Elliott Wave Theory

Earlier in the year 1920-30s, there was a genius and professional accountant in an old school named Ralph Nelson Elliot. 

Around 75 years worth of stock data were analyzed and Elliot has discovered that the stock markets assumed to behave in an utterly confused manner, which is not actually. 

As he reached the age of 66, he finally had collected enough evidence as well as confidence and let the world know about his amazing discovery. 

He published a book, entailing his theory and was entitled The Wave Principle. 

According to Elliot, the market is traded in a cycle of repetition. He also indicates that it is caused by investors’ emotions brought by outside influences or mainly psychology of the masses at the time.  

He specified that the upward and downward swings of the price that are led by collective psychology, often occur in the same repetitive of patterns. 

These upward and downward swings are called as “waves”. 

He considers that if you’ll be able to identify the repetitive patterns of the price correctly, you’ll be able to forecast the next price movement.

Thus, this is mainly the reason why this makes it appealing for investors. It gives them signals to identify a specific point where the price is reasonable to reverse. Basically, Elliot arrived with a system which lets investors to catch tops and bottom. 

Ahead of the chaos in all prices, Elliot has come up with an order. 

With his substantial evidence and proficiency, he needed to claim his theory and end up with an original name, The Elliot Wave Theory. 

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