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I believe Elliott's early work was based on the behavioral
characteristics of the market which are also discussed at some length in
E&M and explained a fair portion of market behavior. Later, in an
attempt to explain all market behavior, the theory was expanded with a
long series of special conditions and exceptions. It is the later which
has given rise to so much of the controversy surrounding EW. Personally,
I stick to the basic EW stuff combined with other pattern techniques and
Fibonacci techniques which have proven effective for me.
Earl
----- Original Message -----
From: "Scot Billington" <scot.billington@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Friday, November 17, 2000 11:33 AM
Subject: Re: [RT] Elliott Wave
> Those of you who are beginning or contemplating studying EW you my
find my
> experience helpful.
>
> I worked as an analyst using primarily EW for seven years. My job
roughly
> ten hours a day was to study EW and apply the counts to various
markets.
> During this period I would claim that I developed an above average to
> excellent ability to apply an EW count and alternates to a market
within the
> rules laid out in Prechter's book.
>
> In my opinion while these counts did sometimes produce
Nostradomus-like
> market 'calls', they were not useful in making trading decisions.
They were
> closer to a neat magic trick than a trading tool. The major problem I
have
> with EW is who said the original premise is valid in the first place.
Mr.
> Elliott made some grandiose claims and offered up an interesting
theory that
> makes some sense under the heading of mass behavior. This theory can
not be
> tested due to its subjectivity. I must choose between time frames,
close
> only or bar charts, continuous, Gann, or individual charts. If I am
using a
> bar chart, I must decide what makes a wave. Due to this subjectivity,
there
> is no way to test Elliott's original premise that the markets move in
five
> and three wave patterns. Nor is there any way to test if the patterns
of
> the market must fit into the 13 (I think) different possible patterns
laid
> out. So, basically, we have a gentleman making a claim that can not
be
> verified or refuted.
>
> Certainly, some moves have ended on five waves, but they have to end
on
> something. And a move of more than one wave must end in an odd number
by
> definition. A five wave move with and extension can be five, nine,
> thirteen, seventeen etc. waves. Every other odd number. Therefore,
half
> the moves must end in a five wave pattern. Even if EW is not valid, I
am
> going to be 'correct' with my five wave count 50% of the time. The
method
> allows moves to end on three waves with its irregulars or by the
larger
> pattern being A-B-C. Therefore, I can end on three or five with and
> extension in any of the waves of either. That covers all the bases.
>
> Undoubtedly, there are those who have claimed to have made money
trading the
> EW. I would contend that while they made money (if indeed they did),
they
> may not know WHY they made money. EW may only generate random entry
> signals, but they may use strong exit strategies and sound money
management.
> By using strong exit techniques and good money management, one can
take a
> random entry and make handsome profits. Even if they use EW to make
their
> exit decisions, it is not necessarily the EW count that makes those
> strategies strong. Each part of the method needs to be tested
> independently, to show its effect. EW can not be tested in any way.
> Therefore, we can not know if it is or is not valid.
>
> (A good example of someone who makes a ton of money, but does not know
why
> is a hypothetical profitable floor trader. Let's say he makes $2
million a
> year using method X. Wow, method X must be great. But the floor
trader
> trades 2000 contracts per day 200 days per year. He also has the
floor
> advantage of buying at the bid and selling at the offer. The spread
is 1
> tic each tic is worth $20, so he makes $10 per contract vs. the value
which
> is between the bid and the asked. $10*2000*200=$4,000,000. So, his
edge
> over the market is not in method X; it is in the b/a spread.)
>
> Its is my opinion that a beginner should look elsewhere for a trading
> method. If they are completely intent on trying EW, I would suggest
that
> they find a mentor who has used EW to successfully make profits in the
> market not to write a book, although those are not necessarily
mutually
> exclusive. Furthermore, I would take a hard look at the mentor's
profits to
> see if they are being generated by something other than the EW counts.
>
> A note of caution. EW does allow one to make some remarkable market
> predictions whether these occur randomly or not. The method contends
that
> it has figured out the secrets not only of the markets but of
existence.
> These predictions give one a feeling of omniscience and a surge of
power;
> therefore, this method of trading is appealing to those with a
narcissistic
> personality style. This personality style is marked by extremely
grandiose
> statements, which Mr. Elliott certainly made about his 'discovery'.
Mr
> Prechter has exhibited traits of this personality style as well. The
narc.
> style puts a lot of its self-worth on the idea of being 'right' and
may not
> take opposing views or questions very well. This style is generally
not
> conducive to long-term (>10 years) successful trading. If you decide
to try
> to study under someone, do not believe the hype.
>
> If you have any questions, feel free to e-mail me personally.
>
> Scot Billington
>
> ----- Original Message -----
> From: <Sonnysark@xxxxxxx>
> To: <realtraders@xxxxxxxxxxx>
> Sent: Friday, November 17, 2000 10:39 AM
> Subject: Re: [RT] Elliott Wave
>
>
> > Thanks Earl...good information. -Sonny-
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxxxxxxxxx
> >
> >
> >
> >
>
>
>
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