Elliott wave principle. Elliott wave theory: what is this method and how can it be implemented in the modern financial market? Bolton "Complete works on Elliott waves"

Alfred Frost, Robert Prechter

Elliott Wave Principle: Key to Understanding the Market

Words of gratitude

The authors have tried to explain everything important that Elliott said. However, you would not be holding this book in your hands if it were not for the help of a number of people whom we will always remember with gratitude. Anthony Beck of Bank Credit Analyst generously opened his file to us. Jo-Ann Drew spent hours working on drafts and poured her artistic talent into the production of the book. Mr. and Mrs. Prechter Sr. meticulously edited the prepared manuscript. Arthur Menil of Merrill Analysis, Inc. gave us good advice and helped us in production. Others, too numerous to list here, supported us in our efforts with advice and encouragement. We are extremely grateful to all of them.

Graphs for some illustrations are kindly provided by the following sources: Bank Credit Analyst, Montreal, Canada (Figures 2-11, 5-5, 8-3); R.V. Mansfield, Jersey, New Jersey (Figures 1-18); Merrill Lynch, Inc. (Figures 3-12; 6–8, 9, 10, 12; 7–5); Securities Research Co., Boston, (Figures 1-13, and 6-1 through 6-7); Trendline, (a division of Standard and Poor's Corp.), New York (Figures 1-14, 17, 27, 37; 4-14). Figure 3–9 includes illustrations kindly provided by the following sources: Fascinating Fibonaccis (drawings by Trudy G. Garland); Mathematics by David Bergamini and the editors of Life (Color Spirals and Pantheon); Omni magazine, March 1988 (tornado, whirlpool, shells); Science 86 magazine, March 1986 (fir cone); Brain/Mind Bulletin, June 1987 (DNA); Fibonacci Quarterly, December 1979 (human body); Nova-Adventures in Science (atomic particles); Daniel Shechtman, Haifa, Israel (quasi-crystal); Hale Observatories, Pasadena, California (Milky Way). Some graphs in the Appendix are courtesy of Ned Davis Research, Nokomis, Florida; Foundation for the Study of Cycles, Wayne, and The Media General Financial Weekly, Richmond.

Unless otherwise noted, all illustrations are by Bob Prechter (book) and Dave Allman (Appendices). The enormous printing work was beautifully done by Robin Maczynski. The cover design was conceived by the authors and created by graphic artist Irene Goldsberg of New Orleans, Louisiana. Subsequent editions were produced by Jane Estes, Susan Willobay, Paula Robertson, Karen Latvala, Debbie Eisler, Pete Kendall, Stephanie White, Leigh Tipton, Angle Barringer, Sally Webb, and Pam Kimmons.

Publisher's note for the 20th anniversary edition

The Elliott Wave Principle was published in November 1978, when the Dow was at 790. Although it was immediately heralded by reviewers as the seminal work on the wave principle, its several hundred thousand copies sold were not enough to make it hit the bestseller list. However, thanks to the spiraling interest in the book's unique content and the success of its wide-ranging predictions, its sales grew year after year and it achieved status as a Wall Street classic. Like the wave principle itself, this book has stood the test of time.

Moreover, the book got better and better over time. As an academic text, it has become more worthy of its purpose with each new edition as Robert Prechter has steadily refined, refined, and expanded its contents over the years. These efforts have borne fruit. In the 70s A.J. Frost often recalled Hamilton Bolton's remark in the 1960s that “out of a hundred people who are familiar with the Dow Theory, only one has even heard of Elliott.” In the summer of 1986, Frost called Prechter to say that “times are changing.”

Until recently, the idea that markets move in a self-perpetuating pattern seemed highly controversial, but more recent research has shown that the formation of self-perpetuating patterns is a fundamental characteristic of complex systems, including financial markets. Some of these systems are characterized by “intermittent growth,” when periods of growth are interspersed with phases of its absence or decline, forming similar figures that increase in size. The world is replete with examples of such “fractal” development, and, as we showed 20 years ago in this book, and R.N. Elliott discovered 60 years ago that the stock market is no exception.

It's hard to believe it's been 20 years since we introduced the world to Frost and Prechter's prediction of a great stock bull market. Although its duration turned out to be much longer than they initially expected, the authors continue to adhere to their view of this growth as the fifth wave of the cycle. Today, the character of the market is exactly what Prechter expected it to be 15 years ago: “By the end of the fifth wave, colossal changes will occur in the mass psychology of investors, elements of 1929, 1968 and 1973 will appear in it, and, all together, interacting like resonance, they will explosively increase the intensity of their manifestation.” The fact that now, in 1998, this is the state of affairs is evidenced by all market statistics, it is felt in the pulsebeat of every investor

This edition, in turn, leaves every word of the forecasts intact, exactly as they appeared, to allow new readers to explore both the successes and errors of the forecasts presented by Frost and Prechter many years ago. Referring to these forecasts, investment analyst James W. Cowan says, "Even with minor errors, this 1978 forecast should be taken as the most impressive prediction of stock market behavior in its history."

It remains to be seen whether this great bull market will be followed by the greatest bear market in US history and thus whether the second part of the forecast given in this book will be fulfilled. The authors, no doubt, are counting on just such a scenario.

New Classic Library, publisher

Preface

About two thousand years ago, a man uttered words whose truth echoes through the centuries:

“A generation passes, and a generation comes, but the earth remains forever. The sun rises, and the sun sets, and hastens to its place where it rises. The wind goes to the south, and goes to the north, spins, spins as it goes, and the wind returns to normal. All rivers flow into the sea, but the sea does not overflow; to the place from which the rivers flow, they return to flow again... What was, that will be; and what has been done will be done, and there is nothing new under the sun.”

The deep meaning of these words is that human nature does not change, just as human behavior does not change. Four men of our generation made names for themselves in the field of economics by relying on this truth: Arthur Pigou, Charles Dow, Bernard Baruch, and Ralph Nelson Elliott.

Hundreds of theories have been put forward about the ups and downs of business, the so-called business cycle: changes in the money supply, shortages or excesses of inventories, changes in world trade associated with political events, consumption levels, capital expenditures, even sunspots and planetary combinations . The English economist Pigou reduced all this diversity to the “human equation.” According to Pigou, business fluctuations up and down are caused by an excess of optimism followed by an excess of pessimism. The pendulum swings too far to one side and there is an oversupply; the pendulum swings too far in the other direction and a disadvantage occurs. Excess movement in one direction generates excess movement in the other direction, and so on and so forth, an endless sequence of changes between diastole and systole.

Charles H. Dow, one of the most profound American researchers of stock market movements, drew attention to a certain repeatability in the continuous spiral movement of the market. In this apparent chaos, Dow noticed that the market was not like a balloon, aimlessly tossed this way and that by the wind, but was moving in a strict sequence. Dow proclaimed two principles, and they have stood the test of time. The first of these was the statement that the market during its major uptrend is characterized by three upward swings. He saw the reason for the first fluctuation as a correction of excessive price pessimism preceding the downward movement; the second upward price fluctuation is caused by an improving picture of business and company earnings; the third and final fluctuation is accompanied by excessive overvaluation of the stock and precedes a fall in prices. The second Dow principle was that at some point in every market swing, up or down, a reversal occurs, bringing the market back by an amount equal to or greater than three-eighths of the swing. Although Dow may not have consciously associated these laws with the influence of the human factor, the market is made by people, and the continuity or repetition noticed by Dow is necessarily born from this source.

Hello, dear readers! Today we have very complex topic: We will study Elliott waves.

What's the difficulty?

No one can definitely tell you how to correctly apply this method in practice. Therefore, for this article to be for you as useful as possible, I suggest doing the following.

Think and answer the question: Do you want to spend several years studying to learn how to trade according to the rules of wave theory?
If the answer negative, then you just need to look at two sections: “ Elliott waves: a simplified version of a complex theory" And " Case Study: How Eliot Waves Can Strengthen an Indicator Strategy».
If the answer positive, then you need to thoroughly study all material in this article and after that draw up a self-training plan for 2-3 years.

Whatever answer you give, reading this article will give you a whole range of advantages.

From a series of selected videos you will learn the basic principles of wave theory;
You will immediately understand what the main problem of all wave traders is and why this forecasting principle is not as popular as technical analysis;
You will have access to selection of textbooks, which will allow you to gain in-depth knowledge about the wave structure of the market. All books are available for free download and do not require any response from you.

Elliott waves: a simplified version of a complex theory

Fans of the wave theory watched the market for a long time and determined that all price fluctuations can be divided into finite number of designs, which, like waves, consistently change each other.

Basic structure of one completed wave cycle

To use this knowledge to make a profit, a trader just needs to complete three simple steps:

Determine what design is currently on the market;
Look at its structure and find the point where the price is located;
Open a deal and trade according to pre-calculated parameters.

Problem. In 2017 none of the analysts is unable to make an accurate calculation and establish the market phases that dominate at the moment. Therefore, all entry points and forecasts subjective.

Each existing wave is always in several states: it is part of a larger structure and contains several less significant models.

The presence of the described problem means that each wave specialist will have his own opinion regarding the processes taking place in the market. A trader can theorize his position in every possible way, however, can't prove it with evidence.

The key problem of the whole wave theory

We'll talk about this in more detail in the next section. You can watch several training videos that will set you up for an in-depth study of wave theory or, on the contrary, convince you to stick to traditional methods of market analysis.

Elliott Waves: A Crash Course

Historical reference

The founder of wave analysis is considered Ralph Nelson Elliot, accountant, economist, Minister of Finance of the State of Nicaragua. At the age of 58, he became seriously ill and, in order not to sit idle, began to study the stock market.

At the age of 67 (1938) he published his first scientific work, “The Law of Waves.” You can download it Here . At the age of 75 (1946) he publishes a new book “ Law of Nature: The Secret of the Universe", in which the wavelength is predicted using Fibonacci numbers. Here it complements all previous developments.

To download Natural Law: The Secret of the Universe, click Here.

In 1948 (age 77), Ralph Elliott dies, and his forecasting method begins to actively develop. In 2017, Elliott waves are considered one of the most perfect ways, allowing you to predict price behavior on the market.

Concept

Price changes in the stock market always occur according to recognizable patterns that look like sea waves. They are always similar in shape, but differ in time and amplitude.

All market cycles consist of two types of waves: driving And correctional. The first are signed with numbers from 1 to 5, and the second are designated by the Latin letters A, B, C.

The order of marking driving and corrective waves

Methods for determining the wave model

The main task of price in the stock market is to find any available way allowing her to advance forward. That is why in wave theory the main attention is focused on the driving type of waves, which in technical analysis are called trend.

To determine where the price is, you need to know the construction features of each wave. For this purpose, “ Elliot's Rules”, which are worked out in most market situations.

Let's look at several examples of wave markings built according to " Elliot's Rules».

Forecasting further price movement in an upward market

Forecasting further price movement in a downward market

Types of waves

There are two large groups: pulse And correction.

Corrective and impulse waves in an ascending market

Corrective and impulse waves in a downward market

Impulse and correction, in turn, are divided into subtypes, of which there are countless numbers in different variations on price charts. Let's look at the most popular and frequently encountered formations.

Types of impulses

These waves can be elongated or truncated. Extended Pulse is a model built in violation of standard proportions, installed " Elliot's Rules».

Elongated pulses retain the general wave structure and turn into well-known graphic figures. Let's look at a few examples.

Model " Double top»

Model " Rising wedge»

Model " Double bottom»

Truncated impulse is a model that lacks one or more required parts of the wave established by “ Elliot's Rules».

Types of corrections

Zigzag

Flat correction

Triangles

Double three

Triple three

Ways to combine waves with Fibonacci numbers

This tool allows you to measure the depth of the wave correction and make a more accurate calculation of the length of the impulse that has not yet formed.

Fibonacci number series theory

Withdrawn ready table, which allows us to calculate the potential of the entire future model based on the length of the first wave impulse and Fibonacci numbers.

An important nuance is that Fibonacci numbers only allow you to calculate most likely levels, which are not always worked out in the stock market. This means that this mathematical method increases the probability of prediction, but does not make it 100% reliable.

To understand all the basic concepts and consolidate the material covered, be sure to watch the following video.

How to make wave markings from scratch: a practical example

Select a trading asset and using the table " Wave notations» identify the waves on the senior cycle and all the associated connections.

Wave notations

After this, make markings on the chart, determine the current position of the wave and make your own forecast. Below you can watch a video in which a visual description of the considered algorithm is made.

Why the wave theory will not stop working in the future

Movement in the market depends on two factors:

speed of information dissemination;
way of thinking, which most traders focus on.

The more exchange participants have the necessary information, the greater the likelihood of moving against the crowd. The majority of users are unable control your emotions. During trading they give in fear, greed And euphoria. This immutable human trait is built into the structure of market waves.

Elliott's concept reflects the natural behavioral cycle that links the speed of information dissemination and the actions of most traders. Let's see what this might look like.

1st stage. 10% receive new data about imminent market growth. The first wave is formed, preceding the future trend.
2nd stage. 90% see the increase as an opportunity to sell at a favorable price. The chart declines briefly and forms a second corrective wave.
3rd stage. The price is rising and moving against the majority. The majority of users close at a loss and at the end of the third wave enter into a bullish trade.
4th stage. On the fourth corrective wave, 10% of informed participants close their positions.
5th stage. The majority of players identified an upward trend and activated bullish trades. Against this background, a short fifth wave is developing.
6th stage. A series of corrective impulses arises, which again take the money of 90% of traders.
7th stage. New information appears and the cycle repeats.

Wave is relationship between the speed of information dissemination and the actions of most traders.

Because the people's habits don't change, the wave theory will exist as long as the stock market operates.

Below you can watch a video that describes the information presented in detail.

Case Study: How Elliott Waves Can Strengthen an Indicator Strategy

In this section we will analyze the popular indicator strategy “ Oracle”, which was the first time it was involved in Forex. After studying it, you will see in pictures how technical analysis signals can be combined with Elliott waves.

Preparatory work

Open MetaTrader 4, select any available asset and follow the three steps listed below.

On a real chart, set the timeframe H4.
Add a set of indicators and a ready-made system template to the root folder of the terminal.
Close all windows, restart the platform and add the template for this strategy.

Download test strategy files « Oracle" You can Here .

Conditions for entering the increase

The price fixed above the red and blue lines of the indicator OracleMove;
bar chart OracleStrength and arrows OracleDirection repainted in blue color;
StopLoss is hidden under the lines OracleMove;
Open a deal;
The StopLoss amount should not exceed 3% of the deposit amount. If you don't know how correctly place protective orders, read the article "".

An example of a successful entry into an increase

Conditions for entering a bear market

The price has consolidated under the red and blue lines of the indicator OracleMove;
bar chart OracleStrength and arrows OracleDirection repainted in red color;
StopLoss is hidden above the lines OracleMove;
We fix profit at a distance that is three or more times greater than StopLoss;
Opening a deal immediately after a new candle appears;
The StopLoss amount should not exceed 3% of the deposit amount.

An example of a successful entry into a bear market

Signal amplification

Now see what you can do if you doubt the signals you are receiving and want to improve their accuracy.

Receive the signal generated by the Oracle system;
Add a wave indicator to the chart;
See if the signals of the Oracle TS and the added wave indicator match;
If the price has the potential to move further, enter the trade. If not, wait for new conditions for entry.

As you can see, to trade the waves, it is not necessary to delve into theory and solve complex market codes. It is enough to download the desired indicator and combine it with other market instruments: Fibonacci levels, trend lines and other elements.

Trader's library

In this section I have collected for you a selection of thematic literature for self-study. If you want to receive accurate analytics and forecasts on Elliott waves, then you should in detail check out all the tutorials listed below.

You can download all the material for free and without any registration. To read you will need programs that open formats PDF And DjVu.

Download PDF reader
Download the program for reading DjVu files

Safronov’s book “ Practical use of Elliott waves in trading” available via this link .

You can download Robert Balan's textbook Here .

Download complete course from Frost and Prechter.

Get the book Glen Neely “ Elliot Wave Analysis Mastery”.

Go to reading directory of Dmitry Vozny.

Download Joseph's tutorial on simplified Elliott wave analysis.

All The listed books on wave analysis are in this archive .

Friends, I understand that the proposed list of references is far from complete. Therefore, if in the process of getting acquainted with the topic you find any useful book, please write its name in the comments below this article. Let's study together.

Let's summarize the information received

Friends, if you have completed the full training course and are ready for decisive action, - no need to wait. Choose a suitable broker and try to convert your knowledge into money. Here are the companies I recommend you work with: and.

Subscribe to my publications, share articles on social networks and don't forget to leave comments. Thank you for your attention!

If you find an error in the text, please select a piece of text and click Ctrl+Enter. Thanks for helping my blog get better!

Words of gratitude

Publisher's note for the 20th anniversary edition

New Classic Library, publisher

Preface

About two thousand years ago, a man uttered words whose truth echoes through the centuries:

“A generation passes, and a generation comes, but the earth remains forever. The sun rises, and the sun sets, and hastens to its place where it rises. The wind goes to the south, and goes to the north, spins, spins as it goes, and the wind returns to normal. All rivers flow into the sea, but the sea does not overflow; to the place from which the rivers flow, they return to flow again... What was, that will be; and what has been done will be done, and there is nothing new under the sun.”

Adviser to American presidents, Baruch, who became a multimillionaire thanks to stock market operations, hit the nail on the head with just a few words. “But what is really captured in stock market movements,” he said, “is not the events themselves, but the human reaction to those events. A reaction to how millions of individual men and women think current events may affect their future." Baruch added: “The stock market is, among other things, people. People trying to guess the future. And it is precisely their impressionability that makes the stock market such a dramatic arena in which men and women present their conflicting judgments, their hopes and fears, their strengths and weaknesses, their greed and ideals.”

Now we come to Ralph N. Elliott, who most likely had not even heard of Pigou when he developed his theory. Elliott worked in Mexico, but due to physical illness - I think he said it was anemia - he retired and settled in California. Having free time and trying to cope with the troubles that befell him, Elliott turned to studying the nature of the stock market, expressed in the history of changes in the Dow Jones Industrial Average. As a result of his long research, Elliott discovered the same phenomenon of repetition, so eloquently expressed by Ecclesiastes, quoted in the first paragraphs of the introduction. Elliott, by observing, researching, thinking, and thus developing his theory, incorporated what Dow had discovered, but went far beyond his theory in terms of completeness and accuracy. Both men understood the components of the dominant "human equation" in market movements, but Dow painted with bold strokes, while Elliott tried to build a detailed picture of price movements.

I knew Elliott by correspondence. At the time, I was publishing a national weekly newsletter on the stock market, which Elliott had expressed interest in contributing to. We exchanged letters regularly, but their contents changed in the first quarter of 1935. Then, after declining from its 1933 high to its 1934 low, the stock market began to rise again, but during the first quarter of 1935 the Dow Railroad Average) fell below the low of 1934. Investors, economists and analysts were still recovering from the depression of 1929–1932, and this crash in early 1935 was especially unpleasant. Was the nation in store for new stages of the crisis?

On the last day of the railroad decline, I received a telegram from Elliott insisting that the decline was over and that this was only the first obstacle in a bull market that had much greater prospects. The ensuing months proved Elliott so clearly right that I asked him to stay at my home in Michigan the following week. Elliott accepted my invitation and introduced me to the details of his theory. I was unable to take him into my organization because he insisted that all decisions should be made based on his theory. But I helped him get established on Wall Street and, in gratitude for his sharing his work with me, I wrote and published under his name a pamphlet entitled “The Wave Principle.”

I subsequently featured Elliott in the magazine Financial World, and he, having published a series of articles there, revealed the essence of his theory. Elliott later included "The Wave Principle" in a larger work entitled "The Law of Nature." There he talked about the magic of Fibonacci numbers and some esoteric evidence that he believed supported his own views.

A.J. Frost and Robert R. Prechter, the authors of this book, are keen researchers and passionate proponents of Elliott's theory. Readers seeking practical applications of the Elliott wave method will find their work worthy of careful consideration.

Charles J. Collins

Grousse Point, Michigan

While co-authoring this book, we remembered one little girl who, after reading a book about penguins, said: “This book told me more about penguins than I wanted to know about them.” We have tried to explain the theory of the wave principle simply and concisely and, for the most part, to avoid lengthy technicalities and excessive detail.

Once clearly stated, the basic principles of the wave principle are easy to understand and apply. But, unfortunately, early works on this topic are no longer published, and what has been written since then is of such a heterogeneous nature that problems have arisen as to which text should be considered the most authoritative, decisive, and final. In this book we have tried to give a complete understanding of the subject, while trying to open the door to the fascinating world of Elliott not only for experienced analysts, but also for simply interested readers.

Hopefully, our readers will want to do their own research by watching the hourly Dow charts and end up enthusiastically exclaiming, “Yes! I see! By understanding the wave principle, you will have at your disposal a wonderful new method of analyzing markets, moreover, a mathematical philosophy that can be applied to other areas of life. This method won't answer all your questions, but it will give you perspective while helping you understand the mysterious psychology of human behavior, especially market behavior. You'll see what Elliott talks about as clearly as if you discovered it yourself, and the stock market will appear in a new light.

A.J. Frost and Robert R. Prechter Jr.

1978

Part 1. Elliott Theory

Chapter 1. General concept

Hamilton Bolton began the introductory article to The Elliott Wave Principle - A Critical Appraisal with the following statement:

“Looking back at the many completely unpredictable events that occurred in the twentieth century that affected the stock market, such as the Depression, World War, Post-War Revival and Boom, I am each time surprised at how closely the Elliott Wave Principle fit into the real facts of economics. Having been tested over a significant period of modern history, Elliott's principle has proven its value in practical trading."

In the 1930s, Ralph Nelson Elliott discovered that stock market prices followed recognizable patterns. The patterns he identified are repeatable according to form, but not necessarily in time or amplitude. Elliott counted 13 similar patterns, or “waves,” that appear again and again in market price data. He named, defined and illustrated these patterns. He then described how, when linked, they form their own larger counterparts, which in turn form the same patterns in even larger sizes, and so on, leading to a structured progression. He called this phenomenon the wave principle.

While it is the best forecasting tool in existence, the wave principle is not primarily a forecasting tool. This is primarily a detailed description of the behavior of markets. Such a description provides a wealth of information about the market's position within the behavioral continuum and thus its likely future path. The main significance of the wave principle is that it provides context for market analysis. This context guides thinking in a certain way and makes it possible to understand the overall situation and outline the perspective. At times, the accuracy of the wave principle in detecting and even anticipating changes in direction is almost incredible. Many areas of mass human activity are consistent with the wave principle, but its application to the stock market is most famous and effective. In any case, the stock market is much more dependent on the human factor than it seems to the casual observer or even to those who are trying to build their wealth on it. The aggregate level of stock prices is a direct and immediate criterion in assessing overall human productivity. The fact that the assessment of such changes in accordance with certain models is a fact full of deep meaning, which can revolutionize the social sciences. However, it is not relevant to our present discussion.

Genius R.N. Elliott - in the amazing discipline of thinking with which he began to study the charts of the Dow Jones Industrial Average and its predecessors. Elliott studied them with such thoroughness and accuracy that he was able to construct a system of principles that reflected all the events in the market that he knew about by the mid-40s. At a time when the Dow was close to 100, Elliott predicted the great bull market of the next decades that would exceed all expectations of the time; However, most investors did not think it was possible for the Dow to rise above its 1929 peak. As we will see, exceptionally accurate market forecasts have accompanied the entire history of the Elliott Wave Approach.

Elliott had theories that he relied on to build his models, which we will discuss in Chapter 3. For now, it is enough to note that the models described in Chapters 1 and 2 have stood the test of time.

Quite often one can encounter different interpretations of the market status of Elliott waves, especially when experts do not bother to deeply study the indices. However, most doubts can be dispelled by examining the graphs simultaneously on arithmetic and semi-logarithmic scales and carefully following the rules and guidelines outlined in this book. Welcome to Elliott's world!

In 1990, Robert Prechter published The Fractal Design of Social Progress, a report on this classic topic based on his speech to the Association of Technical Market Analysts in May 1986. A reprint of the report was published by New Classic Library.

Elliott Wave Principle: Key to Understanding the Market Robert Prechter, Alfred Frost

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Title: Elliott Wave Principle: Key to Understanding the Market

About the book "The Elliott Wave Principle: The Key to Understanding the Market" Robert Prechter, Alfred Frost

“The Elliott Wave Principle” by R. Prechter and A. Frost – Wall Street classic, 20th edition translation. Largely thanks to the book by Prechter and Frost, most modern professional investors, traders and analysts are familiar with Elliott's theory and use it in practice.

While studying financial markets, Ralph Nelson Elliott discovered that prices move in recognizable patterns. He named, defined and illustrated these patterns. The wave principle is not only one of the best forecasting methods, it is primarily a detailed description of market behavior. Such a description provides a wealth of information about the market's position within the behavioral continuum and thus indicates its likely future path.

The book is intended for investors, traders, analysts, and financiers.

On our website about books lifeinbooks.net you can download for free without registration or read online the book “The Elliott Wave Principle: The Key to Understanding the Market” by Robert Prechter, Alfred Frost in epub, fb2, txt, rtf, pdf formats for iPad, iPhone, Android and Kindle. The book will give you a lot of pleasant moments and real pleasure from reading. You can buy the full version from our partner. Also, here you will find the latest news from the literary world, learn the biography of your favorite authors. For beginning writers, there is a separate section with useful tips and tricks, interesting articles, thanks to which you yourself can try your hand at literary crafts.

The book by Alfred Frost and Robert Prechter “The Elliott Wave Principle. The Key to Understanding the Market" came out in 1978 and became a Wall Street classic. The book became a success after scientifically proving the theory of self-replicating patterns, called Elliott waves. One of the authors of the book, R. Prechter, is the winner of the Championship for trading on real money accounts, held in 1984. At this championship, Prechter set a record that has not yet been broken by anyone.

The Financial News called Prechter "a true herald and forecaster of market movements."

It must be said that the translation of the book “Elliott's Wave Principle. key to understanding the market" into Russian was particularly difficult. Most of the concepts used in this course do not have established meanings in Russian. Therefore, translation options for some terms are supplemented by the original names in English.

More recently, the idea that market movements can form patterns has been highly questioned. But it has been established that model structures are fundamental properties of complex systems involving financial markets. Some systems experience what is called “discontinuous growth,” in which periods of growth are followed by phases of decline or lack of growth. In this case, a fractal unification occurs in a model of increasing size. It is this type of pattern that Elliott established in market movements approximately sixty years ago.

While researching financial markets, Elliott noticed that prices move in certain recognizable patterns. He subsequently studied, named and illustrated these models. The wave principle is one of the best methods of forecasting and detailed description of market behavior, which makes it possible to obtain a fairly large amount of information about the market situation. Many Forex market participants successfully use it for investing and trading.

Given the unpredictable economic climate that spans depression, war, and post-war recovery, Elliott's Wave Law fits almost perfectly into these events and their developments, demonstrating its fundamental importance. This means that the behavior of society changes and develops in some recognizable patterns. Using stock market data as his primary tool, Elliott discovered that continuously changing price paths form a special structured pattern that reflects the harmony of nature. Based on this phenomenon, he formed a rational system for analyzing markets.

Elliott identified a total of 13 patterns of movement, which he called “waves.” These patterns continually emerge in market price flows. They are similar in shape, but not always in amplitude or time. In the work “Elliott's Wave Principle. Key to Understanding the Market" details how these wave patterns connect to form larger versions of the same patterns. In short, the Law of Waves is a catalog of patterns of price changes and predictions of the more likely occurrence of such patterns.

Elliott's descriptions are a set of empirically derived guidelines and rules for explaining market behavior. Although Elliott's theory is currently the best predictive tool, it was not originally such. The main value of the Wave Law is that it provides a framework for analyzing markets. This environment is the basis for disciplined thinking and the ability to analyze general market conditions and prospects. At times, the accuracy of this theory in identifying and predicting changes in market direction is almost incredible. Many areas of human activity are subject to the law of waves, but it is in the stock markets that this law is most readily applied.

What is the book "The Elliott Wave Principle. The Key to Understanding the Market" about?

Elliott's genius lay in a disciplined intellectual process focused on examining the charts of the Dow Jones Industrial Average and its predecessors with such care and precision that he created interrelated principles that described every market movement that was known. In the mid-40s. The Dow was near 100. At this time, Elliott, contrary to the predictions of most analysts, predicted a strong recovery for several decades that would exceed all expectations. Thus, the history of the use of the wave approach was accompanied by this phenomenal prediction.

N. R. Elliott had his own assumptions regarding the meaning and origin of the models he discovered. They are described in detail in the book “Elliott's Wave Principle. the key to understanding the market" in Lessons No. 16-19. In the meantime, we can say that all the models that are described in Lessons No. 1-15 have adequately stood the test of time.

You can often hear different interpretations of Elliott wave patterns on the charts of the same market, especially if unprepared and superficial index studies were performed by newly minted experts. Most uncertainties can be easily avoided by studying charts on semi-logarithmic and linear price scales (i.e., on the price axis - logarithmic scale, on the time axis - linear), following the rules and guidelines set out in the book “Elliott's Wave Principle. key to understanding the market."

On the Internet you can find many fragments and retellings of individual chapters of this book, but they give a general idea of the wave theory and are very doubtful when used in practice. To fully appreciate the prognostic and fundamental significance of the wave law, it is necessary to read the entire course “Elliott's Wave Principle. key to understanding the market."

The book “Elliott's Wave Principle. key to understanding the market" is aimed at both traders new to wave analysis and traders who successfully apply Elliott's theory in practice. It should be noted that the materials in this book are unique in their own way, because the emphasis was placed on the Forex market, while other books that are devoted to wave analysis mainly use examples of the securities and futures markets.

So, the work “Elliott's Wave Principle. key to understanding the market" is divided into eight thematic parts. The first parts are almost entirely devoted to the beginnings of wave analysis; some historical facts are presented here, as well as the conditions for creating the theory of waves. The following parts contain a catalog of basic wave models and detailed instructions for their practical use. The sixth part has the greatest practical benefit. It provides examples of trading plans, according to the results of wave analysis. Moreover, these examples are not limited to standard 5-wave models. In the final part, the authors provide traders with the opportunity to familiarize themselves with their views on the theories of chaos and fractals.

Without a doubt, the book “Elliott's Wave Principle. The key to understanding the market" is a very useful guide for a wide range of readers. Practicing traders can gain new ideas that will help significantly improve trading results. For Forex market analysts and investors, this book will provide additional tools for assessing market conditions.