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What is Elliott Wave Analysis?

A detailed discussion of Elliott Wave analysis is beyond the scope of this FAQ, however, here’s a brief overview for those of you who are new to this approach to trading…

With a more than 80 year history, Elliott Wave Analysis forms the basis of the trading strategies of millions of successful traders and investors globally. Some of the most well-known traders in the world have credited Elliott Waves for their trading consistency and success.

“…the Elliott Wave theory allows one to create incredibly favorable risk/reward opportunities. I attribute a lot of my own success to the Elliott Wave approach.” -Paul Tudor Jones

In a nutshell, the Elliott Wave approach teaches us that markets, like much of life, move according to the ebb and flow of the collective sentiment of the market’s participants, and that sentiment moves in regular cycles (or “waves”) that can be measured. Measuring these cycles has produced a set of well-defined patterns that can be consistently identified in price data, and these patterns can be used to determine a context for a given market at multiple time scales.

It’s this context that makes it possible to establish a backdrop of probabilities for what the market is most likely to do next. We all know that there are no magic bullets, but the Elliott Wave approach has given an edge to some of the best in the business for decades.

Elliott Waves embody intuitive and time-tested ideas, however, each Elliott Wave pattern has an associated set of rules and guidelines, which together add up to make the technique quite complex and traditionally difficult and time-consuming to master. And, once you’ve become an expert, applying the principles in practice can itself be a time-consuming and tedious process. Until now.

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