Elliott Wave Theory

The Elliott Wave Theory (a.k.a. the Elliott Wave Principle) is a technical analysis system and risk management system for trading and investing in well-traded financial instruments.

The Elliott Wave Theory is applicable to stock market indices, single stocks (if well-traded), commodity futures, forex pairs, bonds, and more.

The key tenets or suppositions of the Elliott Wave Theory is that the financial markets move in recurring fractal patterns due to the underlying mass psychological mechanisms and tendencies exhibited by large crowds.

Because of the recurring nature of the fractals, an Elliott Wave practitioner can supposedly deduce the current market structure based on the past, and thus make an educated guess about what is more or less likely to occur next, as well as determine if the current market environment is unconducive to trading at a certain time frame.

To learn more about the Elliott Wave Theory, please read the following:

In our technical analysis work, we use our Extended Elliott Wave Theory, which is the standard theory (as divulged by R.N. Elliott – he might’ve used more rules than we know about) reinforced with a large amount of extra rules and guidelines, which allows for more accurate and definitive Elliott Wave analysis work.

What is technical analysis?

Technical analysis is an umbrella term for studying existing price data for a particular financial instrument or index in order to attempt to predict where it might trade in the future, as well as carrying out risk management consideration.

Here are some different technical analysis systems:

  • Classical TA (trendlines + patterns).
  • Dow Theory.
  • Elliott Wave Theory.
  • Candlesticks (and candlestick patterns).
  • Moving Averages.
  • More complex mathematical indicators.

Our analysis are carrid out by the above systems (and a few others), with the exception of Dow Theory. Our main method is the Elliott Wave Theory, or rather our Extended EWT.