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Elliott Wave Principle: Key To Market Behavior Hardcover – 2005

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Product Details

  • Hardcover: 254 pages
  • Publisher: New Classics Library; 10th edition (2005)
  • Language: English
  • ISBN-10: 0932750753
  • ISBN-13: 978-0932750754
  • Product Dimensions: 9.4 x 6.4 x 0.9 inches
  • Shipping Weight: 1.2 pounds
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (48 customer reviews)
  • Amazon Best Sellers Rank: #132,806 in Books (See Top 100 in Books)

More About the Author

For Robert Prechter's full biography, please visit

Robert R. Prechter, Jr., is a financial and social theorist and a market analyst. He is the President and CEO of Elliott Wave International and has written 14 books. Prechter is known for making a very bullish prediction in 1982 for a 1920s-style stock market boom which he detailed in his 1978 book, Elliott Wave Principle. Elliott Wave Principle with A.J. Frost (1978) forecasted the great bull market of the 1980s and 1990s. His 2002 New York Times best seller, Conquer the Crash, predicted the current debt crisis. It is the only book that advised readers to avoid all investments and hold safe cash. Prechter's two-book set Socionomics (2003) shows how his social and financial theories weave together with his market forecasting approach: Waves of group mood determine the tenor of society's actions, from more inward, dark, bearish expressions to more outward, sunnier and bullish endeavors. Prechter's website,, explains his socionomics hypothesis and how it applies to various human arenas.

Prechter has dedicated much of his career to employing and enhancing R. N. Elliott's financial pricing model called the Wave Principle. He began his career as a Technical Market Specialist with the Merrill Lynch Market Analysis Department. Prechter is President of Elliott Wave International, the world's largest market forecasting firm. EWI serves institutional and private investors around the world.

Financial Theory
Prechter's theory of financial causality proposes a separation between finance and economics. In the economic realm, goods and services have utility value and mostly are priced rationally via the Law of Supply and Demand. This leads to rough equilibrium. In the financial realm, investments are priced non-rationally, with changes fueled by uncertain future demand and according to the Law of Patterned Herding. This approach generates speculation and unceasing dynamism. Only once the analyst recognizes this divergence can he properly view financial pricing, Prechter asserts.

Prechter's theory of socionomics says that trends and events across a broad spectrum of human interaction are impelled by a common immutable force: social mood. With its claim that mood impels action and events, socionomics is unique; most social theories posit the reverse.
The Wave Principle
As a market analyst, Prechter applies the Wave Principle, a financial pricing model identified and described by Ralph Nelson Elliott in the 1930s. According to this model, financial market prices develop in a series of five- and three-wave forms and produce a fractal. Prechter has written and/or edited a dozen books on the Wave Principle. Prechter began applying the Wave Principle to financial markets in 1972. Prechter's firm, Elliott Wave International, analyzes every major financial market in the world, 24 hours a day, according to the Wave Principle.

Using the Wave Principle, Prechter won the U.S. Trading Championship in 1984 with a then-record 444% return in four months in a monitored, real-money options trading account. Prechter has won numerous speaking, timing and publishing awards, and in 1989, he was named "Guru of the Decade" by the Financial News Network (now CNBC). In 1999, Prechter received the Canadian Society of Technical Analysts' first annual A.J. Frost Memorial Award for Outstanding Contribution to the Development of Technical Analysis. In 2003, Traders Library granted him its Hall of Fame award.

Prechter was born in 1949. He attended Yale University on a full scholarship. In 1979, Prechter founded Elliott Wave International and began publishing monthly market analysis under the masthead, The Elliott Wave Theorist. He was a nine-year member the Market Technicians Association's board and was the MTA's President in 1990-1991. Prechter employs a staff of analysts who apply the Wave Principle, real-time, to every major market in the world. He recently created the Socionomics Institute, which elucidates socionomics, and he underwrites the Socionomics Foundation, which is dedicated to supporting socionomics-related academic research. Elliott Wave Principle has been translated into a dozen languages, and Conquer the Crash was a New York Times bestseller. Prechter has made multiple speeches and media appearances around the globe. In 2008, the Georgia state legislature asked Prechter to testify before the legislature's Joint Economic Committee regarding the developing real estate crisis. Bob is a member of the Triple Nine Society, the Shakespeare Oxford Society and the Shakespeare Fellowship.

Customer Reviews

4.4 out of 5 stars

Most Helpful Customer Reviews

83 of 90 people found the following review helpful By Raul Dominguez Galbraith on September 22, 2007
Format: Hardcover
This book is awesome, it teaches you a way of technical analysis that nobody else can even imagine. It implies that the markets are patterned, and that those patterns repeat themselves in all time frames, from 1 day to even 5 years or more.

Elliott Wave consists of 13 basic patterns. These patterns are formed by waves and/or market movements. If you can learned to recognize this patterns you can make a lot of money by been able to identify the next move.

Elliott wave analysis has rules and guidelines that will help you to know where to place your stop, how to recognize these patterns, how to make the correct wave count within these patterns, will give you the tools to predict price objectives and time frames for those price objectives, and a stop or a limit that will negate the whole thing if been wrong. The result is method that offers high probability trades that works the majority of the time if you are a discipline investor.

This book alone won't be enough to make you a great trader, but it would improve your trading dramatically. One tip, you need to learn to validate those wave counts and/or patterns by using several technical indicators that should show certain divergences in certain faces of those patterns and/or waves. The combination of Elliott Wave analysis with traditional Technical Analysis beats any other form of analysis you can possibly imagine.

In longer time frames, you need to combine those two with economic cycle theory. I like the Princeton Model. And see the charts and technical indicators in weekly or even monthly basis, and probably in logarithmic scale.

Some said that Robert Pretcher was wrong by calling the market top in 2000.
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28 of 31 people found the following review helpful By P. Matt Blackman on September 12, 2011
Format: Hardcover
This book is required reading for levels 1 thru 3 of the Chartered Market Technicians (CMT) program because it covers all the basics of the Elliott Wave Principle even though the book was written in 1978. Bob Prechter has devoted the major part of his professional life to the study of Elliott Wave theory and application so therefore imminently qualified to write this book with Charles J. Collins.

So why did I give this book 3 stars? In my opinion, Prechter makes the subject more complicated than it has to be. At the very least, he runs the risk of alienating neophytes who will be overwhelmed with his descriptions and analysis and wonder how in the world they will ever make sense of markets from an Elliott Wave perspective. The challenge is that Elliott Wave is highly subjective which is why very few experts ever agree on wave counts and forecasts. Even Prechter himself, who is extremely generous of his time with anyone who shows a genuine interest in the subject, has enjoyed periods of great success punctuated by times when he was very wrong. For example, he warned subscribers in August and September 1987 that a top was forming in the Dow saving those who listened from getting caught in the big October drop. But then he wrote a brilliant but highly bearish article in December 2003 entitled A Developing Depression for Technical Analysis of Stocks & Commodities magazine which talked at length about the challenges US stock markets faced that in retrospect was the early stages of the 2003-2007 cyclical bull market.

I have come to the conclusion that while the behavioral observations of founder Ralph Nelson Elliott in the 1920s and beyond were brilliant, few since have truly mastered his brainchild due to the highly complex and subjective nature of applying it to markets.
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14 of 15 people found the following review helpful By Todd on April 10, 2011
Format: Hardcover
If you want to learn elliott wave principle, this is the book for you. It's quite a dry read but going through it once and using it to refer back to while trading is well worth it. It also works well if you have trouble sleeping since this book will knock you out in minutes after reading a few pages. Despite it's dry content, it is extremely useful and has helped pave the way for a good trading career. This is a must read for any market technician.
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22 of 26 people found the following review helpful By Petunia on November 19, 2008
Format: Hardcover
This is a slightly technical (you can skip to the good stuff) explanation of the hightly rated Elliott Wave Theory for predicting direction and breaks in the stock market. Even if you are not into stocks the book is a good read to show how mathematical theory applies in everyday life. While researching a lecture to be given to gifted students back in the 90's I found a book published in 1964 that laughed at the theory outlined here. The '64 book dedicated a small paragraph to the theory and tossed out the statement to the effect, if one believed this theory, the stock market would have to be at a certain incredible level in the early 90's. A quick check of the market confirmed that it was!
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14 of 16 people found the following review helpful By Mohammad J. Alkhabbaz on February 26, 2011
Format: Hardcover
if you want to make money out of the market know this, its not easy and never will be easy self discipline has a lot to do with it, but the tools should be also good, I have read different analysis theories that include chart patterns cycle analysis even went to RSI detailed analysis (based on andrew cardwell work) and yes all these stuff do help a lot and you should know all of them BUT elliottwave analysis is what you should fully depend on the rest look at them as helping tools to enhance your elliottwave analysis, in this book Robert explains how the market moves in waves and how you can actually interpret these movement and predict future markets movement and this is how you can use it to do your trading ! Yes you can make a lot of money but you have to be very careful and develop strict stop loss strategy especially in forex markets. I highly recommend all traders to read about elliottwave analysis.but elliottwave alone is not enough i look at it like this elliottwave is the backbone of it and represent 70% the rest is all these other methods (cycles,indicators, numorology, astrology....etc) basically Experience.
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