Visual Guide to Elliott Wave Trading
Wayne Gorman, Jeffrey Kennedy
Format: PDF / Kindle (mobi) / ePub
The Visual Guide to Elliott Wave Trading is an in-depth, easy-to-use guide to trading the financial markets with the Elliott Wave Principle.
In many ways this book picks up where Frost & Prechter's classic Elliott Wave Principle: Key to Market Behavior left off, which makes it "required reading" if you want to build a solid foundation in Elliott wave analysis. Co-authored by two of Elliott Wave International's most trusted analysts -- Wayne Gorman and Jeffrey Kennedy -- their trading insights offer a perfect blend of traditional textbook and real-world application.
April 10, it was a good time to lower Smart Investor Tip Remember the three phases of risk management during a trade: (1) lessen risk, (2) eliminate risk, and (3) protect open proﬁts. 32 ■ CHAPTER 2â•‡ How Zigzags and Flats Set Up a Trade for the Next Impulse Wave Figure 2.11â•… Chart reprinted with permission from Bloomberg. Copyright 2013 Bloomberg L.P. All rights reserved. the protective stop to break even at 69.50. It is important for traders to focus not only on the trade but also on
entry points, and targets. For More Information Learn more at your exclusive Reader Resources site. You will find a free online edition of Elliott Wave Principle by Frost and Prechter, plus lessons on Elliott wave analysis, how to trade specific patterns, and how to use Fibonacci and other technical indicators to increase your confidence as you apply the Wave Principle in real time. Go to: www.elliottwave.com/wave/ReaderResources. ■ 75 76 ■ CHAPTER 2 How Zigzags and Flats Set Up a Trade
had followed it. Knowing that it is good practice to look for alternate interpretations in case the preferred wave count does not materialize, I considered three potential counts. My top wave count had Intermediate wave (4) unfolding as a contracting triangle, based on this thinking: Wave A ended at 854.4, wave B ended at 1000.0, and wave C was unfolding as a double zigzag. Using the Elliott wave guideline that alternate legs of a triangle are related by the Fibonacci ratio of .618, I estimated
strong evidence that the diagonal has ended. Let’s say that we decided to sell the euro at the closing price on April 22 at 1.5957 (see Figure 5.24). Our price target is 1.5273, where the diagonal began. Our protective stop is 1.6161, the price at which wave  would be longer than wave , which would make the diagonal invalid. Our potential risk would be 204 points and our potential reward would be 684 points, resulting in a risk-reward ratio of more than 3:1. Visual Guide to Elliott Wave
impulse waves identify the direction of the larger trend. Thus, this five-wave decline in CAT implied further selling to come that would take prices below 108.39 in either wave (C) or wave (3). The subsequent rally in CAT that developed in three waves supported this analysis. Countertrend price action typically consists of three waves, so I knew to expect another move down in CAT. Moreover, the three-wave advance in CAT traveled to 112.47 to retrace 50 percent of the previous sell-off. That 50