Understanding The Elliott Wave Theoryby Nagaraj Rudragouda Freelance SEO Expert
Elliott Wave theory was introduced in the 1920's by Ralph Nelson Elliott. He was born in the year 1871 in Marysville, Kansas. Elliott enjoyed a long working life in the field of accounting and business practices for several companies. Later he started studying the patterns of the stock market. Elliott scrutinized the half-hourly, hourly, and daily as well as weekly, monthly and annual charts of the numerous indexes and went through about 75 years worth of stock market behavior. He studied the repetitive wave patterns and came to a conclusion that such patterns were a result of the psychology of the people. Based on these wave patterns he could make stock market predictions. This theory is now popularly known as the Elliott wave theory.
The Elliott wave theory posits that human collective behavior shifts between optimism and pessimism in a predictable natural sequence. It also states that this sequence can be seen in market price movements. Due to the predictable nature of the wave sequences of the Elliott wave principle, one can forecast the nature of the market by its natural sequence of action. This ability to predict the actions of the market allows one to be a profitable trader.
The Elliott Wave theory measures the investor-based psychology which forms the actual fueling engine of the financial markets. Every time when the people are optimistic on an issue, the bidding price goes up and when they are not confident the contrary happens. The Elliott Wave theory is an exercise dealing with probability. A person who practices the theories of Elliott Wave will be easily able to recognize the structure of markets and would be able to anticipate when the next move is likely to happen. Once you understand the wave patterns you will be able to predict what the market is going to do next. When you use the Elliott Wave theory, you find the highest probable moves while assuming the most minimal of risks.
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to understand the rules of the theory and to understand how to apply them to a
price chart in the most objective way possible. It is also very important to
understand its limitations. Aside from the fact that up trends are harder to
forecast than that of the down trends, it must be understood that, sometimes,
the Elliott Wave count cannot be objectively determined as there are a lot of possibilities
which can exist. All these can be
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Created on Jun 18th 2021 01:36. Viewed 139 times.