Get to know Elliot Wave History in Forex Trading
There are many indicators and strategies from Technical Analysis that can be used in Forex trading. Of course the most popular one is Elliott Wave Theory that has that difference.
The founder of this popular theory is Ralph Nelson Elliott.
The beginning of Elliot’s Theory
Ralph Nelson Elliott began his career as an accountant in the mid-1890s. Elliot has held executive positions in private companies and consulting businesses. Then the US Department of Foreign Affairs appointed Elliott to the position of Chief Accountant for Nicaragua (which at the time was under American control).
While in Central America, Ralph Nelson Elliott had a debilitating illness, which forced him to retire early at fifty-eight. About this time, he decided to dedicate himself to studying the American stock market.
When Elliott began his study of markets, it was generally believed that markets were random and chaotic. Elliott suspects that there are several sequences that underlie how they move. And he proposed that market prices be opened in certain patterns and trends.
Elliott began his studies by examining 75 years of historical stock market data using annual, monthly, weekly, daily, hour and half hour charts. This began in the 1930s, certainly before computing power was available to help track charts and keep records.
Elliot’s research became known and began to develop.
When his research developed, he began to form rules that could be applied to the market. At that time his trust grew, and finally he began to share his ideas in public. On March 13, 1935, on a regular Wednesday, he sent a telegram after the market closure. Its contents state that the American stock market made the last lowest position.
The next day, Thursday, March 14, 1935, the Dow Jones Industrial Average made the lowest closing price of the year. In fact, the market began to rise which lasted almost two years and almost doubled the Dow’s value. Elliott, using the market rules he has developed, has pinned the bottom of the market in one trading day.
Elliot’s theory is able to provide accurate predictions
What makes this even more remarkable is the time in history that Elliott made predictions. In 1935, America was in the midst of the Great Depression and the idea that markets could rise seemed unthinkable.
A few months after predicting the low in March 1935. Then Elliott wrote “Elliott Principles” with Charles J. Collins. Collins himself was the recipient of the Elliott telegram on Wednesday afternoon predicting a low market.
With that book, Elliott Wave Theory was officially born.
Elliott died in 1948, after which many financial professionals continued to provide predictions based on the Elliott Wave Theory. 22 years later, an analyst at Merrill Lynch, named Robert Prechter, again made a surprise from this theory. He found Elliott’s work and reintroduced it to the public through his own bulletins and books.
Prechter won the U.S. Trade Championship. in 1984 using the Elliott Wave with a record profit of 444% in four months. Prechter also succeeded in predicting the long-term US bull market that began in 1982. And predicted the fall of October 1987.
Elliot’s theory in Forex Trading
If you want to use this theory in trading forex, you should study each pattern of wave waves. This can help you make predictions before market entry. You can use the elliot wave theory on your platform, such as metatrader 4 and metatrader 5. By mastering various wave patterns, it will certainly facilitate technical analysis in your forex trading.