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In this article. you will learn the principles behind the Elliott Wave Theory and how to access the best Elliott Wave software. through Admiral Markets’ popular free forex trading platform. MetaTrader 5.

What is Elliott Wave?

Elliott Wave Theory aims to identify repetitive patterns in financial markets based on investor psychology. Elliott found that changes in mass psychology showed up in repeatable ‘waves’ within the markets. These waves are the core foundations of the Elliott Wave Theory.

While there are many Elliott Wave charting software programs in the marketplace. users still need to understand how Elliott Waves are formed to help them apply it on the chart. This will become more apparent when we look at the best Elliott Wave software further down the article. For now. let’s look at the two types of wave formations that construct the Elliott Wave pattern.

1. Motive Waves or Impulse Waves
2. The first half of the Elliott Wave pattern is called the Motive Wave. This is formed by five smaller waves called impulse waves and diagonal waves. The impulse waves include waves 1. 3 and 5. The diagonal waves include waves 2 and 4. Both waves form a five wave pattern called the Motive Wave which typically forms in line with a larger trend.
3. In a broader downtrend. the first wave of a motive pattern consists of a weak sell off with only a small percentage of traders participating.
4. Once wave one is over. the market retraces in wave two. Typically. the rally higher in wave two is vicious but does not take out the previous high. allowing the start of a turnaround and another sell-off.
5. This sell-off begins wave three. which starts off slow. but after breaking the low of wave one the sell-off picks up momentum with traders adding short positions to ‘not miss the move’. or traders exiting long positions to get out while they can.
6. Wave four consists of traders profit taking from the move lower causing a pullback in prices. which is usually more orderly than the pullback in wave two.
7. As some traders would have missed the whole move lower. a few remaining short sellers step in at the end of wave four to start another sell-off at the beginning of wave five. However. this sell-off lacks enthusiasm and eventually bottoms out.
8. Typically. the motive wave cycles are numbered using the ‘minor’ Elliott Wave degree numbering system. Not all Elliott Wave trading software offers different wave degree numbering systems. However. in the best Elliott Wave software section. we will go through how you can access it completely free with Admiral Markets’ forex trading software for Elliott Wave. For now. let’s go through the second half of the Elliott Wave pattern.
9. 2. Corrective Waves
10. Corrective waves can be a bit more difficult to master than motive waves. However. by sticking to the simple corrective wave patterns. with the help of a proper Elliott Wave charting software platform. it can be much easier.
11. Typically. corrective waves consist of three waves. and occur after a five-wave motive pattern. The three-wave correction is also known as an ABC corrective pattern. or a ZigZag correction. due to the Elliott Wave numbering system and how the pattern looks.
12. In a broader downtrend. wave A consists of a small rally in price as traders bank their profits and exit the market on their short trades.
13. As the broader trend is down. some sellers step into the market at the beginning of Wave B. in a weak move lower.
14. At the beginning of Wave C. sellers are quick to exit the market after seeing the original push higher in Wave A. This also attracts the interest of buyers who also join in. forcing the market higher.
15. Now that we have covered the full Elliott Wave pattern consisting of Motive Waves and Corrective Waves. let us look at the best Elliott Wave software available to you.
16. What Is The Best Elliott Wave Software?
17. In the world of financial trading. it is important to use tools which offer the highest level of efficiency. For example. by using one Elliott Wave charting software. a different Elliott Wave trading software. a different forex trading platform and a different stock trading platform. things can get overwhelming very quickly.
18. This is why the best Elliott Wave software is one that can cover the charting and trading of Elliott Wave. as well as enable access to multiple markets such as forex. stocks. indices and commodities.
19. The Elliott wave count MT4 indicator is a wave counting indicator built for the MT4 trading platform. Unlike regular Elliott wave indicators. this indicator does not draw the lines but only gives a count for the waves.
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24. To be able to use this indicator effectively. traders need to understand how to count Elliott waves and also understand the different market cycles and the nomenclature that is used. If you think that this indicator is the Holy grail. then you will be disappointed.
25. The Elliott wave count indicator gives a visual representation and a simplistic view of trading with Elliott waves by just counting and labeling the waves.
26. The indicator also gives trading signals indicating potential turning points in the price. just the way a trader will make use of the waves to predict the future price action.
27. Given the fact that the MT4 Elliott wave count indicator is an automated indicator. traders should apply some discretion.
28. Elliott wave concept of trading is not that commonly used and requires a bit of an advanced method of analysis and knowledge about the markets. In this aspect. the Elliott wave MT4 indicator is an easy indicator to get started with the concept of trading with Elliott waves.
29. The indicator is supposed to improve the quality of trading based on Elliott waves concept of trading. The indicator works across all time frames including short term and long term charts. Therefore. the indicator is best suited for all types of traders whether you are a short term scalper or a long term swing trader.
30. Elliott waves after all measure the market cycle and therefore you will find wave counts of all levels regardless of whether you are looking at the long term charts or the short term intraday charts.
31. The Elliott wave indicator is therefore a handy tool to get started with the Elliott wave concept of trading. if you are really keen to learn about this concept of technical analysis. Traders can use the Elliott wave indicator alongside their existing trading systems and can therefore validate the signals given from this indicator alone. This is a good practice if you are just starting out with Elliott wave based trading or completely new to forex trading. But before we get into the details of how to use the Elliott wave count indicator for MT4. let’s briefly cover the concept of Elliott wave theory and the wave count principles.