What is the Wave Principle?
A brief introduction to
the Principle and its applications.
A short summary of the theory behind
the Wave Principle
Basic Tenets of the Wave Principle
A condensed course on the
rules and guidelines of the Wave Principle.
"How to use" section for
the Wave Principle?
The Wave Principle is,
first and foremost, a detailed description of how markets behave.
Itís a study of how human beings interact collectively in the
trading arena. Itís also called the purest form of
technical analysis because it objectively measures the
true market impetus.
you mean by the "true market impetus"?
Elliott wave analysis
measures investor psychology, which is the real
engine behind markets. When people are optimistic about the future
of a given issue, they bid the price up. When they are
pessimistic, they bid it down. The same is true for the indices:
They (the indices) reflect aggregate social mood about all the
stocks in that particular group.
Two observations will
help you grasp this: First, for hundreds of years, investors have
noticed that events external to the market seem to have no
consistent effect on the marketís progress. The same news that
today seems to drive the market up is just as likely to
drive it down tomorrow. The only reasonable conclusion is
that the markets simply do not react consistently to outside
Second, when you study
historical charts, you see that the markets continuously unfold in
waves. Those waves form 13 basic patterns that
repeat themselves again and again.
Once you understand
these two points, itís clear that Elliott wave analysis measures
the force that truly moves the markets: Investor psychology. The
market has a life of its own and the best way to predict its
direction is by objectively watching the waves.
you saying to ignore the news?
Yes. Using news to
forecast market direction is futile. Your goal is to predict the
behavior of people. If the tools you work with measure
something other than the behavior of people, youíll be at least
one step removed from reality.
will watching waves help me invest?
Using Elliott waves is
an exercise in probability. An Elliottician is someone who is able
to identify the market structure and anticipate the most likely
next move based on our position within the structure. By knowing
the wave patterns, youíll know what the market is likely to do
next and (sometimes most importantly) what it will not do
next. By using the wave principle, you can be sure of the highest
probable moves with the least risk.
I am new to Elliott, what should I do?
You should become
familiar with the wave principle. For
example, our Educational
Section includes online publications designed to introduce
you to the wave
theory. Although still in production, soon we will offer streaming
videos on the wave principle featuring our expert analysts.
Outlook products should I read?
International is one of the world's largest providers of market
research and technical analysis. We provide 24-hour commentary on
the major global markets for leading corporations and financial
institutions around the world. Elliott Wave International offers a
complete package of short-, intermediate- and long-term analysis
designed to assist you in developing your market strategy. Below is a list of the Outlook products we offer with a brief
Currency Outlook: provides a detailed commentary and
forecasts for the major dollar and cross rates along with
opportunities in minor rates.
Interest Rate Outlook: provides monthly, daily and
intraday forecasts for U.S., Europe, Asia/Pacific and Emerging
The World Stock
Markets Outlook: provides comprehensive analysis on
all the major indices in North America, Europe, Asia/Pacific, as
well as some individual equities.
The Global Energy
Outlook: provides detailed analysis of the major
energy markets for institutional hedgers and traders.
Metals Outlook: forecasts prices in all time frames
for the world's base and precious metals markets.
Commodity Outlook: forecasts prices for the key
commodities in the Agricultural, Softs and Livestock Markets.
I have to give you a
warning. Learning about Elliott waves will give you a perspective on
the markets that is both eye-opening and calming. It will give you a
true understanding of how the markets work. Hereís an excerpt
from a letter we received:
"Three days ago, I had
the opportunity to sit down and watch real-time market activity.
After a while it hit me like a brick that I was watching the
beginning of a major decline unfold before my eyes at multiple
degrees. It was literally amazing to watch the degrees subdivide
in real-time at the various time frames. Several cohorts walked in
when I informed them that the bottom was going to fall out of the
market within a matter of hours. When it actually happened they
were dumbfounded (but I wasnít).Ė
Dean F. Ellison, CA
So, youíve been warned.
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