Do you have a favorite pattern to trade? And do you find that to trade currencies with Elliott analysis is different from using Elliott to trade commodities, stocks, or any other market?
It's certainly true that currency trading includes a special set of considerations. The complexities of forex trading can be overwhelming for many traders.
Jim Martens, editor of Elliott Wave International's Currencies Specialty Service, understands these considerations and complexities. He has ten-plus years of experience as a trader and technical analyst, and has used the Elliott Wave Principle since 1993 (read his bio and learn about his upcoming LIVE online trading course here>>).
For the second installation of our Forex FAQ series, we'd like to share Jim's insight:
Q: What is your favorite Elliott wave pattern to trade in forex markets and why?
A: Regardless of the market in question the patterns are the same, so I have no favorite for the forex market. I always like the wind at my back and that means acting in concert with the trend.
From that perspective I view impulsive waves as opportunities and corrective waves as set-up waves. I concentrate on identifying second and fourth waves. The opportunity is typically greater in third waves, so I prefer second waves over fourth waves.
Regarding pattern, a clear corrective pattern will do. In a second wave, a zigzag is clearly in three waves and I know where I’m wrong; below the origin of wave one. Flats are also attractive, since there is already a three-wave correction in place. The failed move to a new high and subsequent move lower in wave C highlight the corrective movement and bring the market closer to the origin of wave one.
Wave four does have its advantages, mainly, that the extended third wave increases confidence that the underlying rally will extend to five waves. And a triangle is a common pattern. Because it takes its time to form, you can see it coming and the risk is known.
-Jim Martens
How did your answer compare to Jim's? Are you similarly confident in your ability to identify Wave patterns in the forex markets objectively?
If you still struggle to apply Elliott successfully in currencies, we have an important announcement for you: Jim and his colleague, Senior Analyst Jeffrey Kennedy, have compiled the most useful, informative and downright cutting-edge forex tutorial for Elliott wave traders you'll ever come across. With their 40-plus years of combined experience, these trader-analysts are two of the best teachers of the method at work today.
Together, they will teach you the invaluable skills you need to apply wave analysis more successfully to your forex trading -- because nothing helps you learn faster than a good teacher.
Don't miss this opportunity to learn from two accomplished forex Elliotticians and instructors.
EWI's upcoming LIVE online Intensive Forex Trading Tutorial is your first step towards finding high-probability trade set-ups in the world's leading currency markets.
Learn to effectively trade forex using the Wave Principle from the comfort of your home or office. Join top EWI instructors, Jim Martens and Jeffrey Kennedy ONLINE for this intensive, 4-session trading course. Learn how to:
- Pick the forex markets that offer the best opportunities
- Identify trends, countertrends and their trade set-ups
- Time your entry, exits and re-entry with high confidence
- Set your stop-loss for maximum protection
- Identify 5 key components of a high-probability trade set-up
- Apply the Wave Principle as a trading methodology
- And much more!
See what over 40 years of market experience can do for your forex trading! Learn more >>
Editor's note: Through the end of the month, we'll share more of their tips to forex traders to promote their January online course -- check back with us each week! Part One of the series can be viewed here>>.