Let's look at swing trading with Elliot Wave in more detail


Elliott Wave theory is named after Ralph Nelson Elliott, who concluded that the markets moved in a repetitive pattern of waves and was a reflection of human nature.

He attributed this action to the mass psychology of the market which never changes and can therefore be predicted with scientific accuracy.

Elliott Wave patterns follow a specific pattern that the markets move up in a series of 3 waves and then down in a series of 2 waves in a bull market. The 3 wave impulse and 2 wave corrective sequences form the basis of his method of a 5 Wave impulse pattern, with the reverse occurring in a bear market.

In Elliot wave theory there is also a use of the Fibonacci number sequence which is specific retracement levels to help calculate the waves.

So by trading these waves, a forex trader can look at his forex charts and swing trade with Elliot Wave and make consistent profits from his forex technical analysis.

It's a scientific way of making profits according to Elliot waves and his disciples ? so does it work?

The answer is it has to be one the biggest myths of forex trading that Elliot Wave Theory can lead you to currency trading success (lets ignore the fact that there is no hard evidence that Elliot made any money from his own theory) and look at why the theory is flawed.

1.If it's a scientific theory:

It should be objective!

If human psychology can be predicted with scientific accuracy it should tell you exactly what to do, but of course it doesn't ? it leaves everything to your subjective judgment, so it can't be a scientific theory ? it's a total contradiction in terms.

You have to look at the waves and decide what happens next - does that sound scientific to you?

2.Human Psychology is not scientific!

Of course it isn't and neither are currency markets.

If there was a scientific theory that allowed people to predict prices in advance there would be no market- as we would all know the price beforehand.

Forex markets move on differences of opinions and these cannot be measured scientifically ? This is common sense.

3.The Fibonacci Number sequence

This number sequence is loved by the far out investment community and was developed in the 12th century by Leonardo Fibonacci. It was NOT developed for the purposes of trading forex markets though - but was developed to solve a problem posed by the copulation of rabbits!

In fact I am sure if Leonardo Fibonacci was around today, he would be bemused by the way his theory is used by the believers of Elliot Wave.

So there you have it:

A scientific theory that is not scientific at all and is totally illogical.

There are many people selling the myth of swing trading with Elliot wave and how you can to but if it was as successful as they claim and they can predict the future, why would they be telling you?

It's a good read but if you want to trade and use forex technical analysis to generate trading signals pass this one by and keep one fact in mind:

Trading is a game of trading the odds and not prediction.

You can win trading forex markets, however appreciate that you need to trade the odds to win and forget predicting the future.

If you understand this you can get a forex trading system that can make you a lot of money. Leave Forex trading with Elliot wave to the dreamers and deal with the reality which is:

There are no short cuts and prediction doesn't work ? work at trading the odds and you have a far greater chance of achieving currency trading success.