Wave after wave

You can ask any analyst Elliott waves, where the market, and it certainly will give you a prediction, based on the calculation of pulse 5 and 3 corrective waves, along with a note from the current situation, like "We are in wave c of iv larger waves within the 3 big wave. " Analysts focus on the calculation of Elliott waves to predict where the market. However, the actual calculation of Elliott waves will be known only after the wave has already formed a combination that often little useful to the trader, even if the calculation is correct. As traders, we strive to find the entrance to the market, where there is a high probability that the market will go in one direction and not in another. Moreover, we try to minimize our risk, finding entry points into the model, so that the difference between our entry level and level of refuting the model was as small as possible.

Does this mean that the Elliott Wave Principle has no practical benefit to traders? Quite the contrary. Elliott Wave Principle is extremely important for traders, however, if you're using it to trade, rather than to predict future direction.

AWE-Elliott model
Often transmitted by the key component of Elliott Wave Principle is that the successive waves correspond to geometric form. Successive waves sootnosyaschiesya in geometric form, are the key to a market structure based on simple ratios of equality.

When the successive waves of attain equal (AB = reliance reliance CD), the market creates what we call AWEmodel Elliott (Alternate Wave Equality - Equality of successive waves). The practical benefit for traders is that the AWE-Elliott model is repeated continuously in highly liquid markets in all stages of the trend. Four types of AWE-Elliott model are shown in Figure 1.


Figure 1 presents the following types of AWE-Elliott model (left - right): impulsive Bull, mismatch Bull, impulsiveness bear, bear mismatch.

In AWE-market models, Elliott has already formed a point of ABC. You keep track of whether the market and when to reach the point D. If the market reaches the point D, and AWE-held model, the market develops. If the model fails, it is a sign that the market will continue to move in the direction of support CD. We use "WaveTracker" graphics package "eSignal" to automate the process of determining AWEmodeli Elliott. Each of the models in the following examples were identified in advance using the "WaveTracker".


Examples
In highly liquid markets, such as the S & P E-Mini, AWE-Elliott models are repeated with a high degree of accuracy. Figure 2 shows an example of corrective bear AWE-Elliott model for a 30-minute schedule of S & P E-Mini.

Please note that reliance AB exactly equal (to teak) in support of CD +12.00 points. This example also shows the importance of all sessions, because the point A in the AWE-model (1179.25) was recorded on Globex at 1:30 AM. Traders who pay attention only to the day's session, missed the point of this model. In Figure 2, at the time of the achievement of 1172.25, "WaveTracker" highlighted the level of 1184.25 as a potential sale, and gave us 3 hours for further analysis. Based on price action, there were several additional reasons why the 1184.25 was the point of sale. This model helps you identify such conditions, where trade has a high likelihood of success with minimal risk of 6 ticks or less.

You can use the AWE-Elliott model to place the transaction on the exact maximum of the exact minimum. Demonstrated by the fact that happened on 13 October 2004.


Figure 3 shows that the market was opened up to trade directly in the point D corrective bear AWEmodeli Elliott at 1127.25 (supports AB and CD, made up +11.50 points were equal to within 1 teak). This was the point of sale.


Figure 4 shows that the market has moved down to 17.75 points to 1109.50, forming impulsive disservice AWE-Elliott model, which supports AB and CD are exactly equal to 10.25 points. Then, you can see that the point C (1119.75) coincided with a point D in the model of Elliott AWE-less level (AB = CD item in +2.50 in teak). This was also the point of sale.

The proof is in the market
If this is your first exposure to AWE-Elliott model, you can treat with skepticism to the examples demonstrated, suggesting that this random isolated fragments. However, AWE-Elliott model, suitable for trade, there every day. The proof of this is on the market. The market is never wrong - it just is what it is, no more, no less, and when the market repeats these patterns every day, the proof is indisputable.

Is AWE-Elliott model is "the Holy Grail cup"?
So, whether AWE-Elliott model is "the Holy Grail cup"? Of course not. AWE-Elliott model simply is a key component of the market structure and market structure, in turn, is a key component of the price action in the market. AWE-Elliott model is constantly occur during the trading day. In half the cases it works, half does not. Failure AWE-Elliott model is also important to continue the movement in the direction of previous motion. The practical question for the trader is what AWE-Elliott models are candidates with a high probability to trade with low risk. The answer is connected with a full understanding of the other components of the price action, which coincide with the AWE-Elliott model. When one or two aspects of technical analysis are consistent with the AWE-Elliott model, the probability of response model significantly increased. If you are well prepared, you can place close to a deal with the stop order, which for the S & P E-Mini rarely exceed 6 ticks. If you are wrong, it will not be a serious loss for you. In the above schemes, you can estimate the ratio of return for risk.

Trading, not to predict
Elliott Wave analysts rely on the calculation of wave propagation to predict where the market. Successful traders do not foresee - they sell. Successful traders have the advantage in the markets, and they think in terms of probabilities. There is only one "Holy Holy Grail" in the trade, which is to find their advantage in the markets and learn to trade them consistently with the proper management of money. AWE-Elliott model, combined with other components of the price action, give you the advantage in the markets. The format of this article can not fully explain the other key components of the price action that can be used to combine with the AWE-Elliott models. If you can learn to think the categories of probability and consistently deal with the proper discipline in the management of money, then you are on the path towards becoming consistently profitable, and thus a successful trader.

Forex Magazine
based on www.esignaluniversity.com