Tuesday, 16 Aug 2016
by Admin
in
Learn Trading Terms
R N Elliott developed a elliott wave theory which declare the crowd behavior ebbs and flows in clear trends. Elliott create a perfect structure of price movements in stock market based on crowd behaviors. Elliott wave have 5-wave impulse sequence and 3-wave corrective sequence. 

First capture the wave 1 of any stock. It may be in downward direction or may be in upward direction. 

How you find the wave 1 of any stock you like get the high and close of that stock. now we need to decide is it upward or downward. For that you can draw a Tradeline to that price if it moving in down direction then trade is downward if it move in up direction then trade is upward.

Elliott wave points for uptrend
 

Elliott wave range, length and direction formula rules.

  • Wave-2's starting point is wave-1's ending point.
  • Wave 2 is in opposite direction of wave 1 and it length is 0.618 of wave 1.
  • Wave 3 is start where wave 2 ends
  • Wave 3 is in same direction of wave 1 and its length is 1.618 of wave 1.
  • Wave 3 is largest wave in all wave generated in elliott waves. (if successfully identify wave 3 and trade you can earn handsome money in every trade)
  • Now wave 4 is start where wave 3 ends.
  • Wave 4 is in opposite direction of wave 1 and in same direction of wave 2.
  • Length of wave 4 is 0.382 of wave 3.
  • Wave 5 is start were wave 4 ends.
  • Wave 5 is in direction of wave 1 and wave 3. Length of wave 5 is length of wave 1.
  • Now it's going to change its trade direction
  • Wave A start were wave 5 ends and wave A's length is 0.382 of wave 5.
  • Wave B start were wave A ends and it's in a opposite direction wave A.
  • Length of wave B is 0.618 of wave 1.
  • Wave C start were wave B ends and length of wave C is equal to wave 1.
    So we need to found length and direction of wave 1 is most import factor in elliott wave calculation.

Elliott wave calculation formula for UPTREND

Wave1StartPoint = Lowprice

Wave1EndPoint = HighPrice

Wave2StartPoint = Wave1EndPoint

Wave2EndPoint = Wave2StartPoint - ((HighPrice - LowPrice) * 0.618)

Wave3StartPoint = Wave2EndPoint 

Wave3EndPoint = Wave2StartPoint + ((HighPrice - LowPrice) * 1.618)

Wave4StartPoint = Wave3EndPoint

Wave4EndPoint = Wave2StartPoint - ((Wave3EndPoint - Wave3StartPoint) * 0.382)

Wave5StartPoint = Wave4EndPoint

Wave5EndPoint = Wave2StartPoint + (HighPrice - LowPrice)  

WaveAStartPoint = Wave5EndPoint

WaveAEndPoint = WaveAStartPoint - ((Wave5EndPoint + Wave5StartPoint) * 0.382)

WaveBStartPoint = WaveAEndPoint

WaveBEndPoint = WaveAStartPoint + (HighPrice - LowPrice)  * 0.618)

WaveCStartPoint = WaveBEndPoint

WaveCEndPoint = WaveCStartPoint - (HighPrice - LowPrice)

Elliott wave calculation formula for DOWNTREND

Wave1StartPoint = HighPrice

Wave1EndPoint = LowPrice

Wave2StartPoint = Wave1EndPoint

Wave2EndPoint = Wave2StartPoint + ((HighPrice - LowPrice) * 0.618)

Wave3StartPoint = Wave2EndPoint 

Wave3EndPoint = Wave2StartPoint - ((HighPrice - LowPrice) * 1.618)

Wave4StartPoint = Wave3EndPoint

Wave4EndPoint = Wave2StartPoint + ((Wave3StartPoint - Wave3EndPoint) * 0.382)

Wave5StartPoint = Wave4EndPoint

Wave5EndPoint = Wave2StartPoint - (HighPrice - LowPrice)  

WaveAStartPoint = Wave5EndPoint

WaveAEndPoint = WaveAStartPoint + ((Wave5StartPoint - Wave5EndPoint) * 0.382)

WaveBStartPoint = WaveAEndPoint

WaveBEndPoint = WaveAStartPoint - (HighPrice - LowPrice)  * 0.618)

WaveCStartPoint = WaveBEndPoint

WaveCEndPoint = WaveCStartPoint + (HighPrice - LowPrice)

You can use our online free elliott wave calculator