Are Elliot waves too subjective to be objective?

Discussion in 'Technical Analysis' started by GordyG, Aug 21, 2024.

  1. GordyG

    GordyG

    #21     Aug 21, 2024
  2. poopy

    poopy


    You're offering him as an authority. If not, then why mention his name?
     
    #22     Aug 21, 2024
  3. GordyG

    GordyG


    An authority on a theory that I'm very sceptical on, you mean?

    Was Elliot FOS aswell?
     
    #23     Aug 21, 2024
  4. poopy

    poopy

    You're a skeptic but arguing for its use in your first post and now asking if they are both FOS?

    Yes, yes he was.
     
    #24     Aug 21, 2024
    taowave likes this.
  5. GordyG

    GordyG

    Here's the title again in big bold letters. LOL

    Are Elliot waves too subjective to be objective?
     
    #25     Aug 21, 2024
  6. MarkBrown

    MarkBrown

    The theory's retrospective nature and its tendency to be "correct" only after the fact are significant drawbacks. Here's a more detailed exploration of these issues:

    1. Retrospective Bias and Recalculation
    • Issue: Elliott Wave Theory often seems to fit historical data perfectly, but this is because it allows for constant recalibration. When an initial wave count or prediction doesn't pan out, the theory provides a way to reinterpret the pattern, adjusting the wave count to fit the new data. This means that the analysis is often "correct" in hindsight but fails to provide reliable predictions in real-time.
    • Implication: For a trader, this recalculation can be frustrating because it undermines the predictive power of the theory. If every time a market moves contrary to the wave count, the count is simply adjusted, then the theory is always right, but only after the fact. This makes it difficult to make actionable decisions based on the theory since the guidance it provides can change dramatically after the market has moved.
    2. Subjectivity in Wave Interpretation
    • Issue: Another problem with Elliott Wave Theory is its inherent subjectivity. Different analysts might interpret the same market data differently, leading to various and sometimes conflicting wave counts. This subjectivity adds another layer of uncertainty, making it difficult to trust any single wave count as a definitive guide.
    • Implication: This lack of consistency can lead to confusion and indecision. A trader relying on Elliott Wave might find themselves second-guessing their analysis or needing to switch strategies frequently, leading to missed opportunities or poor trading decisions.
    3. The Problem with Predicting Corrections
    • Issue: The theory suggests that corrections are supported by buyers on the dips, but, as you mentioned, this is only apparent after the correction has occurred. By the time the correction is evident, the market may have moved significantly, making it difficult to capitalize on the prediction.
    • Implication: For practical trading, this means that Elliott Wave Theory might not offer much real-time value. If the theory only signals corrections after they have happened, then it doesn't provide an edge over other, more straightforward technical analysis methods that also identify support and resistance levels.
    4. The Illusion of Precision
    • Issue: Elliott Wave Theory often gives the illusion of precision because of its detailed wave counts and structures. However, this precision can be misleading because, as you've pointed out, the theory can be recalculated endlessly to fit the latest price movements.
    • Implication: This perceived precision can lead traders to overestimate the reliability of the analysis, potentially leading to overconfidence and poorly timed trades.
    Conclusion
    The fundamental problem with Elliott Wave Theory is that it often appears to work only in hindsight, making it more of a descriptive tool than a predictive one. For traders who need to make decisions in real-time, this can be a significant drawback. The theory's reliance on recalculating wave counts after the fact undermines its usefulness as a practical trading tool. Instead, traders might prefer methods that offer clearer, more actionable signals based on present data rather than constantly shifting interpretations of past movements.
    [​IMG]
     
    #26     Aug 21, 2024
    Sekiyo likes this.
  7. SunTrader

    SunTrader

    Guess I would ask, why start a subject topic which you are sceptical about? Point?
     
    #27     Aug 21, 2024
  8. poopy

    poopy


    So the pro is that this dude in the UK uses EW. what is the point of this thread?
     
    #28     Aug 21, 2024
  9. GordyG

    GordyG

    Well there's this ;

    "After graduating with an honours degree from the University of Exeter in physics with geophysics, he spent two years working in oil exploration in the jungles of Papa New Guinea, living and working with local tribes and beginning to formulate personal theories on collective emotional behaviour. These have enabled him to develop a unique method of analyzing behavioural patterns in the markets. By his 30th birthday, Murrin wanted to be running his own business. In preparation, he spent the next seven and a half years at JPMorgan gathering skills in price prediction and modelling"

    -----------------

    I have no idea how good a trader he is, but quite a few of his geopolitical predictions have come true over the last 10 years, and as such I feel he certainly offers more than shouty attacking posts on Internet forums, at least.

    Do you have any opinions yourself on the topic?

    Have you ever worked 7 and a half years at JPM gathering skills in price prediction and modelling, by any chance?

    [​IMG]
     
    #29     Aug 21, 2024
  10. poopy

    poopy

    I've worked on the sell side and as a PM at some funds. A fiction of seven years running the EMEA desk at JPM. What proof we you have other than his HF is his personal account and his agribusiness had $20K in assets in 2017? Multiples of his net liq? Where is it shown?

    WTF does "multiplied his trading returns" mean?
     
    #30     Aug 21, 2024
    Darc likes this.