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The Anatomy of Elliott Wave Trading - Notes

The document discusses the Elliott Wave Principle, highlighting its benefits in identifying trends, counter-trends, and providing trade signals. It emphasizes the challenges of trading corrective waves due to their complexity and emotional toll. Additionally, it covers essential risk management strategies and psychological factors that affect trading success.

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haripandit531
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11 views5 pages

The Anatomy of Elliott Wave Trading - Notes

The document discusses the Elliott Wave Principle, highlighting its benefits in identifying trends, counter-trends, and providing trade signals. It emphasizes the challenges of trading corrective waves due to their complexity and emotional toll. Additionally, it covers essential risk management strategies and psychological factors that affect trading success.

Uploaded by

haripandit531
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Level 01

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17. The Anatomy of Elliott Wave Trading


Learning Objective Statements :
§ Match the waves as labeled on a chart to the description in the text List the waves considered the most
advantageous to trade

§ Describe trade signals associated with various wave patterns

Five Ways the Wave Principle Improves Trading


1. The Wave Principle identifies the trend.

2. It identifies counter trend price moves within the larger trend.

3. It determines the maturity of the trend.

4. It provides high-confidence price targets.

5. It provides specific points of invalidation.

The Four Best Waves to Trade

When to Trade Corrections


Corrective waves offer less desirable trading opportunities because of their potential complexity. Impulse
waves are trend-defining price moves in which prices typically travel far. Conversely, corrective wave patterns
fluctuate more and can unfold slowly while taking a variety of shapes, such as a zigzag, flat, expanded flat,
triangle, double zigzag, or combination. Corrections generally move sideways and are often erratic,

www.yubha.com | December, 2022 Edition


Level 01
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time-consuming, and deceptive. Thus, it is emotionally exhausting to trade corrections, and the odds of
executing a successful trade during this type of price action are low.

Trading Specific Elliott Wave Patterns

www.yubha.com | December, 2022 Edition


Level 01
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www.yubha.com | December, 2022 Edition


Level 01
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The Neglected Essentials— Risk Management and the Psychology of


Trading
Risk-Reward Ratio
Risk to reward is a ratio that quantifies the risk versus the reward of a trade. Trades that offer less than a 3:1
risk-reward ratio should be avoided.

Trade Size
The risk on a single trade should never exceed 1 to 3 percent of the total portfolio size.

The Psychology of Trading


1. Lack of Methodology

2. Lack of Discipline

3. Unrealistic Expectations

4. Lack of Patience

www.yubha.com | December, 2022 Edition

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