The trading method with wave 3

Wave 3 has the characteristics of moving strongly and far, the size is usually 161.8% more than wave 2 or wave 1. Traders will expect a long take profit if they catch this wave.

To enter the order with wave 3, usually, Trader will wait for wave 2 to recover at the level of 50%, 61.8% of wave 1.

This behavior creates a perfect entry point. In a bull cycle, when a trader places a limit order between 50% - 61.8% of wave 1. Take profit will be 161.8% from the end of wave 2 (using Fibonacci extensions), while point The stop-loss order will be placed at the beginning of wave 1.

Trading breakout with Elliott wave pattern

Among the corrective wave patterns, the flat pattern - the flat pattern appears the most. Elliott found that no less than 10 wave patterns were flat.

To trade the flat wave pattern, you would use the b wave in the a-b-c trilogy. Traders will expect wave b to reach 61.8% of wave a, and that is enough to make a profit.

However, a trader needs to correctly identify the return wave a, and the conditions for it to prove that this is a flat pattern. Corrective wave, if impulse wave, this may not be a flat pattern for you to enter.

Method of dealing with wave 5

Do you remember the 3 important rules of the Elliott Wave? The most important rule is that wave 5 should not be the same size as wave 1. This makes it possible for a trader to predict the length of wave 5 after having wave 1 on the chart.

After the wave pattern completes wave 4, you will determine the length of wave 5, equivalent to 61.8% of the length of wave 1. Once the price has shown a reversal at the end of wave 5, the trader will target 38.2% of the whole Elliott push wave (wave 1 to wave 5).


Final conclusion

The best approach when analyzing Elliott waves is to allow the pattern to confirm before trading. This means that if you are unsure of the wave pattern, reanalyze from the beginning, checking the wave according to a careful process from high time frame to low time frame (current time frame you trade). Once the large time frame has confirmed the correct Elliott wave pattern, you can trade with peace of mind but do not let greed overwhelm you to disobey the usual rules of risk management.

Another point to note, the method of entering with wave 5 is the riskiest method. Only unless you find signs that wave 5 will reverse, do you trade with this method? Unfortunately, Elliott waves do not discuss this, so you have to find signs of reversal based on other factors (indicator, price action, etc.).

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