Elliott Wave Theory : Essential to Become a Successful Trader
Many believe that the stock market is highly unpredictable. In the past few years, investing in the stock exchange has been fraught with perils. Thankfully, the application of the Elliott wave theory can save you landing in such a catastrophic situation. The theory was formulated by Ralph Nelson Elliott, who analysed the stock market for a period of 75 years. He drew a conclusion on the basis of definite patterns visible in the stock markets. Unfortunately, it is commonly perceived that the stock market behaves in a haphazard and undefined pattern, but Mr. Elliott's research clearly indicates that it is very often possible to identify the stock markets future rise or fall in trend, and invest accordingly.
Lately, the markets have been shaky, which has made stock investments a very risky option. If you have struggled with investments on the stock market, then learning Elliott Wave Theory can prove to be a wise decision. With the help of this theory, you can predict the market behavior in specific time frames. With the Elliott Wave Principle, you will have to monitor the multiple peaks and troughs in the financial year, and make a judgment about the behavior of the stock price patterns. According to this theory, the market prices are not random, but in fact, move in a rhythmic pattern. The price pattern can be derived with an analysis based on the social psychology of crowds in market. Elliott also made an interesting observation that the fluctuations in the share market are closely related to changes in the psychology of the investors.
Financial experts who have studied the Elliott Wave Theory will be aware that the theory is, basically, divided into the distinctive high and lows of waves. The impulsive waves are made of five smaller waves, while the corrective waves are made of three smaller waves. In an impulsive wave, five wave patterns exist along with the corrective waves. This pattern is continuous and once you analyse the past and present wave count, you can clearly predict the direction in which the market will move towards in the future. The set of five and three waves will complete the cycle and indicate different time scales. The longest among these waves is called a Grand Super cycle and lasts somewhere between 40 to 70 years. There are a few cycles which last for a span of one year or more, followed by Primary cycles, which last from a few weeks to a couple of months. The minor cycle lasts for a few weeks, the minute wave for a few days, and the smallest wave subminuette lasts only for minutes.
Elliott wave theory is incomplete without an observation of the human psychology that results in forming the patterns. On observing the stock market behaviour, it is evident that investors can also monitor these patterns and make their investment decisions accordingly. You can use this theory to draw a parallel between existing market situations and the prescient changes in the market. Utilize the wave theory and determine the position to take in market share in the coming days. This will help you in avoiding capital loss and gain higher benefits with the aid of wave theory.
Lately, the markets have been shaky, which has made stock investments a very risky option. If you have struggled with investments on the stock market, then learning Elliott Wave Theory can prove to be a wise decision. With the help of this theory, you can predict the market behavior in specific time frames. With the Elliott Wave Principle, you will have to monitor the multiple peaks and troughs in the financial year, and make a judgment about the behavior of the stock price patterns. According to this theory, the market prices are not random, but in fact, move in a rhythmic pattern. The price pattern can be derived with an analysis based on the social psychology of crowds in market. Elliott also made an interesting observation that the fluctuations in the share market are closely related to changes in the psychology of the investors.
Financial experts who have studied the Elliott Wave Theory will be aware that the theory is, basically, divided into the distinctive high and lows of waves. The impulsive waves are made of five smaller waves, while the corrective waves are made of three smaller waves. In an impulsive wave, five wave patterns exist along with the corrective waves. This pattern is continuous and once you analyse the past and present wave count, you can clearly predict the direction in which the market will move towards in the future. The set of five and three waves will complete the cycle and indicate different time scales. The longest among these waves is called a Grand Super cycle and lasts somewhere between 40 to 70 years. There are a few cycles which last for a span of one year or more, followed by Primary cycles, which last from a few weeks to a couple of months. The minor cycle lasts for a few weeks, the minute wave for a few days, and the smallest wave subminuette lasts only for minutes.
Elliott wave theory is incomplete without an observation of the human psychology that results in forming the patterns. On observing the stock market behaviour, it is evident that investors can also monitor these patterns and make their investment decisions accordingly. You can use this theory to draw a parallel between existing market situations and the prescient changes in the market. Utilize the wave theory and determine the position to take in market share in the coming days. This will help you in avoiding capital loss and gain higher benefits with the aid of wave theory.
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