Advanced Charting Tools Applying Technical Formations and Theories |
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Introduction Track 'n Trade Pro has incorporated concepts and theories from leading Technical and Fundamental Educators in the Futures Industry allowing you as a trader to apply their studies easily to your trading. In this section you will learn basics about their theory and how to apply it in Track 'n Trade Pro using the Advanced Charting Tools provided you. For more detailed information on the different theories and concepts see the educational products also offered by Gecko Software, Inc. www.trackntrade.com Elliott Wave Theory This theory was developed by Ralph Nelson Elliott and bares his name. The Elliott Wave Theory is an idea that market behavior is based on waves rather than random timing. Elliott believed that market prices rose and fell in a series of waves based on the same Golden ratio or Golden mean that Fibonacci proved. For more information on Fibonacci, see the Fibonacci Retracements section later in this chapter. This ratio is present in many aspects of nature and science, and Elliott felt that it had great significance on the financial markets as well. Interpretation The basic idea of this theory is that a market rises in a series of 5 "waves" (as he called them) and that a market declines in a series of 3 declines. Elliott's theory is that on the first wave a market rises, on wave two it declines, begins again to rise on wave three, has a period of decline again on wave four, and finally completes the rise on wave five. Then the period of correction is referred to as a three-wave correction, where the market declines for wave A, begins to rise for wave B, and falls again for wave C. Elliott went on to further explain that a complete market cycle consisted of a 144 wave cycle, broken down into an 89 wave bull cycle, and a 55 wave bear cycle. This is based on his observation of Fibonacci's Golden Ratio. The series of numbers Fibonacci describes, (1, 2, 3, 5, 8, 13, 21, 34, 55, 89, and 144) shows a relationship of 1:.618. Elliott further showed that a market usually rises or falls based on this wave cycle. Each wave in the cycle has its own characteristics. Five Wave Advance Wave one: Normally very short and easy to miss. Three Wave Decline Wave A: Normally seen as a minor pullback, of wave 5 of the advance cycle. Trading an Elliott Wave Example of an Elliott Wave in Track 'n Trade Pro: Elliott Wave Tool To identify an Elliott Wave on a chart use the Elliott Wave tool located in the Advanced Charting Tools section. Charting an Elliott Wave: 1. Select the Elliott Wave tool from the Toolbar. 2. Left-click your mouse on the #1 point to place. 3. Continue throughout the wave by clicking on each point 1-5 and A,B,C to place. When you get to the last point C the drawing is complete. Resizing the Elliott Wave Drawing: 1. Select the drawing by clicking on it. Note: The drawing is selected when boxes appear on the corners. 2. Click on one of the boxes to drag the select point and release the mouse button. Moving the Elliott Wave Drawing: 1. Select the drawing by clicking on it continue holding down the mouse button. 2. Drag to the new location and release the mouse button. Deleting the Elliott Wave Drawing: 1. Select the drawing by clicking on it and press the Del(Delete) key on your keyboard to remove. 2. Right-click the drawing and select "Delete" from the menu. Changing the Properties of an Elliott Wave Drawing: Right-click on the drawing to view the Properties menu. Properties that can be changed are: Foreground - Changes the line color of the Elliott Wave.Back To Top |