Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader


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Konstantin Boykachev

CEO Proforexea LLC

Honest Coder

Professional Trader

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How to do a wave analysis of the Forex market, training, video

Forex market wave analysis

As you know, the analysis of the Forex market can be carried out by fundamental and technical methods. Wave analysis of the Forex market, which has been very popular for many years, is an important component of technical analysis and, if used properly, allows you to make serious profits by tracking the wave movement of the market and correlating it with other elements of technical analysis: support and resistance levels, indicators and oscillators. …

Ralph Eliot is rightfully considered the founder of the wave analysis of the Forex market, who in 1946 published his book on wave analysis. It is she who is still used by most traders to predict market movements. It should be noted that Eliot wrote not only about trading on Forex or other exchanges, but revealed general patterns of social processes, which, as his twelve-year observations showed, have a wave nature and change according to certain rules, which the scientist described in his book.

What is Eliot’s theory? Here are the thesis conclusions:

1. Any larger movement consists of the same smaller movement.
2. The wave has a trend component, which is replaced by a correction.
3. The trend, in turn, consists of five waves, which were designated by Eliot with the numbers 1,2,3,4,5.
4. Impulses 1,3,5 correspond to the trend movement.
5. Waves 2,4 are trend corrections that can have different depths.
6. Correction, in turn, consists of waves A, B, C, two of which have the direction of the correction itself (ie directed against the trend), and one is a correction within the correction, ie. in its direction corresponds to the main trend.

How to do a wave analysis of the Forex market? Or where to get training?

At first glance, Eliot’s theory may seem simple, and the presence of waves of different directions, which replace each other, can give an excellent idea of ​​the further movement of the price chart after the next impulse or correction.

However, the use of the wave theory in practice is often problematic, since novice traders do not know how to do a wave analysis of the Forex market in practice and do not have proper experience in this direction.

What problems do newbies often face, and what are they associated with?

First, the market moves without any pauses or stops. One wave replaces another, impulses constantly follow corrections and vice versa. At the same time, larger waves include smaller waves, which often confuses the person in front of whom the price chart appears.

Secondly, it can be very difficult to distinguish a correction from a trend, since both the magnitude of the impulse and the depth of the correction can be different. The duration of a particular movement can also vary over a fairly wide range, which disturbs the overall picture and often confuses the trader. The classic drawing, which is often given in books on wave theory, is extremely rare in practice, and therefore, to understand the concept of the market and the types of possible movements, it is necessary not only to learn about the basics of the theory, but also to undergo training in wave analysis in the Forex market.

How to get training in wave analysis and where to get the information you need?

Today, training in wave analysis in the Forex market can be completed both online and by visiting offline courses. They are conducted by many trading schools, directly by Forex brokers, private traders with extensive experience, and so on. It is better to start training with an independent study of the basics, or find courses for beginners, where they will talk about the fundamental basics, and only then they will begin to explain the intricacies of applying wave analysis in practice.

You can also get proper information on the wave analysis of specific pairs on the Forex brokers’ websites, where reports from professional analysts are presented. They can be successfully used in Forex trading, combining them with their own trading systems, individual indicators or elements of fundamental analysis.

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