Every single trader has their own most loved strategies to utilize when trading the Forex market. Where the conventional specialized studies miss the good trade, the Wave Principle kicks into show high-certainty value trades. Trading with Elliot wave helps the trader to identify extremely profitable trade setups in the financial market.
Let’s see an example of an uptrend with Elliot wave
Figure: Uptrend formation
Four golden rules to improve the trading with Elliot wave
The Elliot wave theory helps the trader to identify the current prevailing trend in the market. The Elliot wave theory suggests that there should be a minimum of 5 waves in perfect trade among which the third wave is the largest one. Trader tries to ride the third wave by the Elliot wave theory.
A trader can easily identify a trend reversal by using the Elliot wave. After the fifth wave in the market traders can expect a deep correction or a trend change .Professional trend trader switches to other pairs when the fifth wave is complete in a trend.
Momentum of a trade
This the most important parameter used in Elliot wave theory. The momentum of a trend can be measured by using the Elliot wave theory. A trader can come to a conclusion that the market will lose its momentum after the fifth and final wave.
Determining the take profit level in a trend can be very challenging. Sometimes the support and resistance level are not enough to set the take profit target. Elliot wave helps the professional trader to set their take profit very precisely.
“Professional trader masters the Elliot wave only to ensure that they can ride the big trend in the market. They combine this wave theory in order to make their trading strategy more perfect and flawless.”