# Elliott Wave Theory

Elliott Wave principle is kind of technical analysis which the traders of finance utilize to examine financial market cycles, and it forecast market trends by recognizing excess in investor psychology, lows, and highs in costs and other kinds of collective factors.

Ralph Nelson Elliott is an expert accountant, invented the fundamental social principles and also developed analytical tools in the year 1930. He recommended that market costs unfold in particular patterns, that practitioner at present known as Elliot Wave. Elliot written his theory of market nature in the book called The Wave Principle in the year 1938, outlines it in the sequence of articles in the Financial World magazine in the year 1939, and coated is most effectively in his ultimate main work called Nature’s Laws: the Secret of the Universe in the year 1946.

Ralph Nelson stated that ‘due to man is subject to a rhythmical process, the computation must be performed with his tasks can be forecasted far into the future along with justification and surely heretofore distant.

## What is the Elliot Wave Theory?

For any individual with also a passing curiosity in the stock markets as well as trading the term Ralph Nelson Elliot is generally a most well-known one. If you consider the one stock market for something such as oil, and you eliminate all details with respect to any of the values or time frames, and you put this alongside the chart of trading for something fully unique, what you will observe in which they share vital similarities.

The reason for this, hence, Elliot Wave Theory recommends, is that the stock markets are densely managed by human psychology; the psychology of human is clearly predictable.

When it comes to the matter of personality as well as features of Elliot wave, analysts hold that every single wave incorporates its own characteristic or signature, which usually mirrors the psychology of the moment. Knowing those personalities is the key to the application of the Wave Principle.

Know about the Elliot wave rules

The actual Elliot wave count should notice below-mentioned rules: –

• Wave 4 doesn’t overlap with the cost domain of Wave 1, other than in the rare case of the diagonal triangle formation.
• Wave 3 can’t be the shortest of the three impulse waves such as waves 1, 3 and 5
• Wave 2 never repeats more than 100% of the Wave 1