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  1. 370 Wave Personality The idea of wave personality is a substantial expansion of the Wave Principle. It has the advantage of bringing human behavior more personally into the equation. free forex signals and The personality of each wave in the Elliott sequence is an integral part of the reflection of the mass psychology it embodies. The progression of mass emotions from pessimism to optimism and back again tends to follow a similar path each time around, producing similar circumstances at corresponding points in the wave structure. As the Wave Principle indicates, market history repeats but not exactly. Every wave has siblings (same-directional waves of the same degree within a larger wave) and cousins (samedegree and same-numbered waves within different larger waves) but no wave has a twin. Related waves — particularly cousins — have similar market and social characteristics. The personality of each wave type is manifest whether the wave is of Grand Supercycle degree or Subminuette. Waves’ properties not only forewarn what to expect in the next sequence but at times can help determine the market’s present location in the progression of waves, when for other reasons the count is unclear or open to differing interpretations. As waves are in the process of unfolding, there are times when several different wave counts are perfectly admissible under all known Elliott rules. It is at these junctures that a knowledge of wave personality can be invaluable. Recognizing the character of a single wave can often allow you to interpret correctly the complexities of the larger pattern. The following discussions relate to an underlying bull market picture, as illustrated in Figures 2-14 and 2-15. These observations apply in reverse when the actionary waves are downward and the reactionary waves are upward. free forex signals 1) First waves — As a rough estimate, about half of first waves are part of the "basing" process and thus tend to be heavily corrected by wave two. In contrast to the bear market rallies within the previous decline, however, this first wave rise is technically more constructive, often displaying a subtle increase in Figure 2-14 volume and breadth. Plenty of short selling is in evidence as the majority has finally become convinced that the overall trend is down. Investors have finally gotten "one more rally to sell on," and they take advantage of it. The other fifty percent of first waves rise from either large bases formed by the previous correction, as in 1949, from downside failures, as in 1962, or from extreme compression, as in both 1962 and 1974. From such beginnings, first waves are dynamic and only moderately retraced. free forex signals 2) Second waves — Second waves often retrace so much of wave one that most of the profits gained up to that time are eroded away by the time it ends. This is especially true of call option purchases, as premiums sink drastically in the environment of 79 fear during second waves. At this point, investors are thoroughly convinced that the bear market is back to stay. Second waves often end on very low volume and volatility, indicating a drying up of selling pressure. forex signals 3) Third waves — Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. Increasingly favorable fundamentals enter the picture as confidence returns. Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series. It follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence. Such points invariably produce breakouts, "continuation" gaps, volume expansions, exceptional breadth, major Dow Theory trend confirmations and runaway price movement, creating large hourly, daily, weekly, monthly or yearly gains in the market, depending on the degree of the wave. Virtually all stocks participate in third waves. Besides the personality of B waves, that of third waves produces the most valuable clues to the wave count as it unfolds. 4) Fourth waves — Fourth waves are predictable in both depth (see page 66) and form, because by alternation they should differ from the previous second wave of the same degree. More often than not they trend sideways, building the base for the final fifth wave move. Lagging stocks build their tops and begin declining during this wave, since only the strength of a third wave was able to generate any motion in them in the first place. This initial deterioration in the market sets the stage for non-confirmations and subtle signs of weakness during the fifth wave. forex signals free 5) Fifth waves — Fifth waves in stocks are always less dynamic than third waves in terms of breadth. They usually display a slower maximum speed of price change as well, although if a fifth wave is an extension, speed of price change in the third of the fifth can exceed that of the third wave. Similarly, while it is common for volume to increase through successive impulse waves at Cycle degree or larger, it usually happens in a fifth wave below Primary degree only if the fifth wave extends. Otherwise, look for lesser volume as a rule in a fifth wave as opposed to the third. Market dabblers sometimes call for "blowoffs" at the end of long trends, but the stock market has no history of reaching maximum acceleration at a peak. Even if a fifth wave extends, the fifth of the fifth will lack the dynamism that preceded it. During advancing fifth waves, optimism runs extremely high despite a narrowing of breadth. Nevertheless, market action does improve relative to prior corrective wave rallies. For example, the year-end rally in 1976 was unexciting in the Dow, but it was nevertheless a motive wave as opposed to the preceding corrective wave advances in April, July and September, which, by contrast, had even less influence on the secondary indexes and the cumulative advance-decline line. As a monument to the optimism that fifth waves can produce, the advisory services polled two weeks after the conclusion of that rally turned in the lowest percentage of "bears," 4.5%, in the history of the recorded figures despite that fifth wave’s failure to make a new high! forex trading signals 6) A waves — During the A wave of a bear market, the investment world is generally convinced that this reaction is just a pullback pursuant to the next leg of advance. The public surges to the buy side despite the first really technically damaging cracks in individual stock patterns. The A wave sets the tone for the B wave to follow. A five-wave A indicates a zigzag for wave B, while a three-wave A indicates a flat or triangle. forex signals 7) B waves — B waves are phonies. They are sucker plays, bull traps, speculators’ paradise, orgies of odd-lotter mentality or expressions of dumb institutional complacency (or both). They often involve a focus on a narrow list of stocks, are often "unconfirmed" (see Dow Theory discussion in Chapter 7) by other averages, are rarely technically strong, and are virtually always doomed to complete retracement by wave C. If the analyst can easily say to himself, "There is something wrong with this market," chances are it’s a B wave. X waves and D waves in expanding triangles, both of which are corrective wave advances, have the same characteristics. Several examples will suffice to illustrate the point. free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/
  2. 147 Elliott Wave Principle and Depth of Corrective Waves No market approach other than the Wave Principle gives a satisfactory answer to the question, "How far down can a bear market be expected to go?" The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus. forex signals Example #1: The 1929-1932 Bear Market Our analysis of the period from 1789 to 1932 uses the chart of stock prices adjusted to constant dollars developed by Gertrude Shirk and presented in the January 1977 issue of Cycles magazine. Here we find that the 1932 Supercycle low bottomed within the area of the previous fourth wave of Cycle degree, an expanding triangle spanning the period between 1890 and 1921.(see Figure 5-4) free forex signals Figure 5-4 Example #2: The 1942 Bear Market Low In this case, the Cycle degree bear market from 1937 to 1942 was a zigzag that terminated within the area of the fourth Primary wave of the bull market from 1932 to 1937. (see Figure 5-5) Figure 5-5 Example #3: The 1962 Bear Market Low https://www.freeforex-signals.com/ The wave ④ plunge in 1962 brought the averages down to just above the 1956 high of the five-wave Primary sequence from 1949 to 1959. Ordinarily, the bear would have reached into the zone of wave (4), the fourth wave correction within wave ③. This narrow miss nevertheless illustrates why this guideline is not a rule. The preceding strong third wave extension and the shallow A wave and strong B wave within (4) indicated strength in the wave structure, which carried over into the moderate net depth of the correction.(see Figure 5-5) Example #4: The 1974 Bear Market Low free forex signals The final decline into 1974, ending the 1966-1974 Cycle degree wave IV correction of the entire wave III rise from 1942, brought the averages down to the area of the previous fourth wave of lesser degree (Primary wave ④).Again, Figure 5-5 shows what happened. Example #5: London Gold Bear Market, 1974-1976 Here we have an illustration from another market of the tendency for a correction to terminate in the area of travel of the preceding fourth wave of one lesser degree.(see figure 6-11) free forex signals Figure 6-11 Our analysis of small degree wave sequences over the last twenty years further validates the proposition that the usual limitation of any bear market is the travel area of the preceding fourth wave of one lesser degree, particularly when the bear market in question is itself a fourth wave. However, in a clearly reasonable modification of the guideline, it is often the case that if the first wave in a sequence extends, the correction following the fifth wave will have as a typical limit the bottom of the second wave of lesser degree. For example, the decline into March 1978 in the DJIA bottomed exactly at the low of the second wave in March 1975, which followed an extended first wave off the December 1974 low. https://www.freeforex-signals.com/ On occasion, a flat correction or triangle, particularly if it follows an extension, will fail, usually by a slim margin, to reach into the fourth wave area (see Example #3). A zigzag, on occasion, will cut deeply and move down into the area of the second wave of lesser degree, although this almost exclusively occurs when the zigzag is itself a second wave. "Double bottoms" are sometimes formed in this manner. Behavior Following Fifth Wave Extensions free forex signals Having cumulatively observed the hourly changes in the DJIA for over twenty years, the authors are convinced that Elliott imprecisely stated some of his findings with respect to both the occurrence of extensions and the market action following an extension. The most important empirically derived rule that can be distilled from our observations of market behavior is that when the fifth wave of an advance is an extension, the ensuing correction will be sharp and find support at the level of the low of wave two of the extension. Sometimes the correction ends there, as illustrated in Figure 2-6, and sometimes only wave A ends there. Although a limited number of real life examples exist, the precision with which A waves have reversed at this level is remarkable. Figure 2-7 is an illustration showing both a zigzag and an expanded flat correction. An example involving a zigzag can be found in Figure 5-5 at the low of wave Ⓐ of II and an example involving an expanded flat can be found in Figure 2-16 at the low of wave a of A of 4. As you may be able to discern in Figure 5-5, wave a of (IV) bottoms near wave (2) of ⑤, which is an extension within the wave V from 1921 to 1929. forex trading signals Since the low of the second wave of an extension is commonly in or near the price territory of the immediately preceding fourth wave of one larger degree, this guideline implies behavior similar to that of the preceding guideline. It is notable for its precision, however. Additional value is provided by the fact that fifth wave extensions are typically followed by swift retracements. Their occurrence, then, is an advance warning of a dramatic reversal to a specific level, a powerful combination of knowledge. This guideline need not apply when the market is ending a fifth wave at more than one degree, yet the action in Figure 5-5 (see above reference) suggests that we should still view this level as at least potential or temporary support. free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/
  3. 87 Elliott Wave and Zigzag (5-3-5) A single zigzag in a bull market is a simple three-wave declining pattern labeled A-B-C. The subwave sequence is 5-3-5, and the top of wave B is noticeably lower than the start of wave A, as illustrated in Figures 1-22 and 1-23. free forex signals In a bear market, a zigzag correction takes place in the opposite direction, as shown in Figures 1-24 and 1-25. For this reason, a zigzag in a bear market is often referred to as an inverted zigzag. https://www.freeforex-signals.com/ Occasionally zigzags will occur twice, or at most, three times in succession, particularly when the first zigzag falls short of a normal target. In these cases, each zigzag is separated by an intervening "three," producing what is called a double zigzag (see Figure 1-26) or triple zigzag. These formations are analogous to the extension of an impulse wave but are less common. The correction in the Dow Jones Industrial Average from July to October 1975 (see Figure 1-27) can be labeled as a double zigzag, as can the correction in the Standard and Poor’s 500 stock index from January 1977 to March 1978 (see Figure 1-28). Within impulses, second waves frequently sport zigzags, while fourth waves rarely do. forex trading signals R.N. Elliott’s original labeling of double and triple zigzags and double and triple threes (see later section) was a quick shorthand. He denoted the intervening movements as wave X, so that double corrections were labeled A-B-C-X-A-B-C. Unfortunately, this notation improperly indicated the degree of the actionary subwaves of each simple pattern. They were labeled as being only one degree less than the entire correction when in fact, they are two degrees smaller. We have eliminated this problem by introducing a useful notational device: labeling the successive actionary components of double and triple corrections as waves W, Y and Z, so that the entire pattern is counted "W-X-Y (-X-Z)." The letter W now denotes the first corrective pattern in a double or triple correction, Y the second, and Z the third of a triple. Each subwave thereof (A, B or C, as well as D or E of a triangle — see later section) is now properly seen as two degrees smaller than the entire correction. Each wave X is a reactionary wave and thus always a corrective wave, typically another zigzag. https://www.freeforex-signals.com/ Figure 1-24 Figure 1-25 Flat (3-3-5) free forex signals A flat correction differs from a zigzag in that the subwave sequence is 3-3-5, as shown in Figures 1-29 and 1-30. Since the first actionary wave, wave A, lacks sufficient downward force to unfold into a full five waves as it does in a zigzag, the B wave reaction, not surprisingly, seems to inherit this lack of countertrend pressure and terminates near the start of wave A. Wave C, in turn, generally terminates just slightly beyond the end of wave A rather than significantly beyond as in zigzags. Figure 1-29 Figure 1-30 In a bear market, the pattern is the same but inverted, as shown in Figures 1-31 and 1-32. A flat correction usually retraces less of the preceding impulse wave than does a zigzag. It tends to occur when the larger trend is strong, so it virtually always precedes or follows an extension. The more powerful the underlying trend, the briefer the flat tends to be. Within an impulse, the fourth wave frequently sports a flat, while the second wave rarely does. forex trading signals What might be called a "double flat" does occur. However, Elliott categorized such a formation as a "double three," a term we discuss later in this chapter. forex signals The word "flat" is used as a catch-all name for any A-B-C correction that subdivides 3-3-5. In Elliott literature, however, three types of 3-3-5 corrections have been named by differences in their overall shape. In a regular flat correction, wave B terminates about at the level of the beginning of wave A, and wave C terminates a slight bit past the end of wave A, as we have shown in Figures 1-29 through 1-32. Far more common, however, is the variety we call an expanded flat, which contains a price extreme beyond that of the preceding impulse wave. Elliott called this variation an "irregular" flat, although the word is inappropriate as they are actually far more common than "regular" flats. free forex signals In expanded flats, wave B of the 3-3-5 pattern terminates beyond the starting level of wave A, and wave C ends more substantially beyond the ending level of wave A, as shown for bull markets in Figures 1-33 and 1-34 and bear markets in Figures 1-35 and 1-36. The formation in the DJIA from August to November 1973 was an expanded flat correction in a bear market, or an "inverted expanded flat" (see Figure 1-37). forex trading signals In a rare variation on the 3-3-5 pattern, which we call a running flat, wave B terminates well beyond the beginning of wave A as in an expanded flat, but wave C fails to travel its full distance, falling short of the level at which wave A ended, as in Figures 1-38 through 1-41. Apparently in this case, the forces in the direction of the larger trend are so powerful that the pattern is skewed in that direction. The result is akin to the truncation of an impulse. It is always important, but particularly when concluding that a running flat has taken place, that the internal subdivisions adhere to Elliott’s rules. If the supposed B wave, for instance, breaks down into five waves rather than three, it is more likely the first wave up of the impulse of next higher degree. The power of adjacent impulse waves is important in recognizing running corrections, which tend to occur only in strong and fast markets. forex signals free We must issue a warning, however. There are hardly any examples of this type of correction in the price record. Never label a correction prematurely this way, or you’ll find yourself wrong nine times out of ten. A running triangle, in contrast, is much more common (see next section). free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/
  4. 79 Structure of the Federal Reserve System About the Federal Reserve System The Federal Reserve System is the central bank of the United States. free forex signals It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest. The Federal Reserve conducts the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy; promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad; promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole; fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations. Read more in the 10th edition of Federal Reserve System Purposes & Functions. free forex signals Figure uses a pyramid of graphics to describe the Federal Reserve System. Top level: There is 1 U.S. Central Bank: the Federal Reserve System. Second level: The 3 Key Entities of the Federal Reserve System: Federal Reserve Board of Governors, 12 Federal Reserve Banks, and the Federal Open Market Committee. Third level: The 5 Key Functions of the Federal Reserve System: conducting the nation's monetary policy, helping maintain the stability of the financial system, supervising and regulating financial institutions, fostering payment and settlement system safety and efficiency, and promoting consumer protection and community development. forex signals The Decentralized System Structure and Its Philosophy In establishing the Federal Reserve System, the United States was divided geographically into 12 Districts, each with a separately incorporated Reserve Bank. District boundaries were based on prevailing trade regions that existed in 1913 and related economic considerations, so they do not necessarily coincide with state lines. Twelve Federal Reserve Districts operate independently but with supervision Federal Reserve District boundaries are based on economic considerations; the Districts operate independently but under the supervision of the Federal Reserve Board of Governors. forex signals Federal Reserve Banks 01-Boston 02-New York 03-Philadelphia 04-Cleveland 05-Richmond 06-Atlanta 07-Chicago 08-St. Louis 09-Minneapolis 10-Kansas City 11-Dallas 12-San Francisco Board The Federal Reserve officially identifies Districts by number and Reserve Bank city. forex signals In the 12th District, the Seattle Branch serves Alaska, and the San Francisco Bank serves Hawaii. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of Governors revised the branch boundaries of the System in February 1996. free forex signals As originally envisioned, each of the 12 Reserve Banks was intended to operate independently from the other Reserve Banks. Variation was expected in discount rates--the interest rate that commercial banks were charged for borrowing funds from a Reserve Bank. The setting of a separately determined discount rate appropriate to each District was considered the most important tool of monetary policy at that time. The concept of national economic policymaking was not well developed, and the impact of open market operations--purchases and sales of U.S. government securities--on policymaking was less significant. As the nation's economy became more integrated and more complex, through advances in technology, communications, transportation, and financial services, the effective conduct of monetary policy began to require increased collaboration and coordination throughout the System. This was accomplished in part through revisions to the Federal Reserve Act in 1933 and 1935 that together created the modern-day Federal Open Market Committee (FOMC). forex trading signals The Depository Institutions Deregulation and Monetary Control Act of 1980 (Monetary Control Act) introduced an even greater degree of coordination among Reserve Banks with respect to the pricing of financial services offered to depository institutions. There has also been a trend among Reserve Banks to centralize or consolidate many of their financial services and support functions and to standardize others. Reserve Banks have become more efficient by entering into intra-System service agreements that allocate responsibilities for services and functions that are national in scope among each of the 12 Reserve Banks. free forex signals The U.S. Approach to Central Banking The framers of the Federal Reserve Act purposely rejected the concept of a single central bank. Instead, they provided for a central banking "system" with three salient features: (1) a central governing Board, (2) a decentralized operating structure of 12 Reserve Banks, and (3) a combination of public and private characteristics. Although parts of the Federal Reserve System share some characteristics with private-sector entities, the Federal Reserve was established to serve the public interest. forex signals free There are three key entities in the Federal Reserve System: the Board of Governors, the Federal Reserve Banks (Reserve Banks), and the Federal Open Market Committee (FOMC). The Board of Governors, an agency of the federal government that reports to and is directly accountable to Congress, provides general guidance for the System and oversees the 12 Reserve Banks. Within the System, certain responsibilities are shared between the Board of Governors in Washington, D.C., whose members are appointed by the President with the advice and consent of the Senate, and the Federal Reserve Banks and Branches, which constitute the System's operating presence around the country. While the Federal Reserve has frequent communication with executive branch and congressional officials, its decisions are made independently. forex trading signals The Three Key Federal Reserve Entities The Federal Reserve Board of Governors (Board of Governors), the Federal Reserve Banks (Reserve Banks), and the Federal Open Market Committee (FOMC) make decisions that help promote the health of the U.S. economy and the stability of the U.S. financial system. Three key entities, serving the public interest The framers of the Federal Reserve Act developed a central banking system that would broadly represent the public interest. forex trading signals CONGRESS graphic positioned above the three key Federal Reserve entities' graphics: 'CONGRESS oversees the Federal Reserve System and its entities.' A dotted arrow leads down to the BOARD graphic: 'BOARD OF GOVERNORS is an independent agency of the federal government.' A dotted arrow leads right from the BOARD graphic to the BANKS graphic: 'FEDERAL RESERVE BANKS are the operating arms of the Federal Reserve System and are supervised by the Board of Governors.' Dotted arrows lead left from the BOARD and BANKS graphics to the FOMC graphic: 'FEDERAL OPEN MARKET COMMITTEE consists of the members of the Board of Governors and Reserve Bank presidents. The Chair of the Board is the FOMC Chair. https://www.freeforex-signals.com/ Other Significant Entities Contributing to Federal Reserve Functions Two other groups play important roles in the Federal Reserve System's core functions: forex trading signals depository institutions--banks, thrifts, and credit unions; and Federal Reserve System advisory committees, which make recommendations to the Board of Governors and to the Reserve Banks regarding the System's responsibilities. https://www.freeforex-signals.com/ Depository Institutions Depository institutions offer transaction, or checking, accounts to the public, and may maintain accounts of their own at their local Federal Reserve Banks. Depository institutions are required to meet reserve requirements--that is, to keep a certain amount of cash on hand or in an account at a Reserve Bank based on the total balances in the checking accounts they hold. free forex signals Depository institutions that have higher balances in their Reserve Bank account than they need to meet reserve requirements may lend to other depository institutions that need those funds to satisfy their own reserve requirements. This rate influences interest rates, asset prices and wealth, exchange rates, and thereby, aggregate demand in the economy. The FOMC sets a target for the federal funds rate at its meetings and authorizes actions called open market operations to achieve that target. free forex signals Advisory Councils Four advisory councils assist and advise the Board on matters of public policy. Federal Advisory Council (FAC). This council, established by the Federal Reserve Act, comprises 12 representatives of the banking industry. The FAC ordinarily meets with the Board four times a year, as required by law. Annually, each Reserve Bank chooses one person to represent its District on the FAC. FAC members customarily serve three one-year terms and elect their own officers. Community Depository Institutions Advisory Council (CDIAC). The CDIAC was originally established by the Board of Governors to obtain information and views from thrift institutions (savings and loan institutions and mutual savings banks) and credit unions. More recently, its membership has expanded to include community banks. Like the FAC, the CDIAC provides the Board of Governors with firsthand insight and information about the economy, lending conditions, and other issues. forex trading signals Model Validation Council. This council was established by the Board of Governors in 2012 to provide expert and independent advice on its process to rigorously assess the models used in stress tests of banking institutions. Stress tests are required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The council is intended to improve the quality of stress tests and thereby strengthen confidence in the stress-testing program. Community Advisory Council (CAC). This council was formed by the Federal Reserve Board in 2015 to offer diverse perspectives on the economic circumstances and financial services needs of consumers and communities, with a particular focus on the concerns of low- and moderate-income populations. The CAC complements the FAC and CDIAC, whose members represent depository institutions. The CAC meets semiannually with members of the Board of Governors. The 15 CAC members serve staggered three-year terms and are selected by the Board through a public nomination process. Federal Reserve Banks also have their own advisory committees. Perhaps the most important of these are committees that advise the Banks on agricultural, small business, and labor matters. The Federal Reserve Board solicits the views of each of these committees biannually. More on https://www.freeforex-signals.com/ free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/
  5. The Broad Concept - Elliott Wave Principle free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ In The Elliott Wave Principle — A Critical Appraisal, A. Hamilton Bolton made this opening statement: As we have advanced through some of the most unpredictable economic climate imaginable, covering depression, major war, and postwar reconstruction and boom, I have noted how well Elliott’s Wave Principle has fitted into the facts of life as they have developed, and have accordingly gained more confidence that this Principle has a good quotient of basic value. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or "waves," that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form larger versions of themselves, how they in turn link to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle. Although it is the best Forex Signals tool in existence, the Wave Principle is not primarily a Forex Signals tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market’s position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis and FREE Forex Signals . This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable. Many areas of mass human activity display the Wave Principle, but it is most popularly used in the stock market. Truly, however, the stock market is far more significant to the human condition than it appears to casual observers and even to those who make their living by it. The level of aggregate stock prices is a direct and immediate measure of the popular valuation of man’s total productive capability. That this valuation has form is a fact of profound implications that will ultimately revolutionize the social sciences. That, however, is a discussion for another time. R.N. Elliott’s genius consisted of a wonderfully disciplined mental process, suited to studying charts of the Dow Jones Industrial Average and its predecessors with such thoroughness and precision that he could construct a network of principles that reflected all market action known to him up to the mid-1940s. At that time, with the Dow near 100, Elliott predicted a great bull market for the next several decades that would exceed all expectations at a time when most investors felt it impossible that the Dow could even better its 1929 peak. As we shall see, exceptional stock market forecasts, some of pinpoint accuracy years in advance, have accompanied the history of the application of the Elliott wave approach. Elliott had theories regarding the origin and meaning of the patterns he discovered, which we will present and expand upon in Chapter 3. Until then, suffice it to say that the patterns described in Chapters 1 and 2 have stood the test of time. Often one will hear several different interpretations of the market’s Elliott wave status, especially when cursory, offthe- cuff studies of the averages are made by latter-day experts. However, most uncertainties can be avoided by keeping charts on both arithmetic and semilogarithmic scale and by taking care to follow the rules and guidelines as laid down in this book. Welcome to the world of Elliott.
  6. Leading Diagonal free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ When diagonal triangles occur in the wave 5 or C position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags. The characteristic overlapping of waves 1 and 4 and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5-3-5 pattern. The structure of this formation (see Figure 1-20) fits the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a "continuation" message as opposed to the "termination" implication of the three-wave subdivisions in the ending diagonal. Analysts must be aware of this pattern to avoid mistaking it for a far more common development, a series of first and second waves. The main key to recognizing this pattern is the decided slowing of price change in the fifth subwave relative to the third. By contrast, in developing first and second waves, short term speed typically increases, and breadth (i.e., the number of stocks or subindexes participating) often expands. Figure 1-21 shows a real life example of a leading diagonal triangle. This pattern was not originally discovered by R.N. Elliott but has appeared enough times and over a long enough period that we are convinced of its validity.
  7. WAVE FUNCTION Elliott wave free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ Every wave serves one of two functions: action or reaction. Specifically, a wave may either advance the cause of the wave of one larger degree or interrupt it. The function of a wave is determined by its relative direction. An actionary or trend wave is any wave that trends in the same direction as the wave of one larger degree of which it is a part. A reactionary or countertrend wave is any wave that trends in the direction opposite to that of the wave of one larger degree of which it is part. Actionary waves are labeled with odd numbers and letters. Reactionary waves are labeled with even numbers and letters. All reactionary waves develop in corrective mode. If all actionary waves developed in motive mode, then there would be no need for different terms. Indeed, most actionary waves do subdivide into five waves. However, as the following sections reveal, a few actionary waves develop in corrective mode, i.e., they subdivide into three waves or a variation thereof. A detailed knowledge of pattern construction is required before one can draw the distinction between actionary function and motive mode, which in the underlying model introduced so far are indistinct. A thorough understanding of the forms detailed in the next five lessons will clarify why we have introduced these terms to the Elliott Wave lexicon. Lesson 4: Motive Waves Motive waves subdivide into five waves with certain characteristics and always move in the same direction as the trend of one larger degree. They are straightforward and relatively easy to recognize and interpret. Within motive waves, wave 2 never retraces more than 100% of wave 1, and wave 4 never retraces more than 100% of wave 3. Wave 3, moreover, always travels beyond the end of wave 1. The goal of a motive wave is to make progress, and these rules of formation assure that it will. Elliott further discovered that in price terms, wave 3 is often the longest and never the shortest among the three actionary waves (1, 3 and 5) of a motive wave. As long as wave 3 undergoes a greater percentage movement than either wave 1 or 5, this rule is satisfied. It almost always holds on an arithmetic basis as well. There are two types of motive waves: impulses and diagonal triangles
  8. Common trading mistakes: part two free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ Overreliance on software Most people use some form of technology to assist their trading. For example, you might study chart patterns or use automated alerts and algorithms as prompts to trade. But, as useful as all of these tools are, it is important to remember that they are only tools, and must be employed wisely. Just as your satnav can occasionally direct you to drive into a deep torrent of water because it doesn't know the river has flooded, trading technology isn't something to follow blindly. You still need to keep your eyes open and react intelligently to the signs you see. Car So when using technology, such as charting software or other analysis tools, it's important that you understand the underlying concepts and the reasons behind what the charts are telling you. This will allow you to see the bigger picture and avoid unnecessary mistakes. Lack of record keeping Do you remember your first trade? What about the third, or the fifth? If you're new to trading, the details may still be clear in your memory. But in a few months' time will you still be able to describe each step and decision in detail? Unless you keep a trading log or diary, the chances are that this information will be lost. And if you can't remember what you did right, how can you replicate it? Similarly, if you don't know where you went wrong you could easily make the same mistakes again. Your trading diary will let you look back at your experiences with the value of hindsight and learn from them. So what should you record in it? Question Which of the following is NOT worth putting in your trading diary? A Why you decided to trade B What you were wearing at the time C Where you placed your stops or limits D How you felt at the time you opened and closed the trade Reveal answer Bad timing Timing is not only the art of good comedy - it's also central to good trading. In the same way that a stand-up artist needs to deliver the punchline at exactly the right moment, you need to time your entry and exit from a market perfectly to maximise any profit or minimise any loss. Timing mistakes are common among new traders. So how can you avoid them? Although getting your timing right isn't an exact science, there are a few tools that will help you to act at the right moment: Chart analysis will help you forecast potential scenarios by revealing market patterns A trading plan will help you to define your strategy, meaning you're more likely to avoid impulsive actions Stops and limits will allow you to go about your business without having to monitor the markets constantly summary Remember the limitations of software and use it intelligently Keep a trading diary and reflect on the strategies that have worked well (or not so well) Use tools such as charts, stops and limits to help you get your timing right when opening and closing positions
  9. Controlling emotions that cloud your judgment free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ Some types of emotion can affect the clarity of your thinking, and so impact any trading decisions you make. Anger A losing trade can make you furious - often simply with yourself, for making a bad decision. But we all make mistakes - it's an important way to learn. If it happens to you, as it inevitably will one day, put it down to experience and make a mental note about what to do differently next time. One common impulse in moments of anger is to try and 'get back at the market' by placing another trade. This sort of knee-jerk reaction - or 'hair-trigger trade' - is nearly always a bad idea. Alternatively, you might just start buying anything and everything indiscriminately. This is known as 'shotgun trading'. Take a moment to sit back and breathe deeply, then consider objectively whether your proposed trade really makes sense and is in line with your overall trading strategy. Relax Regret Another common source of annoyance is missing an opportunity - something that's easy to do in the fast-moving world of financial markets. When this happens, it's easy to give yourself a hard time about it, repeating things like 'I should have bought there' or 'I knew that was going to happen'. But this sort of mentality can lure you into traps capable of undoing all your hard work at a stroke. You might, for example, be tempted to place a belated trade anyway, or to risk placing a number of trades in quick succession - known as overtrading - to set things right. You might even 'go on tilt', a particular state of mind which means you make irrational decisions, rather than those based on the merit of what's right in front of you. That's why, if the moment has passed, you need a few tricks to remain clear-headed until the next signal comes along. Fortunately, those tricks are as simple as taking a break, casting an eye over your original trading plan and exercising a positive mentality - remember, missing a move is not the end of the world. Sentimentality Suppose you've traded gold several times, and each time you've made a healthy profit. It might be tempting to start believing (perhaps subconsciously) that 'gold is your friend', and that it will reward you in the same way every time. Gold Once this conviction grows, there's a danger that you'll open further positions in gold without properly considering the current situation. Unfortunately, the fact that a particular instrument has been profitable in the past is no guarantee that it will continue to perform for you. But likewise, if you've had a bad experience with a certain asset that's no reason to shy away from any future opportunities it offers. Stress There are times in all of our lives when events beyond our control affect our ability to think clearly. It could be divorce, family illness, bereavement, or just moving house or changing jobs. All of these things will distract you from trading and could cloud your judgment. The world of financial trading can be hectic, demanding your undivided attention. So when you're going through stressful periods, it's often safest to put your trading on hold until you can commit the necessary time and energy to it again. summary Don't beat yourself up about poor decisions or missed opportunities. Learn from your mistakes and look forward to getting it right next time To avoid going on tilt when things go wrong, take a break, remind yourself of your trading plan, and wait until you're back in a positive state of mind Remember that sentimentality and superstition have no place in trading. No market is your friend or enemy, and every opportunity should be assessed on its merits When you're suffering from stress in other areas of your life, it may be wise to put your trading on hold