Swing Trading With Elliot Wave For Bigger Forex Profits

Elliot wave is one of the most popular methods of trading and although originally devised for the stock market swing trading with Elliot wave is very popular with forex traders.

Let’s look at swing trading with Elliot Wave in more detail


Elliott Wave theory is named after Ralph Nelson Elliott, who concluded that the markets moved in a repetitive pattern of waves and was a reflection of human nature.

He attributed this action to the mass psychology of the market which never changes and can therefore be predicted with scientific accuracy.

Elliott Wave patterns follow a specific pattern that the markets move up in a series of 3 waves and then down in a series of 2 waves in a bull market. The 3 wave impulse and 2 wave corrective sequences form the basis of his method of a 5 Wave impulse pattern, with the reverse occurring in a bear market.

In Elliot wave theory there is also a use of the Fibonacci number sequence which is specific retracement levels to help calculate the waves.

So by trading these waves, a forex trader can look at his forex charts and swing trade with Elliot Wave and make consistent profits from his forex technical analysis.

It’s a scientific way of making profits according to Elliot waves and his disciples â€" so does it work?

The answer is it has to be one the biggest myths of forex trading that Elliot Wave Theory can lead you to currency trading success (lets ignore the fact that there is no hard evidence that Elliot made any money from his own theory) and look at why the theory is flawed.

1. If it’s a scientific theory:

It should be objective!

If human psychology can be predicted with scientific accuracy it should tell you exactly what to do, but of course it doesn’t â€" it leaves everything to your subjective judgment, so it can’t be a scientific theory â€" it’s a total contradiction in terms.

You have to look at the waves and decide what happens next - does that sound scientific to you?

2. Human Psychology is not scientific!

Of course it isn’t and neither are currency markets.

If there was a scientific theory that allowed people to predict prices in advance there would be no market- as we would all know the price beforehand.

Forex markets move on differences of opinions and these cannot be measured scientifically â€" This is common sense.

3. The Fibonacci Number sequence

This number sequence is loved by the far out investment community and was developed in the 12th century by Leonardo Fibonacci. It was NOT developed for the purposes of trading forex markets though - but was developed to solve a problem posed by the copulation of rabbits!

In fact I am sure if Leonardo Fibonacci was around today, he would be bemused by the way his theory is used by the believers of Elliot Wave.

So there you have it:

A scientific theory that is not scientific at all and is totally illogical.

There are many people selling the myth of swing trading with Elliot wave and how you can to but if it was as successful as they claim and they can predict the future, why would they be telling you?

It’s a good read but if you want to trade and use forex technical analysis to generate trading signals pass this one by and keep one fact in mind:

Trading is a game of trading the odds and not prediction.

You can win trading forex markets, however appreciate that you need to trade the odds to win and forget predicting the future.

If you understand this you can get a forex trading system that can make you a lot of money. Leave Forex trading with Elliot wave to the dreamers and deal with the reality which is:

There are no short cuts and prediction doesn’t work â€" work at trading the odds and you have a far greater chance of achieving currency trading success.

Article Source: http://www.Free-Articles-Zone.com

A Novice Forex Traders Guide To Fundamental Analysis

If you are new to forex trading you have access to a lot of fundamental analysis as the click of a mouse from banks brokers and news wires you can look at and trade upon it - let's look at forex fundamental analysis and how to use it.

A forex trader, who makes trades based upon fundamental analysis, will look at the supply and demand situation in relation to the currency studied, and try and predict the impact of the various factors on its movement and they include:

• Economic growth and economic policy

• Interest rate outlook

• Balance of payments

• Employment

• Trade deficit

• Political Factors

To name but a few but there is a problem when trying to use fundamental analysis:

The facts are there for all to see but price is ultimately decided by millions of different opinions such as you and me and we all draw our own conclusions from the facts and numbers. Furthermore all the news is available in seconds anywhere and this means it is discounted.

With human nature involved and the fact that fundamental analysis is quickly discounted it is almost impossible for the novice trader to execute trading signals on.

If you want a graphic example of how forex fundamental analysis won’t help you make money consider this fact:

The ratio of winners to losers is the same today as it was 50 years ago and this is despite better news more of it and faster communications. So if you are thinking of trading it think again.

A far easier way is to study charts and use technical analysis.


A technical approach takes into account both the supply and demand situation, as well as investor psychology. We can see the impact of both at once and reflected in the price.

Many traders don’t believe that technical analysis works, as it can’t take into account the fundamentals but this is not correct:

Technical analysis assumes that all known fundamentals are going to show up instantly in price action. Technical analysis therefore is simply a short cut way of taking into account the fundamentals and more importantly takes into account human psychology.

The equation for market movement is:

Supply and demand factors + Human perception (investor psychology) = Price action

So if you are thinking of trading using forex fundamental analysis, you can save yourself a lot of time and increase your chances of success, by taking a technical approach - that reflects ALL the factors that influence price and increase your odds of success.

With technical analysis you act on the reality of price - not opinions and therefore trade the truth and not what you or anyone else thinks it might be.

Article Source: http://www.Free-Articles-Zone.com

Forex Charts - A Simple 3 Step Method for Huge Gains

On any Forex chart, you’ll see repetitive patterns that you could have traded for profit. This article is about spotting these repetitive patterns â€" and using technical analysis to create big consistent gains from them.

Use Forex charts and follow these 3 simple tips for success:

Step 1. Understand Support and Resistance

If you want to make money in Forex trading, you need to understand support and resistance - and incorporate it into of your Forex trading strategy.

An important point to keep in mind is to only trade valid support and resistance - as market participants consider these important.

Firstly, forget about using support and resistance in short time frames â€" it doesn’t work. All volatility is random in short time frames - so if you’ve been thinking about day trading - forget it.

You need to look at your Forex chart, and see support and resistance that’s held for weeks or months - and already been tested several times. As a general rule look for five tests or more.

You then need to decide whether support or resistance will hold, or break - and this is the difficult bit for any currency trader.

Step 2. Trade with Momentum

Most currency traders simply see prices approach support and resistance - and buy or sell - hoping the levels hold. Try this, and you’re sure to lose money. You’re guessing, and hoping - and the Forex markets will wipe out the equity of any trader that does this!

To be successful with your currency trading system, you need to calculate the odds of levels holding or breaking. This means looking closely at the momentum, and strength of price.

For example, if price momentum weakens into resistance, then you can sell. If however, price momentum accelerates into resistance, then you should hold back - and wait for the break to execute your trading signal. This way you’re always trading with price momentum - and there are several indicators you can use.

Two of the best indicators are the stochastic and Relative Strength Index (RSI) â€" which we’ve already covered in previous articles.

If you use stochastic and Relative Strength Index in association with your Forex charts, you’ll gain a huge advantage - by getting the odds in your favour.

Step 3. Cutting Losses and Running Profits

Cutting loses is actually the easy bit - you place your stop when executing your trading signal behind the breakout point - nice and simple.

The hard bit is running profits - most traders simply cannot accept big profits. This may sound odd, as all traders want to run profits. However, few traders can manage to run profits - due to human nature. Why? Because Forex traders are so obsessed with not losing money, they can’t make big gains.

A trader will see a profit on his Forex charts and get excited and nervous at the same time â€" excited they’ve made a profit - and nervous they might lose it!

The Bigger the profit becomes the more tempted they are to take it - so they move their stop up to close - and gets taken out by normal market volatility. The trader may also snatch the profit, when the temptation becomes too much. Do either of these and of you’ll never make big gains.

You need the courage to hold your stop back - and accept dips in your open equity, as part of Forex trading. Sure, it’s not nice losing a thousand or more per day in open profit - but you need to keep your eyes on the bigger prize!

Look at any Forex chart, and you’ll see trends that can, and do, make Forex traders $10,000 to $50,000 â€" maybe even more. You just need the courage to hold on.

If you check your Forex charts for valid support and resistance, and trade with momentum on your side, and have the courage to run your profits â€" then you’ll make huge currency trading profits.

Article Source: http://www.Free-Articles-Zone.com