Binary Options Trading: Elliott Waves Theory

Elliott Waves Theory is one of the most widely used theories associated with corrective waves that help traders to implement technical analysis and decide where their trades should be placed in order to be successful. Here we will try to tell you about it in details.

What is this theory about? Of course, it is a part of technical analysis applied to charts, but it is usually considered as its psychological part, not a mathematical one because first of all it is a detailed analysis of different trader groups’ behavior in some certain situations. Its main aim is to clarify the mass psychology which leads to swings from optimism to pessimism and backwards. Elliot insists this sequence can be measured and predicted. He broke those competitive patterns into waves.

This theory was considered a viable one in 1970’s because of its correct forecasts for the strong bull markets and it extended its popularity in 1987 because of market crash prediction.

Elliot wave theory takes into consideration five impulse or motive wave structure and three counter waves which correct the previous five.

Elliot’s theory supposes the market is split into what they call cycles and supercycles. If you divide it like that it becomes easier to calculate the waves.

The five motive waves will always move in one direction (name them 1-5) and those three corrective waves will always move in the opposite direction (name them a-c). Corrective waves are usually formed by triangles, zig-zags, and flats. The correction process is really complex and you can often find doubles and triples of the mentioned above pattern forms of the waves.

More related articles:

One off the most important decisions a binary options trader must make is whether to place a bull or a bear put. Understanding this is an essential part of making the right decision and placing a s...
Trading Binary Options on Non-Farm Payroll Days
The Non Farm Payroll report, as its name suggests is a report which shows the number of paid employees across the country, not including farm employees, private household employees or general gover...
Trading stock indices is the best choice to achieve the higher return on your even moderate investment. Indices are among other professional indicators to feel yourself comforta...
Put and Call Options
Binary options trading is not the same as trading on the stock market. The stock market requires a significant amount of capital and knowledge of shares and the economic factors which influence the...
The only way to consistently obtain good results when attempting binary options trading is to have a strategy. This will increase your chances of winning more trades than you lose and ultimately re...
Large Time Frames When Trading Binary Options
Choosing when to trade should and is a difficult and yet essential part of trading in binary options. The wrong expiry time can see a trend reverse and leave you without your investment funds. Ther...
Interest Rates and Their Importance
Interest rates are one of the most important guides and controls in any economy. In fact, many other economic changes are reviewed in respect of how they may affect the interest rates. Even when ne...
How To Manage Your Binary Options Investments
It is imperative that you understand that trading options come with risk. Especially binary options are followed by plenty of losses for those who do not have the fundamental understanding of how t...
Choosing how to place a binary option trade is a personal matter. Everyone has a different approach and employs a different binary options strategy when analyzing the data in fr...
Fibonacci Retracement – Trading Binary Options with Fibonacci
There are two ways of analysing data when you are looking to trade in binary options. The first is known as Fundamental. This approach studies the reasons behind market movements. Just because a ma...
Exponential Moving Averages and Binary Options
The Exponential Moving Averages is a useful tool for locating price movements and trends, once mastered it can become a valuable addition to your market analysis and help you place the right invest...
Diversify Binary Options And Boost Profitability
When trading in binary options it is extremely difficult to predict the right outcome every time, it is, therefore essential to find ways in which you can increase your chances of trading profitabl...
Correlation Strategy and Binary Options
Finding the right point to start binary options trading is one of the most difficult skills to master. One binary options strategy which can be used to achieve a high success rate is the correlatio...
The most essential ingredient to becoming a successful binary options trader is learning the wide variety of different strategies and ways to analyze data. The majority of the binary brokers have t...
Binary Trading and Trend Lines Strategy
A trend line is simply a straight line which reflects the overall movement of an asset; whether up or down. They can be easily picked out of an asset price chart and can be of g...
Binary Options: power of buying and weakness of selling
When trading binary options it is essential being able to predict where an asset price will move and how long it will move in that direction. Sometimes it is really difficult to predict, if it was ...
Binary Options: Head and Shoulder Patterns
When you first look at the stock market it will probably appear to be a huge mess of numbers, share prices climbing and falling without any obvious reason or any continuity. However, the only way t...
Binary Options with Stochastic Indicator
Stochastic Indicator has been used as a predictive one since the late 1950’s. Now its application embraces a wide range of trading with binary options among. It is an oscillation type indicat...
Binary Options with Bollinger Bands
Bollinger Band analysis is a tool for binary option analysis. It was created by and named after John Bollinger, a popular present-day technical investment analyst. Bollinger bands are normally plot...
Binary Options Trend Lines
Have you ever met the “trading tools” word combination, which is often mentioned in different sources of information on binary options trading? You have to come across these words if yo...
Binary Options Trading With the Help of Ultimate Oscillator
We have already analyzed and studied many various technical chart indicators. You should have understood that oscillators have proved their effectiveness and profitability as the tools for predicti...
Binary Options Trading with CCI Indicator
The Commodity Channel Index (CCI) was developed by Donald Lambert, an investment analyst, in the late 1970’s. Since then it has been successfully used by lots of brokers and traders with thos...
Binary options trading and the psychology that surrounds the market
When trading binary options you cannot just focus on the practice of analyzing numbers. Sure, this is a large piece of the puzzle. Analyzing charts and to sort out the statistical information is ve...
Binary Options Strategy
Binary options trading has received a large amount of publicity in recent years, unfortunately much of this publicity has been negative. This, and a lack of knowledge regarding ...
Trading with application of straddle strategy is considered to be highly efficient. The process of straddling includes opening the trades by covering two sides simultaneously. In order to do that, ...
Binary Options Scalping Strategy
"Scalping" does not purely relate to Forex trading. The act finds its reflection in binary marketing too. Thus, with binaries, you get a chance to involve scalping into your trading strat...
Successfully trading in binary options requires you to be able to accurately predict the direction and extent of a given asset’s price. In fact, this is essential for any kind of trading. Bef...
Binary Options Hedging Strategy
There are a multitude of different approaches which can be adopted by anyone wishing to trade in binary options. Not all of these tactics will work for everyone which is why the binary options hedg...
Binary Options Drake Delay Strategy
The stochastic technique Drake Delay stems from the renovated stochastic strategy, which is justified by its naming. With the help of the stochastic Drake Delay indicator, a line of pricing movemen...
Binary Options and MACD Indicator
The Moving Average Convergence and Divergence, or MACD for short, sounds like a daunting prospect to anyone who is new to binary options trading. However, it is useful to unders...
Binary Options - Ranges
Once you have been trading binary options for a while you may become bored with the standard options and look for something a little more challenging. Range trading is one way of livening up the tr...