Why Does Anyone Use Elliot Wave Theory At All?

[limitdown]

to continue to make the Elliot Foundation popular,

why else?

 

[MRWSM]

Entertainment purposes only. Definitely would not trade on it unless you want to lose money.

I only try to keep track of really long term waves here on my site. Anyone notice yesterday how we had resistance on the QQQ at 37.93 for half a day? I've had that number on my site for most of 2003.

http://www.geocities.com/wallstreetmoney1/Ewave.html

 

[range]

EW was very profitable in the mid-1980s. At the time, Prechter was the EW guru, and his calls were fabulous until the '87 crash. Since then, Prechter has been off, and it seems that EW has not worked as well for anyone.

Like a number of other market disciplines, things work for a while, and then they don't work for a while. The trick is to focus early on what is working now. EW will have its day in the sun again, some day.

 

[formikatrading]

There are some people like Robert Miner who employ a less strict application of EWT. I have no idea of Miner's track record but I have heard a few traders talk favorably about his book, Dynamic Trading. Still, his strategies may be a little much for me. I subscribe to the KISS principle.

Quote from range:

EW was very profitable in the mid-1980s. At the time, Prechter was the EW guru, and his calls were fabulous until the '87 crash. Since then, Prechter has been off, and it seems that EW has not worked as well for anyone.

Like a number of other market disciplines, things work for a while, and then they don't work for a while. The trick is to focus early on what is working now. EW will have its day in the sun again, some day.

 

[dbphoenix]

The theory is helpful to beginners who are looking for an understanding of basic market principles, e.g., that in a buying "wave", there will come a point at which those who bought early will want to take at least some profits, and that, if the trend is a solid one, the public will be given an opportunity to buy into the trend, creating the second "wave". When profits are inevitably taken again, latecomers will buy in. If there are enough of them, a third wave will ensue. However, at this point, everybody's bought, and there's no support under the market. The same sort of dynamic applies to the H&S.

But when it comes to calculation and counting, we pass through the looking-glass.

Therefore, keep the theory and toss the hype.

 

[They]

Here is a mechanical E-wavers url:

http://www.symmetrading.com/Products/ProductsMain.htm

He claims his mechanical system is the best commercially available trading system in the market. If you can prove otherwise he will give you his system.

 

[marketsurfer]

Quote from JT47319:

Now, I've done a cursory inspection into EWT and personally found it wanting. I think maybe his basic theory on creating a basic structure of price movement that incorporates the market participants psychology is sound, but only in the most basic sense and certainly not realistically tradeable (bull or bear market) and useful only as a framework.

exactly. TA is similar though less subjective at times. for more indepth studies of EW see mastering elliott wave by glenn nealy.

surfer

 

[dbphoenix]

Quote from They:

Here is a mechanical E-wavers url:

http://www.symmetrading.com/Products/ProductsMain.htm

He claims his mechanical system is the best commercially available trading system in the market. If you can prove otherwise he will give you his system.

If you can prove otherwise, why would you want it?

 

[valleyvintner]

Quote from JT47319:

Now, I've done a cursory inspection into EWT and personally found it wanting. I think maybe his basic theory on creating a basic structure of price movement that incorporates the market participants psychology is sound, but only in the most basic sense and certainly not realistically tradeable (bull or bear market) and useful only as a framework.

Other small gripes is that he centered his work almost exclusively on the Dow and never hinted that it might apply to futures. Not to mention, he was also a mystic who believed in numerology.

Elliott was both an accountant and a numerologist? Even so, the fact that Benoit Mandelbrot appears independently to have reached conclusions quite similar to Elliott persuades me that the failings of EWT are in the practitioners rather than the theory.

Elliott's Wave Principle is essentially correct. The problems arise when people treat their personal wave count as if it were a road map which the market must inevitably follow. EW may be a roadmap but it's a map fraught with detours and signs saying, "Caution: Bears working." What looked like an Impulse Wave One on Monday can turn into a Corrective Wave B by Wednesday. If you know that and you're prepared to amend your map, EW can be helpful. I think it's especially good for estimating future support/resistance because the Golden Ratio (0.382, 0.50, 0.618, 1.618, 2.618 etc.) appears so frequently in every chart. But you have to be flexible. Hybrid TA/Quants like me try to find "confluence" in EW studies - instances where different time frames give the same common target or turning point. And even then you have to be ready to revise if the market shows you something has changed.

 

[nkhoi]

use EW with tight stop until you catch the big one, that should more than make up for all small loss.