Trading Strategies

Elite Trader’s Secrets

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Introduction

Our latest discoveries are redefining the Wave Principle as a statistically sound market-forecasting tool.

Since the 1940’s, when R. N. Elliott discovered patterns within the price charts of liquid markets – the result of mass human emotion, flowing from hope to fear, and back again – the Elliott Wave Principle has been the subject of constant controversy. It has been said that, if you were to place ten Elliott Wave technicians in a room to discuss the Elliott forecast on single chart, you would get at least twelve opinions – and possibly a considerable amount of bloodletting.

If even the best Elliott experts can’t agree on a single chart, what chance does a trader have of being able to use the Elliott Wave Principle as a reliable forecasting tool?

Finding an answer to this question has taken me more than a decade.

This all-consuming quest has taken me around the world many times to work with some of the greatest minds in the industry. It has

required hundreds of thousands of hours of computer programming, and the analysis of millions of charts. It has required the formation of a dedicated research team to collate a database of millions of Elliott Wave patterns and market forecasts. It has even required the help of many thousands of traders gifting their unused computer time to this extensive project so that our software could compare millions of these forecasts with subsequent real market action – and determine their accuracy.

The results may surprise you. They certainly surprised us.

We have discovered, through undeniable statistical evidence, that the most common Elliott Wave patterns are often significantly different in shape and frequency than previously understood. Up until now, all understanding of the Elliott Wave Principle was simply the result of personal observation – herein lies the fundamental problem: human nature will tend to see what it expects to see. Elliott experts so often disagree with each other because, I believe, they have different opinions on the relative frequency and most common shapes of the various Elliott Wave patterns. These differences in understanding result in different labeling of the various patterns found within a chart.

The only way I could find to reliably solve this “human observation distortion” factor was to statistically analyze a large quantity of current charts, find the Elliott Wave patterns and document every one.

I am now delighted to report that, after nearly a decade of work on this project, the results are refining and redefining the Elliott Wave Principle into an even more accurate market forecasting tool.

Our statistical analysis has now uncovered the truth about the most common pattern shapes, their relative frequency, and even the likelihood of each market forecast being correct.

We have now proved statistically that the new “Refined” Elliott Wave Principle gives an undeniable forecasting advantage when trading liquid markets. We can even tell you the probability of each forecast being correct – a world-first in technical analysis of stocks and commodities – and the Elliott Wave Principle.

You can use the Refined Elliott Wave Principle to better and more reliably forecast any liquid market – and therefore increase your trading profits.

A Confession

I need to make a confession …

Until recently, I didn’t know whether I could continue operating my company, Elliott Wave Research.

For more than a decade it has been my all-consuming passion to contribute to Elliott Wave Pattern Recognition technology in a very real way – technology that gives traders a truly measurable and distinct trading advantage when attempting to forecast future market movement.

To this end, I have devoted my career to the research and refinement of the leading pattern recognition technology – the Elliott Wave Principle.

We have discovered that Elliott Wave patterns change shape dependent on the time frame, market type (equities are different to commodities), and market direction. We have discovered that pattern shapes found in price data are not random. We have even discovered Fibonacci ratios in the relationships of Elliott Wave patterns.

But up until recently, one thing was still missing, one final “litmus test”. A test that would finally prove the usefulness of the technology we had so painstakingly developed.

This final test would prove once and for all whether the Refined Elliott Wave Principle was a valuable forecasting tool.

Remarkably, in the 70 years since R. N. Elliott discovered price patterns in price movements of liquid markets, no one has ever proved statistically whether or not the Elliott Wave Principle gives a trader a better-than-random chance of forecasting future market movement.

This was because, until now, no one had ever developed the necessary computer software or had sufficient computer power to identify a statistically significant number of tests to validate or invalidate the theory.

Until now …

We were the first people, in the history of the Elliott Wave Principle, who had the software, resources and technology to carry out this investigation.

For me, the decision to go ahead and carry out this final test was a little like going to the doctor to be checked out for a suspected terminal illness. What if the result is bad? Would it be better not to know?

The test was relatively simple. We would analyze a large quantity of charts containing data up until about a year ago, including the most traded stocks and commodities in the U.S.A. We would then compare every forecast with the subsequent market movement – and determine how often (or not) the forecast was correct.

However, that would only be the first half of the final test. Any forecast is going to be correct some of the time – by pure random chance. We needed to determine the random probability of each forecast being correct, and compare our results using real market data.

Therefore, we would need to carry out the exact same analysis on random walk data (simulated chart data created with random number generators), and compare the results with real data.

As you could imagine, we were expecting that our forecasts on real market data would be correct more often than the forecasts created on random data. If so, the difference between the real and the random would be the actual, verifiable, measurable trading edge our technology could give a trader. Analysis of these “random walk” charts would be the statistical control group.

But what if our forecasts on real data were correct no more often than the forecasts using random data? If this were the result, then our technology, and a decade of work, would be proven worthless.

Although I firmly believed from the feedback of our clients that our forecasts were giving traders a real edge, we had no statistically verifiable proof. Our hope was that this final test would provide us with the evidence we had been looking for. However, and this was a big “however”, if the results were not favorable, it would also give us statistically verifiable and undeniable proof that our technology was totally worthless.

For weeks, and even months, I procrastinated. I found other “more important” tasks to complete. I postponed – I was terrified. What if the results showed that, for all the years of work, research and results, our technology did not give a trader a real advantage? What would I do?  What were the implications for us, our team, our clients, and even the future of the Elliott Wave Principle?

Of course, I could possibly decide to cover up any bad results by simply telling no one – and carry on regardless. However, such a course of action would be totally against everything I believe in. In all integrity, I could not do it and still sleep soundly.

If the results were to prove unfavorable, to remain honest and true to my clients and myself, I would need to close my company down.

But what about our thousands of clients who use our software every day to make trading decisions? They had purchased the software in good faith that we would continue to support it. How could I close the company and do the right thing by them? Should we offer their money back?

Difficult questions.

So days turned into weeks, then into months, while I considered the options.

Read the whole article to know the secrets: Elite Trader’s Secret

About the author

David Richard

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