Short Introduction to Elliot Waves as a Resource in Forex Trading.
The Forex market has the largest volume of trades per day among
all the capital markets you can trade. This characteristic
together with it's high leverage and around the clock trading
schedule makes Forex very attractive for traders around the
world.
Once you enter the world of forex trading you will realize that
this market has strong trends that seem to follow a repetitive
pattern in all the different time frames you can use to analyze
the market conditions.
Ralph Nelson Elliot also observed this and after analyzing a
great number of charts he discovered in the late 1920's that the
markets move in a repetitive manner that is far away from being
a totally chaotic behavior. The markets move in cycles and they
reflect the mass psychology of the active elements participating
in them, with a characteristic ebb and flow that can be divided
and analyzed as "waves" of this active elements psychology in
their daily dealing with the markets.
But Elliot not only discovered the repetitive nature of the
markets cycles but he also realized that this patterns had a
fractal nature. This means that the patterns not only repeated
with time but that in a given period of
time the characteristic
wave pattern would repeat at different scales (days, hours,
minutes).
The Elliot wave pattern can be divided in five constitutive
waves with the first of the waves called the impulsive wave. The
fractal nature if this waves was evident to Elliot when he
observed that in every impulsive wave, when observed at a
smaller time scale he would find the characteristic five waves
of the pattern he had found and if he now looked at the
impulsive wave of the smaller impulsive waves in an even smaller
scale he would find again five ways, etc.
Elliot waves are very important in Forex because he identified
the specific patterns that you can observe when trading this
market and considering the repetitive nature of this patterns
you can make a pretty accurate forecast of what the markets will
do next. Giving you a huge advantage in your daily encounters
with the currency markets.
About the author:
Adrian Pablo is a freelance writer with articles published in a
number of places. Get a free report on Fibonacci Trading and
learn more about the world of trading , visit:
http://www.1-forex.com
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Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest / trade in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.
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