In recent years, software programs have been developed with extensive
and complex algorithms (mathematical rules) that supposedly provide
Elliott wave labels automatically on any data chart. If a software program
provides an Elliott wave count on each and every data file, the program
(and its programmer) assumes there is a valid and practical Elliott wave
count on every data series, at any time. The program is forced to provide a
wave count, even when none logically exists. A forced wave count is not
only misleading, but will prove very costly to the trader who foolishly
takes action on this irrelevant information.
Beware of forced wave counts, whether they are made by you, an
Elliott wave analyst or a software program.
Don’t Become An Elliott Wave Obsessive
One of the most
important objectives of Elliott Wave analysis is to distinguish if the
market is in a trend or counter-trend position. Also it`s stated above that a
clearly identifiable Elliott Wave pattern is usually only evident about 50%
of the time in most markets. When a market is not unfolding in one of the
specific impulse or counter-trend patterns described in this chapter, the
rules, guidelines and general characteristics of impulse and counter-trend
patterns will often strongly suggest whether the market is in an impulse or
counter-trend position. That is a valuable piece of information itself.
Do not become obsessive with having to make a specific wave count if
one is not obvious. The road to trading and investing ruin is littered with
Elliott-Wave-Obsessives who would leave no chart unlabeled. The harder
you have to work to apply a wave count the less likely it is to be a valid
count and the more likely you will believe it to be a true when in fact it is
only an illusion of your label-obsessive mind. Some day, for sure there
will be EWA (Elliott Wave Anonymous) groups throughout the country
where Elliott-Wave-Obsessive analysts will find help.
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