Wave Theory Eliot band theory of deep meaning. English: Band theory Securities analyst Ralph ?. Nelson ?. Elliott (RNElliott) use the Dow Jones Industrial Average (Dow Jones Industrial Average, DJIA) as a research tool and found that changing the structural form of the share price reflects the natural beauty of harmony. Based on this discovery that he proposed a theory of relevant market analysis, refining the market of 13 types (Pattern) or that the wave (Waves), in the market, these types of repeats, but the rate of emergence and size of the interval not necessarily reproducible. Then he discovered the structural pattern of these was the same graphic pattern can be connected together to form larger map. This proposed a series of authoritative interpretation of the rules used to explain the behavior of the market, with special emphasis on the predictive value of fluctuations in principle, this is the band the prestigious Elliott theory, also known as the wave theory. Wave theory. Stock price fluctuations and the tidal phenomena in nature are very similar, in the bull market conditions, after each wave of high prices will be the bottom price, the bear market conditions, will be the opening price after each wave of price. If investors can assess the situation, grasp the trend of stock price volatility Taishi if do not have old stock of small fluctuations around a busy busy forward, and all the way to do more with the main trend or a short way, so a lot of money not only seize the favorable opportunity Zhuanqu , but also to avoid the risk of unexpected stops in time, Elliott Wave Theory for investors to distinguish good volatility trend provides an effective tool. Eliot (RaLPH Nelaon Elliot ,1871-1948) is the founder of wave theory, he was a professional accountant, specializes in the restaurant industry and the railway industry, due to illness contracted in the middle-aged, retired in 1927, long-lived rest in California. Rest in his rehabilitation period, he has the stock from the development of wave theory, it is clear that Elliott Wave theory is affected by the Dow Theory, but there are many similarities, the major Dow Theory trend on the stock market give a more qualitative interpretation of the perfect, and Ai little quantitative analysis of material presented in a unique view. Eliot's theory of a large number of stock market paper published in 1939, Eliot died in 1946 from two years ago, Elliott Wave Theory clearly wrote the monograph "Natre's lsw-The Secnt of the universe". The title sounds somewhat exaggerated. This is because the stock market Eliot thinks his theory of natural law are part of this law govern all human activities, we do not fine it must be made for the time being, but will focus his research on the stock market law . Many engaged in the wave theory and in practice, investors have put into practice will find difficult to understand the wave theory, and even daunting. The basic principles of wave theory is very simple, the reader will soon find many of the points covered by the wave theory. Looks familiar, it is because many of the wave theory of architecture, is quite consistent with the principles of the Dow Theory and the traditional graphics technology. However, the wave theory goes beyond the traditional graphical analysis techniques for market volatility to provide a comprehensive analytical point of view, to explain the specific reasons for the development of graphic patterns and timing, as well as the meaning of the graphic itself, while the wave theory Analysts can also help to identify where the market cycle. It has been said, most of the technical analysis, in essence, are analyzed by the potential. Dow Theory, Leaving aside all its advantages, but also the formation of the trend only after the confirmation signal, wave theories can further be made on the head and the bottom of the warning signs, but also by more traditional methods of analysis to confirm , in the following sections, we will focus on that wave theory and the more familiar graphical analysis of the common ground between the two. Number four basic rules the waves. Investors should be aware of, Elliott Wave Theory The key consists of three parts, the first for the wave form; Secondly, the ratio between the wave and the wave relationship; Thirdly, as the time interval between waves. And that between the three, the most important form of waves. Wave form, Elliott Wave Theory is a theoretical basis, therefore, the number of waves of right or wrong, successful application of wave theory of investment opportunities are essential. The so-called wave number of the basic rules, only two. If the number of investors to the waves on the two basic rules in the use of the stick usually does not pass, can be said to have half the battle. Several waves of two basic rules: first, the third wave (third drive) is never 3-driven waves (I, III, V waves) in the shortest waves. The actual trend in the share price, usually the third wave is the most explosive wave, and often will become one of the longest waves. Second, the bottom of the fourth wave, can not be lower than the top of the first wave of the wave In addition to these two in a few waves when the iron law, there are two additional rules, the two additional rules are not unbreakable iron law, it is primarily to help investors to better distinguish wave type, to help correct the number of waves work. Supplementary Rule number one: alternative rules, if the wave-shaped loop, the second wave of simple forms and shapes, the majority of the fourth wave will be more complex forms and shapes. The second wave and the fourth wave to nature, belong to the adjustment of the waves travel upstream, and adjust the wave form there are many seed types. This supplementary rules, can help investors better analyze and speculate the future development of market prices and changes in access to grasp the opportunity. Supplementary rules II: The stock market is rising after a period of adjustment, especially when the adjustment of the fourth wave is the wave of time, the majority in the lower level will be completed within the fourth wave. Usually of the case, near the end near the end. This supplementary rule is mainly for investors to adjust the end point, so that investors understand the adjustment near the end, attention should be doing more, short of the strategies. Operation does not enable investors to commit a big mistake direction, cast an irreversible situation. There are nine characteristics of waves. Wave Theory in the specific use, often encounter more difficult to distinguish the market conditions, also found several ways to set up a few waves. Therefore, investors need to understand the characteristics of each wave. The first wave began in the wave cycle, the general market, most investors do not immediately realize increased band has already begun. Therefore, the actual trend, about half belong to the first wave of construction of the bottom part of form. As the first wave of out of the typically arises after the end of bear market, so the atmosphere and short on the market used to operate the way the bear market changed, therefore, belongs to a bottom of a class followed the first wave of the emergence of the first Second wave of reduced amplitude, is usually larger. The second wave has already been mentioned above, usually in the actual trend in the second wave of adjustment is large, but also has a larger mass destruction, mainly because the market people often mistakenly think the bear market is not over yet, the second wave is characterized by a turnover was gradually shrinking, the band gradually narrowed, reflecting the gradual failure in selling pressure, there turned to the traditional graphic form, such as the common head and shoulders, double bottom and so on. The third wave movements in the third wave in the vast majority belong to the main section of a big wave rose, therefore, usually the third wave is the most explosive wave. Its main features are: the running time of the third wave of the entire cycle is usually the longest wave in the wave, and the magnitude of its increase in space is also often the largest; the third wave of the running track, most will develop into a rose extension jumped upward move; in volume, the volume enlarged dramatically, reflecting a rise in the amount of potential energy; on the graphic, often to break up the unstoppable upward gap, giving a strong signal break-up . The fourth wave form of the structure from the point of view, often in the fourth wave triangle shape to run the adjustment. The end point of the operation of the fourth wave is generally more difficult to foresee. At the same time, investors should keep in mind that the end of the fourth wave of the wave does not allow lower than the first wave of the wave top. Waves in the stock market in the fifth, the fifth wave is one of the three waves push, but the rise in most cases small compared with the third wave. The fifth wave is characterized by a relatively high market sentiment, optimism is often flooded the market. Complete the form and extent of their point of view, often in the form of failure in the end. Increase in the fifth wave of the operation, the second and third line stocks will whim, and generally increased, and often very substantial increase. A rising wave in the cycle, A wave of adjustments arising from the wake of the fifth wave, so most people would think that the market potential yet to reverse the city, there is no preparedness of the heart, just look at as a short adjustment . A wave form is usually adjusted in two forms, flat shape with three shaped form, it is often with the B wave form of cross-form exchange. B waves often rise in wave B as a multi-party unrequited love, the more emotional rally, mainly on the market from the bull market most people have not woken up the sky in the market, but also on a rise that has not yet ended, the chart bull trap often appears, from the volume point of view, transaction sparse, significant departure from the phenomenon of price and volume increase of the amount of energy is not on financial aid. C wave followed closely by the B wave and then the C wave, wave B the completion of the Dayton market, many people disillusioned soldiers, a bull market is over, expect to continue to rise have been dashed, so, the market has begun to fall, from the nature point of view, their destructive power is strong. Wave classification. Elliott Wave Theory is one of the basic tenets of "the wave length of time will not change the shape, because the market will develop in accordance with its basic form. Wave can be elongated in its operation can also be shortened, but the fundamental form is constant. "Based on the above theory, a super cycle wave, and a very short waves (such as time-prices) compared participants in accordance with its basic form a certain pattern. Analysis method is also similar. The difference, is related to the level of the wave series is different only. In Elliott Wave Theory, he will wave movement in the stock market is divided into nine series, the Institute was obtained from the information he will give the smallest to the largest wave of different names. However, for the wave of the name does not matter who actually work. In general, a super cycle wave can contain several years or even decades the trend. As for the microwave and the smallest waves, the waves are short-term, need to use the hourly chart can only be analyzed. From the above discussion, we can divide the situation on the stock market wave for a conclusion: 1, the stock price movement pattern was not simply a straight line, but as the waves and change. 2, to promote the main trend wave or waves associated with the direction of travel can be broken down into five small-class waves, and the main trends in correction wave or waves traveling in the opposite direction, can be broken down even smaller levels of three waves. 3, when the stock market a complete movement to form a cycle of eight waves (three or five liters), the greater the level of cycle right again into another part of the stock market cycle. 4, the wave shape will be expansion or contraction-type road, but the basic shape does not change over time. Wave forms. How to divide the five waves up and down three waves it? In general, the performance of eight different waves and features: 1 waves: (1) almost half of the 1st wave patterns are created at the bottom of the first part of wave 1 is the start loop, due to the rise in this market decline in a bear market rally and counter-post turn, the buyer is not a strong force, coupled with short selling continue to exist, therefore, in such increased after 1 wave 2 wave to adjust down there, its magnitude is often retreated deep; (2) the other half of the first 1 waves in the long-term consolidation is complete, in this type of wave 1 in a greater increase in its market, experience shows that wave 1 of 5 wave rise is usually the shortest of the stock market. Wave 2: This wave is a wave fall, people mistakenly think a bear market because the market is not over, the adjusted rate of decline in a large, almost eaten by an increase of wave 1, when the market fell in near the bottom of this wave (1 waves the starting point), the market appears reluctant to sell psychology, selling pressure gradually failure, volume is gradually reduced, the first 2 waves will adjust to an end, the waves that often appear in this shift patterns, such as the head end, double bottom and so on. 3 waves: the first 3 wave rally is often the largest and most explosive rise in waves, the duration of this market and scope, is often the longest, the market investor confidence returns, trading volume increased substantially, often appear traditional breakthrough in the chart signals, such as gap jump, etc., this market trend is very intense, a number of points on the graph, very easy to be worn, especially in the high waves breaking 1 point, is the strongest buy signal , due to strong gains in the first 3 waves, often "extended wave" phenomenon. 4 waves: the first 4 waves rose sharply after the price adjustment is the wave pattern usually appears more complex, often "tilted triangle," the trend, but the first wave of the end point of 4 will not be less than 1 wave peak. 5 Wave: In the first five waves of the stock market rally is typically less than 3 ÀË, and frequent failures, in the first five waves in the, two, three stocks are usually the leading force in the market, the large increase Changchang in a class of shares (blue chip blue chip, large cap), which investors often say "few kilometers from heaven", this time quite optimistic about the performance of market sentiment. Section A Wave: A wave in the market that most investors believe that rising prices have not yet reversed, then retreated only a temporary phenomenon, in fact, A wave of fall, in the first 5 waves usually have a warning signal such as volume and price movements on the departure or deviation from the other technical indicators, but because the market is still more optimistic this time, A wave of potential adjustments or sometimes flat, "the" word type operation. Section B wave: B waves often show little turnover in general is a long line of escape, but because it is a rising market, investors can easily mistaken for another band of the rally, a "bull trap" Many are stuck in this tragic period. Section C wave: the decline was a devastating wave of strong, relatively strong decline, down a large, sustained over a long time, but there is also a comprehensive fall. From the above view, the wave theory seems to be quite simple and easy to use, in fact, because each of its increase / decrease in both the integrity of the process includes an eight-wave cycle, a cycle in small cycles, small cycles in a smaller cycle, that is, there are small waves to big waves, small waves in small waves, so make a few waves become very complicated and difficult to grasp, coupled with its promotion of the waves and waves often extends wave of adjustments such as changing patterns and complex patterns, the accuracy of the wave by making more difficult to define, these two points constitute the practical application of wave theory the most difficult. Wave theory of a few basic points. 1, a complete cycle consists of eight waves, five on the third down. 2, the wave can be combined for high-level waves, can be divided into low-level, small waves. 3, follow the main walk of the wave can be split into five small low-level waves. 4,1,3,5 three waves, the first 3 waves, a wave can not be the shortest. 5, if the promotion of any of the three waves as an extension of a wave, the other two waves will increase the running time and the same trend. 6, adjusting the wave form is usually run in three waves. 7, Golden Ratio is the wave theory of singular combination of numbers of data base. 8, often taking the ratio for the 0.382,0.5 met and 0.618. 9, the fourth wave of the end of the first wave can not be less than the top. 10, the wave theory consists of three parts: the type, rate and time, and its importance to in order of ranking. 11, mainly reflecting the wave theory of mass psychology. The more people participate in the market, its accuracy is higher. Wave theory of defects. 1, the wave theorist's view of the phenomenon is not uniform. Each wave theorists, including Eliot himself, very often plagued by a problem, is a wave has been completed and start another wave of it? Sometimes a look is the first wave, B is the second wave look. Least bit of difference, a mile. Wrong but could be very serious consequences. A theory can not be used to determine the risk of a high stock market, operational errors enough to make losses. 2, or even what constitutes a full wave, and no clear definition of the ups and downs in the stock market, the number of majority or not according to the five-liter three-emergence of this mechanical model. But the waves that some theorists have misinterpreted should not be calculated into the waves rise and fall inside. The number of waves (Wave? Count) is entirely subjective and arbitrary. 3, the wave theory of the so-called extended wave (Extension? Waves),? Sometimes five waves can reach into nine waves. However, when or under what guidelines can stretch the waves it? Elliott has not made it clear that the number of waves into their own thing as inspiration, think about yourself. 4, the wave theory of waves in waves, can be infinitely extended, that is, when an infinite increase in a rising market, are on the rise among the waves, a giant wave, a hundred years can be. Waves can also be dropped without a trace down all the waves are still falling. Unfinished as long as the uptrend is still up to the waves, the downtrend is still unfinished on the waves in the fall. What is the role of such a theory? Wave crests of waves can guess the end of the run time is very suspicious, is equal to pure speculation. 5, Elliott Wave Theory is a subjective analysis tools, there is no objective criteria. Operation of the market is influenced by emotional factors rather than mechanical operation. Ever-changing wave theory applied to the stock market will be very dangerous opportunities for error than anything else. 6, wave theory can not be applied to the selection of individual stocks. Fine points of wave theory. Wave theory can be divided into three parts. One is the wave form; the other is the ratio between wave and wave; the three was the time, the importance of the three, in order of the arrangement. Wave form, the argument is based on wave theory. Therefore, the number of waves is correct or not, is essential. Number of only two basic rules the waves. If you stick to take root, can be said to have half the battle. First: The third wave (wave drive) is not always the shortest of the first and fifth wave of a wave. Generally speaking, the third wave is the most explosive, often become the longest waves. Second: The fourth wave of the wave at the end, not less than the top of the first wave of the wave. In the analysis of wave form, sometimes more difficult to distinguish the city faced potential, may find a few waves while a number of ways to set up, in this case, understanding the characteristics of each wave to help make the right judgments. The basis of wave theory: five-liter three-down. "When we went through many hard to imagine and predict changes in the economic boom, such as depression, crash and post-war reconstruction and economic prosperity, I found that Elliott wave theory and the real economy was actually so much between the development of pulse fit each other. For Elliott Wave analysis, forecasting ability, I have confidence. " - "The Elliott Wave Principle-A Critical Appraisal" If I were elected the most valuable find of the century, I would choose the "Elliott Wave Theory." Because it is a natural fluctuation of an approximate "mathematical expression model." Basically, it and other stock market analysis is not at the same level. If set to explain to Figure 1. In fact, the relationship may be luck, Redford Nissen Eliot (Ralph Nelson Elliott) even in the recuperation of the three-year period, the Dow Jones Industrial Average through careful study and found that we now call the "wave theory ", like" golf placement problem ", we have no idea how Eliot discovered, can only say that his luck only.