Fibonacci number sequence, to predict industry retracements.

 

2. Investors who believe inside the false assumption that you simply can predict industry behavior in advance – and want an effortless way to produce money.

 

How Markets Truly Move

 

Industry rates are a reflection from the following:

 

Supply and demand fundamentals + human psychology = price action

 

This looks simple, but is in reality, complicated equation – which is impossible to predict ahead of time.

 

Buying and selling markets via technical evaluation is all about putting the odds and probability within your favor, and no greater than that. It isn’t a way of predicting the future.

 

Are there far better theories than Elliott wave around, for producing cash in the markets? – A great exercise can be to poll the entire top performing fund managers in the globe and see how many of them take the concept seriously.

 

Predictive and subjectivity don’t mix!

 

The Elliott wave theory is really a predictive theory that leaves everything to subjective analysis.

 

If Elliott had worked out a predictive theory, why didn’t he give an objective way to produce cash from it? – Like most predictive theories it doesn’t function.

 

If all investors could predict the industry beforehand, we would all know what was going to happen – and there would really be no industry whatsoever, as we would all know the industry price tag ahead of time!

 

Elliott wave principle is supposed to become a predictive concept, but the only thing you can predict with it, is you will lose your cash.

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