Some Ramblings on Elliott Wave (Part 3)

Today I conclude a trader monologue heard a few years ago.

“I meet a lot of professional traders: futures, commodities, forex, large private investors, RIAs, market makers, pit traders, black-box programmers, etc. I always ask if they use Elliott Wave. I have always gotten the same basic response: ‘we look at them because other people look at them. Sometimes we look for levels of support and resistance at those levels, but we don’t trade off of them.’

I know there are people who claim success using Elliott Wave but sometimes things work for different reasons.

Jeff Augen did a dirty little trick once. He took random data (using lognormal scale) and presented the data to technicians. They worked their magic and drew their conclusions. He later told them it was all random. Reading that was a seminal moment for me. It really changed my perspective on technical analysis. Augen essentially believes it’s all hocus-pocus. I don’t go that far but I do believe it gets a lot more credit than it deserves.

So… what do I think? I put Elliott Wave much closer to astrology in terms of being able to predict future market movement.

By the way, I am Sagittarius with moon in Taurus and Venus was not in retrograde, which totally explains everything you need to know about me.”