HOW TO TRADE ELLIOTT for BEGINNEERS

Step #1 Wait until you can spot at least a 3 wave Elliott Wave sequence
Since we always advocate trading in the direction of the trend, as explained above, we’re only
attempting to catch the last wave 5.
So, in order to find our Elliott Wave entry points we need to let the market tip his hands off and
wait to develop the first 3 waves of a five Elliott Wave pattern
We must verify that each wave complies with the Elliott Wave strategy rules in order to confirm
the validity of our Elliott Wave count. In the figure above, we’ve spotted a bearish Elliott wave
count that complies with the Elliott Wave strategy rules, which means we’re looking for a sell
setup.
Step #2 Sell between 38.2% and 50% Fibonacci retracement of Wave 3
One of the Elliott wave rules states that, ideally, wave 4 should retrace between 38.2% and 50%
Fibonacci retracement of wave 3. Our Elliott Wave entry points are at 38.2% because we never
know for sure how far the market will retrace and we don’t want to miss the move.
We’re pretty much sure that with experience you can fine tune your Elliott Wave entry points and
get even better entries.
Now, we can note that wave four retrace a little bit above the 50% retracement. Since the market
is never a perfect place where rules are respected to the pip there will always be small
variations and the Elliott Wave strategy is no exception from the rule
Step #3 Place the Protective Stop Loss few pips above the Wave 1 Ending Point
In the section “How to trade Elliott Wave” we highlight the importance of wave 4 never entering
into the wave 1 territory. In this regard, it’s smart to place our stop loss exactly where the Elliott
Wave pattern will be invalidated.
Step #4 Take Profit when Wave 5 is equal to Wave 1 or when we break below
wave 3
With the Elliott Wave strategy is all about experimenting new trade ideas and we encourage you
to find your own set of rules because once you have a firm understanding how to trade Elliott
Wave you can develop many Elliott Wave strategies around it.
In this regard, we don’t have a set in stone take profit strategy because the Elliott Wave strategy
looks to maximize profits and the only way you can do this is through flexibility because no two
Elliott Wave structure is the same
Note** The above was an example of a SELL trade… Use the same rules – but in reverse – for a
BUY trade.
PM me if you want to read the complete strategy.