Forgive me if this is a naive or stupid question, but I'm just starting out with trying to learn Elliott Waves (EW) using Glenn Neely's book, but its a huge time commitment, so I dont want to spend months practicing and learning it just to find out it only works 20% of the time. So, can anyone who has used Elliott Waves successfully help me out by answering the following questions: 1. What percentage of the time are waves accurate ? 2. Do you use any software to generate the wave counts/classes ? 3. How much guess work is involved with using EW in your opinion ? 4. Is there anything more accurate or better than Elliott Waves ? Any other experiences or tips you can provide would be most appreciated. Thanks !
I've watched EW gurus being interviewed on FNN/CNBC and have been reading posts/trades of EW disciples on message boards for just over 20 years now. This includes so called "experts" and guys who had spent a tremendous amounts of times studying EW "rules" and they know as much about EW as anyone. On the Raging Bull site there were a couple dozen or so guys who shared trading thoughts and idea of which almost all were EW guys. Over the course of several years all but one or two abandoned EW. These were otherwise smart guys with trading experience and tons of EW "knowledge". They just couldn't make it work. One of the issues is the subjectivity of what constitutes a "wave". Which leads to more subjectivity of where are in the wave count. Hence the constant and non stop debate and discussion among wavers on the various possible wave counts. Hell, as a rule wavers can't seem to even be able to agree on whether they should be looking at the "bear count" or the "bull count". Then of course there are all the "alternate counts" they also can't agree on. EW depends on there being a relatively rigid "order" in price structures. Five wave trends trends three wave corrections and the like. Unfortunately it doesn't always work like that. So then they have to force fit the waves to fit the EW rules. Perpetuating the subjective viscous circle of almost infinite wave count possibilities depending on who is doing the counting. I personally have NEVER seen anyone consistently use EW in a manner that would make me want to study it. Now there very well may be someone somewhere out there that is able to use EW, in some form or another, to good affect. I'm just saying I've never seen it. Ultimately it won't affect me one way or the other if use decide to learn EW or not. My humble advice, based on two decades of observation, is that your time would be better spent elswhere.
Thanks Lucrum ! Glenn Neely's book specifically addresses the wave count controversy, and he gives exact rules on how to calculate everything. The rules are extremely complex though. It made me wonder how the hell he came up with them (Neely says all the rules for generating counts have been thorough testly by him, but I'm not sure how true that is ). To me, its a case of the fox guarding the hen house if you get my drift. I've yet to see anyone say they've used his book (or any Elliott Wave book) to make any profits. I'm not precluding the possibility of them being out there, perhaps they are making money secretly or not ...
Neely took over 10 years to write his first book due to his testing and reseach..... There's some useful stuff in there....
Ignoring the fact that there is no compelling reason for various instruments to follow the structures of Elliott Even comparing discussions of EW followers, they use a lot of "seems" and "I think" in their interpretations. ANd they often have different impressions between themselves of the same chart. As always, show definitive, audited, verifiable proof (10 years over hundreds of instruments, not 2 weeks of 1, such as in some magazines or websites). Without proof, everything in trading is an unsubstantiated idea.
A Complex method is not always better than a Simple method. This is particularly true when it comes to trading. There are much simpler methods that exist for trading the markets. Unfortunately, that's about as far as I can go on the subject. However, I will suggest you set as your goal to look for SIMPLE methods that work across ALL MARKETS and ALL TIMEFRAMES. Otherwise, the method will more than likely fail.
I'm not a EW fan, but one of it's biggest advocates Bob Prechter called the stock market crash. Interestingly, he said there was far too much credit given out which fueled the bubble (for sub-prime mortgages lol?). Watch this vid: http://www.youtube.com/watch?v=SjS60TaD_J8 All in all, I think EW could be utilized fairly simply... meaning don't waste to much time "studying" it. Just note 3 pushes (higher highs, higher lows) and recognize that when the market tries to make that last push it fails to make a new high, and therefore the trend reverses (at B). On the way from B to C it also breaks support at 4. Obvious likely reversal pattern applicable in day and swing trading. Keep it simple.
I never concern myself with counting the waves,as others have said there are too many variables.BUT i do pay very close attention to the pivot prices as sup/res. For example,if you take the week Aug 3rd-7th (SP500). The week low (mon 3rd) was 990.2, The week high (fri 7th) was 1018.0. 990 and 1018 are both elliott wave pivots.Last week price was contained between the 2 pivots.Do you really need to worry about waves if your signal is a close above/below the pivot? If the market breaks 1018,then next resistance is 1034. If 990 breaks,then next support is 961. I am using other methods to determine whether 1018 is an intermediate top and don't worry about the wave count. So it's never a waste of time studying various ideas if you can take something away that becomes part of your own setup.Maybe too many traders are looking for an out of the box system or a magic indicator.But yes,simple is best,as others have said.
I never met someone who profitably trades with EW only. However, I met some successful traders using them as part of their analysis. Still, I haven't seen anything convincing yet. Alex