Elliott Wave - Do you use it?

[It's Snake Pliskin]

None one is disputing the fact that you can't using EW without knowing the larger picture.
But to do this correctly taking the larger picture into consideration would be desirable. Especially as it may give you some hints in terms of the magnitude of a potential moves TO COME.....

Always starting with the big picture will give you the approximate orientation of the degree of trend that you maybe looking to trade. The thing you have forgotten here is that the lasger patterns control the smaller patterns.....

Ultimately it boils down to one thing: STUDY YOUR MARKET WELL........

Machi,
Would going back to the monthly for example be far enough to trade the daily once confirmation of the monthly, weekly and daily waves show something tradable? Is this what you mean?

 

[It's Snake Pliskin]

Final questions:

With using EW what aspects do you practitioners find:

• subjective?
• objective?
• destructive?
• most difficult?
• easy?
• essential?

I am looking for some opinions to help my understanding of the above.

Thanks
Snake

 

[It's Snake Pliskin]

Final questions:

With using EW what aspects do you practitioners find:

• subjective?
• objective?
• destructive?
• most difficult?
• easy?
• essential?

I am looking for some opinions to help my understanding of the above.

Thanks
Snake

I'll take it elsewhere.

 

[theasxgorilla]

Final questions:

With using EW what aspects do you practitioners find:

• subjective?
• objective?
• destructive?
• most difficult?
• easy?
• essential?

I am looking for some opinions to help my understanding of the above.

Thanks
Snake

{applying armour}

My opinion only, of course:

• Subjective; almost all of it...particularly higher degree wave counts, like in the super cycle ranges.
  
• Objective; the rules and guidelines. But there are literally so many of these that practioners vary in their interpretation of where the current price action is. Consider the list at this link if you need convincing.
  
• Destructive; people who emerse themselves in Elliott Wave can become dizzy with the whole predictability element. They think that due to the apparently fractal nature that they can take what is working well for them on daily, or hourly charts and zoom out to a super cycle and grand super cycle perspective and start plotting the future of mankind. This is uber destructive because it taints the perspective of the analyst/practioner (IMO). If you trade in a trend-following style it is dangerous to keep calling for this wave or that to come next. It is, after all, trend following.
  
• Easy; finding wave counts (in hindsight) on daily or hourly charts.
  
• Essential; to be prepared to say, "there isn't a count here right now"...then try something else, or walk away. You don't NEED EW to trade a trend. But if you are presented with two trades and in one of them you can identify a wave 3 of 3, then perhaps at your discretion you decide that one has a higher probability of success.

 

[motorway]

Too much money is lost and too much money is missed
for two simple reasons: One, trying to predict the
future, and two, fearing the future.


George F. King

motorway

 

[wavepicker]

Final questions:

With using EW what aspects do you practitioners find:

• subjective?
• objective?
• destructive?
• most difficult?
• easy?
• essential?

I am looking for some opinions to help my understanding of the above.

Thanks
Snake

Snake, my response to your questions will be very different to the Gorillas. It seems to me he has failed to grasp EW fully. I respectfully disagree with a lot of his opinions here. I am not trying to convince anyone to adopt EW, but I have found this method of TA (along with others) very very useful in my 10 years of trading and applying it. This may not necessarily mean it is for you though.

Subjective: Very much so, but I don't know a TA method that isn't. Trading the market is about assessing probabilities and analysing risk/reward. For me the subjectiveness is greatly reduced as all my alternate wave counts are quantified one by one, either by analysing the pattern of the trend or other proprietary techniques which I will not mention at this stage.

Objective: Of all the TA techniques I have used this would have to be the most objective. Irrespective of what others say there are very few Rules(only 3 of them) and equally as many guidelines. There are however other intricacies that can only be learnt through personal experience and that depends on how you view the market. There can be ambiguities as there are in all TA methods. But if there appears to be ambiguities, well just find another market to trade that doesn’t show ambiguities. Alternatively, use other methods to quantify.

Destructive: Any method itself is not destructive. The practitioners themselves and their psychology is what is self destructive.

Most Difficult: That depends on the individual and if they are comfortable with using it.

Easy: In terms of counting waves. All you need to know is count to 5. Understanding how the market moves, the pattern of the trend and repeatable patterns, this is more difficult, but with enough persistence and commitment fully within the grasp of anyone.

Essential: Absolutely Not. It is like any other for of TA a tool to be used at the right time if the opportunity presents itself. The key is not to try and apply it all the time and in any market such as illiquid stocks. Personally I like to use it on Indexes, Currencies, and Commodities or any other very liquid market. Application on any stock in any market all the time, may not yield the desirable results.



EW analysis is above all a theory. Many just read a text on EW such as Frost and Prechter, go out applying their knowledge for a short while only to fail miserably. Like any form of TA, this method takes work and effort (perhaps years of it) to fully understand and grasp.


Where most practioners fall over is that they place too much emphasis on counting alone without paying as much attention to the patterns and minutia that are developing within the pattern of the trend. Attempting to count an impulse is much easier than a correction, but if one has an open mind to all the probabilities and possibilities, in the large these are not a problem. Also most pratitioners fail to even think about the hard right side of the charts and the types of patterns that are most likely to follow a pattern that has just completed. Above all in EW the key is the pattern, and the probable pattern that is likely to flow from that pattern and not necessarily the count all the time
Using EW in isolation I would say I have the correct count 60-65% of the time for either impulsion or correction. Coupling it with other forms of analysis such as my own Cycles Analysis it is more like 70-75%, whereby the alternate counts are reduced dramatically.

Elliott Analysis can be applied succesfully, this can be evidenced by the many succesfull practioners and forecasts on this site alone. But in the end it's up to you to find your own path to succesfully using it, if that is the direction you seek.

Hope this helps

 

[IFocus]

* Subjective; almost all of it...particularly higher degree wave counts, like in the super cycle ranges.
* Objective; the rules and guidelines. But there are literally so many of these that practioners vary in their interpretation of where the current price action is. Consider the list at this link if you need convincing.
* Destructive; people who emerse themselves in Elliott Wave can become dizzy with the whole predictability element. They think that due to the apparently fractal nature that they can take what is working well for them on daily, or hourly charts and zoom out to a super cycle and grand super cycle perspective and start plotting the future of mankind. This is uber destructive because it taints the perspective of the analyst/practioner (IMO). If you trade in a trend-following style it is dangerous to keep calling for this wave or that to come next. It is, after all, trend following.
* Easy; finding wave counts (in hindsight) on daily or hourly charts.
* Essential; to be prepared to say, "there isn't a count here right now"...then try something else, or walk away. You don't NEED EW to trade a trend. But if you are presented with two trades and in one of them you can identify a wave 3 of 3, then perhaps at your discretion you decide that one has a higher probability of success.

Gorilla I see what you see good comment a couple of your points go to the heart of trading not just EW.


Wavepicker thanks for your posts.
This is my second time that I have looked at using EW and its been quite clear this time around. This brought the question why didn’t it appear so the 1st time?

A question for you is do you have an idea on how much of other areas of trading like price action, patterns etc that you have internalized and apply in addition to EW?

Focus

 

[wavepicker]

A question for you is do you have an idea on how much of other areas of trading like price action, patterns etc that you have internalized and apply in addition to EW?

Focus

Probably an equal amount IFocus. Now it's just routine. I look at a chart(many times I don't even look at the company name!!) and I look for certain EW pattern traits that I have become familiar with. For example a pattern/chart has to exhibit the "right look" and then I consider it.

ASX Gorilla mentioned that wave counts were always right in hindsight. I ask him this, what it wrong with that? When I see a completed wave count, it automatically registers in my brain that a wave or a pattern may have completed and a trend is at risk of ending. Thereafter one can look at the probabilities of types of patterns/moves that are likely to follow.

As mentioned in the earlier post, the key is the pattern.

It's all about:-

-finding when fast moves are about to take place following the completions of certain patterns such as Ending Diagonals, contracting triangle and the like.

-finding those 3rd wave moves (the 1-2,1-2,1-2 moves)

These are the bread and butter of EW analysis

Cheers

 

[tech/a]

Waves,

Excellent explaination which can only be delivered in the way it has by a long term Practitioner.

IFocus,
I find the more I try to apply it (Correctly or incorrectly as a few are good enough to point out) The clearer the patterns and the counts become---or more so the repetitive nature of them.

But if there appears to be ambiguities, well just find another market to trade that doesn’t show ambiguities. Alternatively, use other methods to quantify.

An important observation/fact.

 

[theasxgorilla]

ASX Gorilla mentioned that wave counts were always right in hindsight. I ask him this, what it wrong with that? When I see a completed wave count, it automatically registers in my brain that a wave or a pattern may have completed and a trend is at risk of ending.

Lets requote the context and what was actually said.

What is easy? I answered; "finding wave counts on daily and hours charts". I suspect you have taken the tone of my post (purposely leaning slightly away from Elliott Wave as the be-all-and-end-all) and presumed that my message was something different than what it was.

If you re-read my post, then re-read your post, you may actually find (as I do) that we're saying many of the same things.

 

[wavepicker]

Lets requote the context and what was actually said.

What is easy? I answered; "finding wave counts on daily and hours charts". I suspect you have taken the tone of my post (purposely leaning slightly away from Elliott Wave as the be-all-and-end-all) and presumed that my message was something different than what it was.

If you re-read my post, then re-read your post, you may actually find (as I do) that we're saying many of the same things.

fair enough Gorilla,

we agree then??


For the sake of Snakes question however I would like to present some real time analysis of the DJIA (1hr bars). These are series of charts that were marked up myself in the last week. The charts were updated every few days. No hindsight analysis here of any kind.
We had a completed pattern to the downside( an impulse ) This pattern was not easy to count by the average EW practitioner. Why?? Because they are looking for a too simplistic a pattern. We got a (simple) clean impulse down then we got one more 'unorthodox" low. That would have been enough to confuse most practioners there and then and most would think the whole move down was corrective. The impulse down, subdivided into 1-2,1-2,1-2, just before the point of recogntion or wave 3. Wave 4 (green) was a sideways move, which was the biggest clue that trend was at risk of ending in the subdivisions that would follow.

-The first chart was pointing to an imminant rally, because we had the 5 wave move down followed by a 3 wave move up (green a) followed by 3 waves down again (green b). This means only one type of move can follow -an impulse for green wave c of an irregular flat correction. This is when it's handy to know all the possible types of correction other than zigzag. Wave c's of an irregular flat are quite strong and this has resulted in a healthy rally. Notice I had marked up waves 1 and 2(blue of the developing impulse up) just before blue wave 3 was about to start, or the higher low. That was the time to go long this instrument

-The second Chart I updated up on the 12th march. It shows how the pattern has progressed and how I expected the pattern to resolve. So far so good.

- The 3rd chart was updated a few mins ago. So this pattern perhaps has almost finished or close to finishing?? Maybe it might continue bullishly too, dunno??
My point is, does it matter? The whole point of the trade was to enter the blue 3rd wave of the expected impulse wave C(green) of larger wave 2 (red). This was a descent rally. After all wave 3's are the bread and butter.

We had a completed pattern that was high probability, from here a list of possibilities can be quantified to take a possible trade.

Will be interesting to see what happens from here but I suspect this is a crucial juncture coming up

 

[tech/a]

Now THATS the sort of quality analysis and explaination which adds volumes to the/any discussion.

 

[moses]

So (forgive me for being thick) the bottom line is that Elliot says we should don our parachutes?

PS. some headlines on Google news:

"Asian shares close mostly lower on caution ahead of US data release"

"London shares fall midmorning off lows; UK hedge fund collapse ..."

"BURSA MALAYSIA: Shares Ease On Profit-taking"

"Qantas shares fall on buyout opposition concerns"

 

[It's Snake Pliskin]

{applying armour}

My opinion only, of course:

• Subjective; almost all of it...particularly higher degree wave counts, like in the super cycle ranges.
  
• Objective; the rules and guidelines. But there are literally so many of these that practioners vary in their interpretation of where the current price action is. Consider the list at this link if you need convincing.
  
• Destructive; people who emerse themselves in Elliott Wave can become dizzy with the whole predictability element. They think that due to the apparently fractal nature that they can take what is working well for them on daily, or hourly charts and zoom out to a super cycle and grand super cycle perspective and start plotting the future of mankind. This is uber destructive because it taints the perspective of the analyst/practioner (IMO). If you trade in a trend-following style it is dangerous to keep calling for this wave or that to come next. It is, after all, trend following.
  
• Easy; finding wave counts (in hindsight) on daily or hourly charts.
  
• Essential; to be prepared to say, "there isn't a count here right now"...then try something else, or walk away. You don't NEED EW to trade a trend. But if you are presented with two trades and in one of them you can identify a wave 3 of 3, then perhaps at your discretion you decide that one has a higher probability of success.

ASXGorilla,
Thank you for your response. It is much appreciated. I am happy now.

Regarding the part in red is that not subjective due to interpretation of the practitioners?

Yes finding wave counts even in hindsight seems difficult for me.

Have you traded using EW to some extent in the past? If so why do you not use it now if that is the case?

Regards
Snake

 

[It's Snake Pliskin]

wavepicker,

Snake, my response to your questions will be very different to the Gorillas. It seems to me he has failed to grasp EW fully. I respectfully disagree with a lot of his opinions here. I am not trying to convince anyone to adopt EW, but I have found this method of TA (along with others) very very useful in my 10 years of trading and applying it. This may not necessarily mean it is for you though.

Thanks for the time to contribute wavepicker.

Subjective: Very much so, but I don't know a TA method that isn't. Trading the market is about assessing probabilities and analysing risk/reward. For me the subjectiveness is greatly reduced as all my alternate wave counts are quantified one by one, either by analysing the pattern of the trend or other proprietary techniques which I will not mention at this stage.

Objective: Of all the TA techniques I have used this would have to be the most objective. Irrespective of what others say there are very few Rules(only 3 of them) and equally as many guidelines. There are however other intricacies that can only be learnt through personal experience and that depends on how you view the market. There can be ambiguities as there are in all TA methods. But if there appears to be ambiguities, well just find another market to trade that doesn’t show ambiguities. Alternatively, use other methods to quantify.

So the market, stock, etc will display the objective nature of EW. If it doesn't it may be subjective application to something that will not display it.

Destructive: Any method itself is not destructive. The practitioners themselves and their psychology is what is self destructive.

Most Difficult: That depends on the individual and if they are comfortable with using it.

Easy: In terms of counting waves. All you need to know is count to 5. Understanding how the market moves, the pattern of the trend and repeatable patterns, this is more difficult, but with enough persistence and commitment fully within the grasp of anyone.

Essential: Absolutely Not. It is like any other for of TA a tool to be used at the right time if the opportunity presents itself. The key is not to try and apply it all the time and in any market such as illiquid stocks. Personally I like to use it on Indexes, Currencies, and Commodities or any other very liquid market. Application on any stock in any market all the time, may not yield the desirable results.

EW analysis is above all a theory. Many just read a text on EW such as Frost and Prechter, go out applying their knowledge for a short while only to fail miserably. Like any form of TA, this method takes work and effort (perhaps years of it) to fully understand and grasp.

Yes the lazy never succeed at anything. I am picking it to pieces to hopefully understand the nuances. I am trying to understand the theory and its objective application.

Where most practioners fall over is that they place too much emphasis on counting alone without paying as much attention to the patterns and minutia that are developing within the pattern of the trend. Attempting to count an impulse is much easier than a correction, but if one has an open mind to all the probabilities and possibilities, in the large these are not a problem. Also most pratitioners fail to even think about the hard right side of the charts and the types of patterns that are most likely to follow a pattern that has just completed. Above all in EW the key is the pattern, and the probable pattern that is likely to flow from that pattern and not necessarily the count all the time
Using EW in isolation I would say I have the correct count 60-65% of the time for either impulsion or correction. Coupling it with other forms of analysis such as my own Cycles Analysis it is more like 70-75%, whereby the alternate counts are reduced dramatically.

Elliott Analysis can be applied succesfully, this can be evidenced by the many succesfull practioners and forecasts on this site alone. But in the end it's up to you to find your own path to succesfully using it, if that is the direction you seek.

Hope this helps

Thank you again Wavepicker for an insightful post. I shall consume this for a while.
Regards
Snake

 

[It's Snake Pliskin]

Now THATS the sort of quality analysis and explaination which adds volumes to the/any discussion.

I totally agree Tech. Seeing the work of pros using EW is humbling.
Wave look at the smily I have placed here: :bowdown:

 

[motorway]

The more I look at EW the more I think My answer would be NO..

( But early days here yet for Me , So just some discussion )

Wyckoff stated that one of the important realizations to have about markets
Was the fact that price moves in waves..

That waves operate across all time frames.

But that 4 time frames were most significant

That these time frames were best defined by the % move they made than slices of time.

That large waves built themselves from smaller waves .

But that in a more meaningful way causation ran from larger to smaller time frames...

The thing that creates the waves is demand and supply creating a following...

following = volume.. Waves emerge from trading ranges
where ownership sentiment and contingency are crystalized..

Waves last as long as they have a following
Volume is a key metric
We look for waves taking form gathering strength We look for the other side the other force building We look for the end of waves.
And the contrary motion ( Like Heraclitus's Enantiodromia )

"The best indication of a stocks future action is it's current action in context "


Waves are a Dynamic process that No one can predict. But can be anticipated

I see David Weis ( a significant figure in EW and Wyckoff ) makes some interesting comments on this in Elders recent book...


Here is the full quote from George King ( A significant past figure in Wyckoff )

In Nick Radges book He shows a chart of CBA There are strong waves up.
He calls the pattern undefined because there is No EW pattern

This is David Weis's point

A static pattern is being put onto a dynamic process

I feel too many good opportunities will not fit the EW pattern like CBA

If demand and supply creates a following and a wave
That is all We need to know We have tools then to measure the strength
preservation and to anticipate turning points..

If an EW pattern does emerge IT has to be demand and supply that builds it

So why go past demand and supply and restrict our universe and miss real signals and real opportunity ?

Always keep in mind we are not forecasting the market.
Mr. Wyckoff in His text pays most of his attention to
what the market is doing rather than trying to predict
what the market may or will do in the future. In a
number of places in the text, Mr. Wyckoff states
specifically that the trend is the most important
thing. For example,
Mr. Wyckoff says:

“The trend is the line of least resistance. It is the
most important thing to know about the market or an
individual stock.”

Just above this ... in the same page, he says:

“The purpose of a trend chart is to enable you to keep
in harmony with the trend.”

Notice it doesn’t say ‘the purpose of a trend chart is
to predict the future.’ Its purpose is just to keep
you in harmony with the trend.

I am impressed with Mr. Wyckoff’s use of the word
‘the,’ as in the trend. This is the present tense use
and I am convinced that students having trouble in the
market either in taking a position at the wrong time
or in fearing to take a position at the right time are
troubled by the fact that they are trying to predict
the future. I am also convinced that anyone who
really wants to make money in the market will do two
things: First, he will determine major accumulation.
That is, he will detect when major accumulation is
underway. And second, he will take his positions in
line with the trend of the market and not try to
predict the future of the market, but just try and
stay in harmony with that trend. And, that is the
basic purpose of determining technical positions.

Too much money is lost and too much money is missed
for two simple reasons: One, trying to predict the
future, and two, fearing the future.


George F. King

Determining Technical Positions

Wyckoff Was a tape reader
Which He defined as determining the future course of the market from it's current action Now..

He was before price patterns and indicators and EW
All that I would think are the cart before the horse

They are things built from demand and supply
They are shadow artifacts

They are Not demand and supply themselves

Prices move in waves small waves build into larger waves
They last as long as they have a following, Volume = following
All the time a contrary movement builds..

Yes there will be 1,2,3 yes there will be 4 and 5 then a b c

But there will be anything else as well

All markets are manipulated

The ores of manipulation are routine and habit

The mechanical , The static

Real time is fluid ... Everything real has a broken rhythm.

It is not that a market breaches a trend line or makes a pattern
But HOW it does so and How it came to the juncture... In the How is where the intent is..



motorway

 

[coyotte]

A Query on EW

On long term Charts eg : 12 mths + , are Nor or Log settings used ?

If for example W5 is supposed to be around the same movement price wise as W1 is this referring to $$$ or %%% .

Over a 12 month or longer period surely a Nor chart could be very misleading .


Cheers

 

[motorway]

A Query on EW

On long term Charts eg : 12 mths + , are Nor or Log settings used ?

If for example W5 is supposed to be around the same movement price wise as W1 is this referring to $$$ or %%% .

Over a 12 month or longer period surely a Nor chart could be very misleading .


Cheers

Look here:

http://www.financialsense.com/fsu/editorials/russo/2006/1115.html

motorway

 

[coyotte]

Thanks for the link --- so inflation's the key!