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Elliot Wave Principle

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15 minutes ago, Kodiak said:

Always look for wave 3

Fully agree.  the Wave 3 identification (or wave C of a major counter trend phase) is a vital aspect of long term trading and indeed trend following.  At such a point I will switch from swing trading to trend following.  As an example we may be about to see such a moment on Arabica coffee.  If the current bearish phase completes as an A-B-C at key support and then turns up and makes a new higher high then a Wave 3 or Wave C will be on and trend following techniques can reasonable be applied.

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@Mercury,

I appreciate that EWT can be applied to any asset. Some successful and others unsuccessfully. 

One of the questions I have to the IG Community in general is whether anyone has conducted any research into which assets have historically adhered to EWT principles more than others? Does anyone know whether historically Gold has adhered to EWT principles say 50% of the time over the past 20, 30 or 40 years? I mean does anyone have access to or can refer to any research which has been conducted where based on historical data and evidence it can be seen that certain assets whether that be Gold or any other has adhered to EWT X% of the time during X period

So does Gold adhere to EWP principles greater than the reported 70% for Natural Gas over the past however many years? I think some form of being able to quantify historical data and charts for EWT is crucial to better appreciate how prevalent it is in certain assets and which assets can give you the best chance of success when trying to apply EWT. This is the bit I seem to be struggling with. I do not know the answers as I do not apply EWT and never have. I accept that those who know how to may be doing a fantastic job and both successful and profitable. 

@Mercury, if you cannot answer any of these questions then I doubt very much there is anyone else on the IG Community that can as based on my experience on the IG Community you are most probably one of the most proficient EWT technicians. This is a compliment by the way so please take it as a compliment as I know a lot of people misunderstand my posts and jump to all sorts of conclusions that were simply not intended by me. 

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Some of the issues I have with EWT (this may be due to my lack of understanding or technical skills required to adopt it successfully or profitably) are as follows:

  • How can a trader identify on a consistent basis the beginning of a wave or an end of a wave?
  • Wave Prediction seems to be an art which only the very few will have the skill set or ability to translate into their trading so that they are consistently applying it both successfully and profitably.
  • A trader can only confirm a certain wave has materialised until after it has. How does this help with trading decisions in real time?

I accept the notion that EWT cannot simply be applied by itself. It needs to be used with other technical indicators and signals. For me prices go up and down. Trends are formed upwards and downwards. Most can use different technical signals and indicators to see this on charts without EWT. 

It would be good to understand what if any 'edge' EWT can give a trader. I think understanding this and how EWT can be applied into a trading model which delivers and increases consistency of successful and profitable trades is key. If a trader only trades 5 times a year using EWT when there were 500 possible trades available then there is 496 trades that they did not feel comfortable applying EWT to. I think context is king here. Does using EWT rule out a lot of trades because the set up cannot be found on many assets? It may increase the chances of success when found but how many times are clear EWT examples found when trading real time?

I am not discounting EWT but I think a very high skill level is required to be able to implement EWT into a trading strategy and trading system and this is not for beginners or novices. A real understanding and technical nous is required. 

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On 20/12/2019 at 11:57, TrendFollower said:

One of the questions I have to the IG Community in general is whether anyone has conducted any research into which assets have historically adhered to EWT principles more than others?

I do not agree with the premise of the question.  What I am saying is EWT works for all markets all the time.  The hard part is how to use it.  As usual it is easy to see it and map it in hindsight, and this is how it is best used, to see where we may be in long term cycles.  I do not use EWT in isolation, it works better for me as a corroboration to other techniques over and above the long term cycle aspect.  You can use EWT to map any market all the time if you are seeking to assess the long term position and therefore the likely long term direction. 

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On 21/12/2019 at 11:47, TrendFollower said:

ome of the issues I have with EWT (this may be due to my lack of understanding or technical skills required to adopt it successfully or profitably) are as follows:

 

On 21/12/2019 at 11:47, TrendFollower said:

How can a trader identify on a consistent basis the beginning of a wave or an end of a wave?

You don't use EWT for this, all you can say is that a wave is likely to be coming to an end and what wave you are in.

On 21/12/2019 at 11:47, TrendFollower said:

Wave Prediction seems to be an art which only the very few will have the skill set or ability to translate into their trading so that they are consistently applying it both successfully and profitably.

Not sure what you mean by wave prediction but everyone who uses EWT, and the are many professionals using it, seek to assess where in the cycle a market is and therefore where it is likely to be heading.  If this is what you mean by prediction it takes some experience and a knowledge of the"rules" but not that much skill.  It is not used to time and entry or exit.

On 21/12/2019 at 11:47, TrendFollower said:

A trader can only confirm a certain wave has materialised until after it has. How does this help with trading decisions in real time?

Again it is more about where we are in the cycle.  If then we see the market conform to the long term scenario road map we can project forward with confidence but again this is about putting your trading into context and not entry and exit.

 

On 21/12/2019 at 11:47, TrendFollower said:

It would be good to understand what if any 'edge' EWT can give a trader.

For that you would have to study and practice using EWT in analysis and see how best to incorporate into your trading method, same as with anything really.  For me, when I started out I was trying to trade shorter term but found I was often trading against the dominant trend. EWT was a way for me to assess which way the dominant trend was heading and when a market was in a counter trend rally.  At is most basic that is a good start for me.  After that you can hone your method and develop usage with experience but as with all technical analysis, including simple support/resistance pivots, it cannot be used as a simple set of rules that if followed produce success, no such thing exists.

 

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1 minute ago, TrendFollower said:

Thanks for your responses. Much appreciated. 

NP, if you decide to look into it Elliot Wave International is a good place to start.

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@Mercury,

In a couple of my posts I was stating that Natural Gas adheres to EWT around 70% of the time. The website (above) you have referred me to supports this.

Natural Gas Does This 72% of the Time

https://www.elliottwave.com/ElliottWaveTV/Natural-Gas-Does-This-72-of-the-Time

I have bookmarked Elliott Wave International. I will from time to time go through it when time permits. I still have a backlog of books to read and get through as well as a large amount of Blockchain and Crypto related reading material. 

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