If I were to tell anyone which of the 5 motive waves are safer and easier to trade than others, without a blink of the eye ill recommend wave 3, why wave 3? That good question, well wave 1 is not easy to predict since it happens against the trend you really need a lot of experience to spot it. Picking top and bottom in the markets is for experienced traders, not easy to master at first. Wave 1 can be impulsive or diagonal, if it diagonal it even harder to predict since it might appear like corrective, you not sure whether the trend has ended or is still continuing. Some traders don’t like trading against the trend, they say the trend is your friend until it ends. Wave 2 is a correction, correction patterns are tricky especially if it not a simple zig-zag. You can go through the website full course to understand all corrective patterns. Wave 4 is the same as wave 2 it corrective and the more experienced you are the more you realized that wave 4 is worse, usually it becomes a complex corrective pattern. Wave five can be impulsive or diagonal or truncated, it also not as simple as wave 3.

Well, some say the magic wave aka the money wave in Elliot wave principle is WAVE 3, it makes sense why some traders trade only wave 3 and are successful. Wave 3 is impulsive, which mean it always consists of 5 easy to spot waves, it has a lot of volumes as a lot of trades enter there as they realized now that the trend has changed. Our friends who believe the trend is your friend are exiting their trades and buying the opposite way now since they see the trend has changed. Wave 3 is usually the extended wave which means if you can spot extension you will make more pips than you were intended to get. Who doesn’t want more pips? Everyone does including myself. Wave 3 always has a good risk to reward ratio, so you always risking less while achieving more usually 1:4 or above if you place your stop-loss below wave start of wave 1. If your counting was wrong and you thought you are in wave 3 while you are in wave C of correction pattern may be simple zig zag, at least you are still getting paid. A zig-zag corrective pattern and 1, 2, 3 waves are more or less the same. Wave 1 has 5 waves, also wave A can have 5 waves. Wave 2 is 3 waves same as wave B assuming that it also zig-zag. While wave 3 is 5 waves same as wave C.

Imagine a strategy where you make an error in your analysis but you are still in profit, isn’t Elliot wave lovely. Another interesting thing about wave 3 is since you went through my course you supposed to know now that one of the rules of Elliot wave is that wave 3 is not supposed to be the smallest. Which makes it the richest one to trade.

I’m sure lot of you are like me, I learn better with some examples. Let’s look at the chart above. Since you went through my free course you should be able to spot the money wave easily, if you didn’t well I made arrows for you to spot it easily. The red arrow points to the wave 3, by the way, this is EUR/USD pair on a weekly time frame. One thing you should notice first is how big wave 3 is compared to wave 1 and wave 5. On the chart I showed you the trend with the yellow arrows, the trend was bearish at first till the start of wave 1, if you are interested to know the bearish trend was the end of a corrective wave on a monthly chart. As I said before that wave 1 we are still not sure that the trend has changed except few experienced traders, but others are noticing that wave 1 is motive sub waves which make some to be aware we might change trend soon, so they wait for wave 2 to complete 3 waves and that when they enter with everyone confident now that the trend has changed.

So that what makes wave 3 to be full of energy it moves very fast as more and more traders are buying in the direction of the trend including our friends who always say the trend is your friend. The blue arrows show the start and end of wave 3. Another way people trade it is to spot it on bigger time frame like weekly that I showed you and they buy in the direction of the trend only on a smaller time frame, that also profitable. Anyway, you trade it is your choice as long as you are racking those pips, I’m happy.

Those who didn’t go through the course but want to know when wave 3 usually start, we use Fibonacci retracement tool to predict support and use Fibonacci extension tool to predict resistance where it will end. It all it the course which ratios we use and reliable most of the time.

if you like this post or it helped you in anyway please share so that we can reach to more people and grow our forum. we are going to be the biggest elliot wave forum in the world, we just need you help, thanx in advanced.


Leave a Reply