Elliott wave theory

I've read all the info I could find on technical analysis but I was hungry for even more. To my attention came Elliott wave theory because many experienced traders mentioned it either in good or bad sense. I had to check it out and opened a whole new world. Wave analysis is very complicated one and it don't give you straight answers on how to trade.

The simple rule states that each wave consist of 5 impulsive waves (12345) and 3 corrective waves (ABC). Moreover all waves are made of smaller waves with the same structure.


All the work you have to do with this theory is to mark all waves on the chart. If you mark all the waves the right way then you'll know what will be the next market's move.

This theory is completely based on psychology and golden ratio rule. The biggest problem of this theory is that it is completely subjective. I saw people on forums who tries to use this theory on practice, and on the same charts they have completely different markings. Because of that, there are no good EAs based on this theory (at least I didn't hear of any) and that's why it's hard to check if its working or not. This method was developed for trading on stocks which adds more doubts in its potential on forex.

Anyway I'm happy that I've read some books on this theory because there were many clues that helped me to understand many mysteries on forex. All the standard technical analysis is written in details in wave theory and all the market possibilities are uncovered there.