Hi, I’m Kamepoko.
Elliott Waves, are you using them?
If you can use it, it is so profound that it is no exaggeration to say that you can keep winning.
Frankly speaking, I am convinced that learning Elliott Waves is far more likely to lead to winning than searching for the holy grail of indicators or buying all kinds of automated trading systems.
After all, you can win by learning this kind of knowledge, rather than trying to make money by having fun from the beginning.
Many of you may be somewhat familiar with Elliott Wave, but when it comes time to put it to use in practice, it is difficult.
In this time,
What are Elliott Waves?
How to use Elliott Waves in practice.
I will explain this.
So, let’s get started.
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What are Elliott Waves?
First, what is an Elliott Wave?
Elliott Wave is
The market price is propelled by 5 waves and adjusted/corrected by 3 waves.
It is said that the market has a certain pattern and is formed by repeating such cycles.
In actual market prices, however, it is rare to see such a clean transition.
Basically, the three waves are the easiest to extend, both up and down, so the goal is to aim for that point.
There are several types of waves in Elliott Wave, and if I start explaining them in detail, this article would be about 100 million words, so I will skip that part lol.
In this article, I will explain only what you need to know.
Practical Uses of Elliott Waves
In this section, I will explain the practical use of Elliott Waves.
In order to get 3 waves, whether up or down, it is necessary to identify 2 waves.
In other words, if you can identify the second wave, you can take the third wave.
However, it is difficult to identify this 2-wave.
There are two points for identifying the second wave.
- Big push back
- Push back in a clean trend
①Big push back
The first point to identify the two waves is the big push back.
When there is such a rise, many people end up with a buy position on a small pushback like the one below.
If you do so, you end up losing money.
If you are holding a position for the purpose of short-term scalping, and you are entering and closing a position based on your understanding of the market trend, that is fine, but if you are entering at such a spot in an attempt to take the three upward waves, you need to review your position as soon as possible.
In my case, I would wait for such a big push back and then consider entry for three waves.
[Supplemental] Can we tell where the pushback is?
By the way, where does this big push back stop and where does the third wave begin?
As it turns out, no one knows.
However, we can make predictions.
I mainly use the important horizontal line as a reference point for push/return positions, but that requires environmental awareness.
Basically, we want to take positions where we have the advantage.
In other words, we buy low and sell high.
Sell at high prices and buy back at low prices.
Since our objective is not to trade but to increase our assets, it is important to refrain from entering a position if the price does not come to the pushback position you are predicting.
You may feel that it is a lost opportunity, but you do not need to worry about it because your asset has not decreased.
Opportunities will come up again and again, so wait patiently for them.
②Push back in a clean trend
The second key to identifying two waves is to push back in a clean trend.
After a push back in such a trend, a 3-wave is likely to occur and is characterized by a tendency to extend.
Incidentally, these two waves also have Elliott waves, forming up to three waves in the short term.
The timing of the end of this descending 3-wave is easy to switch to an upward movement afterwards.
It is important to note that a clean push back is important, and an adjustment like the one below often does not lead to a subsequent extension.
In summary, the key to identifying the two waves is to look for a big pushback and a pushback in a clean trend.
What It Takes to Use Elliott Waves
As I mentioned a little earlier, the ability to recognize the environment is essential to using Elliott Waves.
I use multi-timeframe analysis to recognize the environment, but if you want to know more about it, please check out my market analysis article.
I recognize the most recent high/low, the previous high/low, and the price area where the trend turned as the main important horizontal lines.
Important to avoid dismay
After confirming the up 1 wave, you need to wait until the critical horizontal line where you are predicting the return of the 2 wave.
In other words, until the second wave returns to the price area you are targeting, there is little need to drop to the lower leg and check the chart any further.
Rather, we recommend that you do not drop to the lower leg at the halfway point and check the chart.
This is because looking at the chart of the lower leg will cause you to be at the mercy of short-term price movements and enter where you should be waiting, triggering repeated dismay.
Tidbits on Elliott Waves
Finally, here is a little trivia.
The three waves of an Elliott wave often extend as far as or further than the first wave.
This means that if the three waves are not fully extended for the price range of the first wave, we can look for a trend on the short-term legs and aim as far as the target gain line.
However, note that if the important horizontal line of the leg above it is nearby, the price may rebound and fall.
These are the practical ways to use Elliott Waves.
Summary
How was it?
In this article, I summarized Elliott Waves.
I hope this article has been of some help to you.
See you again in the next article.
