Preschool>= Lesson Status ?
Kindergarten>= Lesson Status ?
Elementary>= Lesson Status ?
Grade 1 Support and Resistance Levels
Grade 2 Japanese Candlesticks
Grade 3 Fibonacci
Grade 4 Moving Averages
Grade 5 Common Chart Indicators
Middle School>= Lesson Status ?
Grade 7 Important Chart Patterns
Grade 8 Pivot Points
Summer School>= Lesson Status ?
High School>= Lesson Status ?
Grade 9 Trading Divergences
Grade 10 Market Environment
Grade 11 Trading Breakouts and Fakeouts
Grade 12 Fundamental Analysis
Grade 13 Currency Crosses
- What is a Currency Cross Pair?
- Crosses Present More Trading Opportunities
- Cleaner Trends and Ranges
- Taking Advantage of Interest Rate Differential
- Obscure Crosses
- Planning Around News and Fundamentals
- Creating Synthetic Pairs
- Euro and Yen Crosses
- How to Use Crosses to Trade the Majors
- How Cross Currency Pairs Affect Dollar Pairs
- Summary: Currency Crosses
Grade 14 Multiple Time Frame Analysis
Undergraduate>= Lesson Status ?
- Why Keep a Trade Journal?
- Benefits of Keeping a Journal
- What Should You Record in Your Journal?
- Potential Trading Area
- Entry Trigger
- Position Sizing
- Trade Management Rules
- Trade Retrospective
- Trading Journal Statistics
- Reviewing Your Trading Journal
- Difficulties of Keeping a Trade Journal
- Summary: Keeping a Trade Journal
Graduation>= Lesson Status ?
- Which Trading Style is Best for You?
- Which Currencies Should You Trade?
- What is Your Level of Trading Experience?
- Should You Be a Discretionary, Mechanical, or Hybrid Trader?
- What Kind of Mechanical System Suits Your Personality?
- What is Your Attitude Towards Risk?
- What Kind of Stop Suits Your Trading Style?
The 3 Cardinal Rules and Some Guidelines
As you may have guessed, the key in using the Elliott Wave Theory in trading is all about being able to correctly identify waves.
By developing the right eye in recognizing what wave the market is in, you will be able to find out which side of the market to trade on, long or short.
There are three cardinal cannot-be-broken rules in labeling waves. So, before you jump right in to applying the Elliott Wave Theory to your trading, you must take note of the rules below.
Failing to label wave correctly can prove disastrous to your account.
3 Cardinal Rules of the Elliott Wave Theory
- Rule Number 1: Wave 3 can NEVER be the shortest impulse wave
- Rule Number 2: Wave 2 can NEVER go beyond the start of Wave 1
- Rule Number 3: Wave 4 can NEVER cross in the same price area as Wave 1
Then, there are the guidelines that help you in correctly labeling waves. Unlike the three cardinal rules, these guidelines can be broken. Here they are:
- Conversely, sometimes, Wave 5 does not move beyond the end of wave 3. This is called truncation.
- Wave 5, more often than not, goes beyond or "breaks through" the trend line drawn off Wave 3 parallel to a trend line connecting the start of Waves 3 and 5.
- Wave 3 tends to be very long, sharp, and extended.
- Waves 2 and 4 frequently bounce off Fibonacci retracement levels.
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- Elliott Wave Theory
- The 5 - 3 Wave Patterns
- ABC Correction
- Waves Within a Wave
- The 3 Cardinal Rules and Some Guidelines
- Riding Elliott's Waves
- Summary: Elliott Wave Theory