WHY is Elliott Wave supposed to work?

Quote from Landis82:

I worked for PTJ as a floor trader and know for a fact that he used it successfully. He also used a lot of fibonacci retracements and "measured-moves" . . . Simple, but effective.

My Wave Count is shown below in the following JPEG file:
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Thanks Landis, appreciate your input. My kudos to you for working for PTJ, you must have been top of your class. Yeah, it could be that PTJ, aka The Man, in my book, (what a phenomenal businessman/trader!), just puts a lot of faith in some basic wave patterns and trades them to the best of his abilities, without trying to overanalyze it. That is likely what I'm trying to do by probing for a reason as to why the waves work.

:(

But hey, it can't hurt to ask right? And if get no leads (I think I actually have one), no harm done.
 
"golden ratio was not due to crowd psychology " the golden ratio is not due to crowd psychology. EW attempts to fit crowd psychology to the golden ratio. The golden ratio is a universal constant that organic growth tends to follow. Pretcher writes all about that relationship ad nasaum in his elliot waves/psychology book-- A good read with some insites on human behavior and mathematical organic growth modelling. That doesn't make EW an objective science, however.

People believe it works, because you can find just about any possible pattern that goes up and down with thousands of reversal pts, and find a way to make it fit the pattern. It's just a zig zag envelope that goes up with pullbacks.

I challenge you to find a stock market pattern over a one hundred years time, where one can NOT find a way to make it fit into an elliot wave pattern; now that is a challenge and possibly a better way to think about why people beleive it.
 
Quote from dtrader98:

I challenge you to find a stock market pattern over a one hundred years time, where one can NOT find a way to make it fit into an elliot wave pattern; now that is a challenge and possibly a better way to think about why people beleive it.
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Good point!
Many so called EW experts arbitrarily label the movement within a pattern to fit the theory.
But what if some devised a method to remove all that subjectivity. Pinpointing the exact beginning and end of every wave since they started keeping records on stock market data, over 100 years ago. Would they be out there, writing books and promoting their methodology to the world, to dilute its effectiveness?
 
Quote from ES335:

It would be great if we could just discuss the why behind the phenomenon.
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If you add 3 sine waves of different frequencies you will see an output that looks very much like a price time series.

Elliot Waves describe price action across one cycle of the longest frequency.

Michael Gur in "The Symmetry Wave Trading Method" went a long way to show the weakness of Elliot Wave counting and to suggest ways to improve counting.

Kase in "Trading with the Odds" has a chapter on using MACD to more accurately count the waves. I think Kase's combination of Elliot and MACD was very helpful.

Gur and Kase are examples of people trying to use computers to improve upon Elliot's work. Why bother, just use more accurate terms borrowed from digital signal processing than from an long past visionary.

The major question is "does knowing what the wave count is help you trade"? If you know the frequency of the dominant and component cycles then you know the wave count. Right? It is so simple! :)

Is all crowd behavior just groups buying and selling at different frequencies?

Elliot is useful to understand how we got to where we are today. However, there are better tools available today for both describing price action and trading.(IMHO)

Good trading...
 
Quote from ES335:

And what are you, the local spell check ombudsman? Amazing what nonsense some people here waste their energy and time on.
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No, just the local wanker detector.
 
Quote from Artie21:



There isn't one successful trader, manager that uses EW. [/B][/QUOTE



Every entry I make is based on it, and believe me it works.
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I receive the Elliott Wave International emails because i came across the website and it was free. I like to learn different trading methodologies to expand my horizon (lol). But seriously from what I have read, and most are right on here, you can fit EW anywhere. EWI tries to mask the EW theory with historical data, but over all i really cant find it very predictable trying to make a future price move. I saw this video on there web site and i understand the principle but it looked as if the guy was just labeling peaks and troughs, as it got further into the video i looked at the bottom of the chart HE WAS LABELING 2001!! Come on he knew the answer through hindsight... anyway most of the time i see an EW prediction 9 times out of 10 it matches a technical study which is far more accurate
 
Quote from kiwi_trader:

No, just the local wanker detector.
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You couldn't detect your way out of a paper bag you moronic half blind bird. Your obnoxiousness is on par with that other idiot nononsense, who I don't see around much anymore, thank goodness. We could use less of arrogant posters like yourself kiwi wanker. Everyone except you has contributed something of interest on this thread, even if it's dissent or support for EW. Try to learn something from these posters, it'll do you good.
 
It works because of many factors. The big one is mass psychology. It is just a tool to help with other confirming factors. I hope most people dont believe it that way it will continue to work and provide me with a good income everyday. Nothing in the markets is 100%. Keep it simple with the ew anaylsis and you will be light years ahead of most traders.
 
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