The foreign currency exchange market or commonly known as the Forex market is the largest financial market in the world. Trading volume is well above the trading volume of many combined stock exchanges. In the forex trading system Forex trades in the form of OTC or “Over-the-counter”. In Forex trading, currencies are usually traded in pairs. Operating in this financial market can provide good profits partly thanks to its high liquidity. The chances of making a profit are often high. This is because if the value of one currency falls, the value of the other is devoted to increase.
Profits due to the Forex market have saved many households during the recession and have served as a passive source of income for many in the United States and other countries. However, in order to make profits, you need to have a clear understanding of how the Forex market works. If you can predict market movement, there is nothing that can prevent you from mastering the art of predicting trend changes.
According to Elliot ‘s theory of waves , the currency market moves in series consisting of 5 upward oscillations and 3 backward oscillations. This is usually repeated without interruption. It seems to be simple but the main factor that decides the fate of a Forex trader is the calendar. There is no particular time for an upward oscillation or for a downward oscillation to take place.
This makes it very difficult to predict movements. According to fractal math, there are many waves in a wave and so on. It is important that the ridges and curves are interpreted properly.
Elliot’s theory at a glance
The standard law that applies to the study of the behavior of a mass is none other than that law of physics, which says: “Every action has an equal and opposite reaction.” In the case of Elliot’s theory of waves, the principle is “every action is followed by a reaction.”
In summary Elliot’s theory of waves states the following:
-There are basically 5 upward oscillations that move in one direction. This is usually followed by 3 “corrective waves” that move backwards (to the starting point).
– Although the pattern of oscillations or series 5-3 is kept constant, what varies is the time. It is difficult to predict the timing of the 5 upward oscillations, as well as the timing of the 3 downward oscillations.
-You will be a successful currency trading trader if you are able to find the starting point of the wave and can anticipate the time when the full 5-3 series will take place.
The importance of observing and studying the wave pattern is important as it will help you make the right decision when trading Forex on the Forex market. By studying the direction of the waves, you can predict the movement of the market. This can help you make important decisions about your investment.