The theory of trading using Elliott Wave does seem easy. Traders only need to draw a line, place a position based on the projection of the line, then it’s done.
It turns out from observations in the field that many beginners confuse how to apply it appropriately.
First, the biggest difficulty lies in the process of preparing a trading system. Novice traders do not yet have procedures for entry and exit trading positions based on signals from Elliott waves.
Even though you already know the basics of identifying trends, it is not certain that beginners can decide when to buy or sell when the Impulse Wave or Elliott Corrective Wave patterns appear.
Second, Elliott Wave trading signals are subjective. Even though Pair and Timeframe, and the broker are used exactly the same, two different traders can get different trading signals from Elliot Wave.
Last, Elliott Waves cannot stand alone. That is, to truly be able to trade, traders need help from additional indicators, to find out at what level a trading position can be opened or closed.
Basic Flow of Trading Using Elliott Wave
In practice, spontaneous market conditions are represented by Elliott’s Impulse Waves. Traders use these waves to gain trading opportunities as long as the trend continues. This is one of the secret weapons of professional traders to achieve large profits.
Furthermore, after the Elliott Impulse Wave is over, the trader prepares to face a correction or reversal of the price direction by mapping the Elliott Corrective Wave.
How to Trade Using Elliott Wave Easily
Although Elliott Wave has a relatively high degree of difficulty, there are some easy guidelines and instructions. You can start with the wave identification process, then confirming the signal, and Market Order execution.
Trends are your truly best friends
You should buy when prices are going up or sell when prices are going down. You must remember this simple sentence so that you get the benefits consistently.
Therefore, the first important step is to know the extent to which the trend will survive through Elliot Wave. According to Trading Strategy Guides, the Elliott wave strategy is similar to a trend following strategy.
Besides, you should remember that Elliot Wave consists of two types, that is Impulse Waves and Corrective Waves. The formation and continuity of trends is represented by Impulse Waves. If the price has reached the peak of the wave, then there is a possibility the price is ready to reverse direction.
Be patient and wait for the best trading signals
Besides equity, patience is the main capital in trading. Thus, you have to be patient by choosing the best trading signals. Forget about noise or dubious trading signals. You should wait until there is a strong confirmation to which level the price will visit.