Customer Reviews

Elliott Wave Principle: Key to Market Behavior

5 star:		(7)
4 star:		(2)
3 star:		(2)
2 star:		(1)
1 star:		(5)

 

 

Obviouosly people either love this book (and this concept) or they hate it. I happen to love it and believe that the wave principle answers many questions about market behavior, mass social psychology and even world history. To me, the book does as much in constructing the tapestry of human history as it does in expaining stock market movements.

Anyone expecting to use this book to day-trade and get rich quick is likely to be dissappointed - no one but true experts should be day trading anyway and even many "experts" should probably find other lines of work.

What this book will do is begin to provide an understanding of markets as a function of human nature as well as to provide a very good long term perspective of all of human history. This book provides insight to explain everything from minor stock market corrections to protracted economic depressions to major world wars and even, believe it or not, the dark ages.

Many are critical of Prechter's (obviously wrong) bearish opinion through the 1990s, and rightfully so. On the other hand, if his hypothesis is correct (and I think it is) that we are approaching the end of a bull market that started in 1789, then calling the end of that bull market correctly within even ten years is a spectacular feat. (Yes, I said a bull market that started in "Seventeen Eighty-Nine". Read the book and begin to understand why the USA was born through revolution at the end of the 1700s.)

Let me also point out that Prechter was about the only voice calling for a tremendous bull market starting in 1982. At that time, the mainstream media was pronouncing equities "dead" and you could hardly give away a share of stock free with a bowl of soup. Now that everyone and their brother wants to own stock, of course anyone with a bearish opinion is treated as an outcast.

I think people who have such a low opinion of this book either have minds that are way too closed or, frankly, do not have the ability to understand it. (While I don't think the book is extremely difficult, it is not exactly a first grade reader either.)

Anyone who is in the stock market or considering being in it should consider this book obligatory reading. As unpopular as this viewpoint may be now, we are heading for a very serious bear market and anyone who removes most (or all) of their funds from the stock market will look back ten years from now and be very glad they did.

Prechter's Elliott Wave International has a web site at elliottwave.com which I highly recommend. The site provides additional information which may make a stronger case for the validity and importance of this information than I have here.

This book is a must for anyone who believes that there is method to the stock market madness.I am a pharmacist with a scientific and mathematical background.This book explains the stock market in terms of elliott waves,in a similar way that writing is explainned by the alphabet.In essence it explains the relationship between the everyday variations and its relation to what is happenning today.It explains why the DOW is 10750 today and what the most likely scenario is for the next week,month,year.I like to get into it in a complicated way ,but it is not necessary to do so.Learning the alphabet(elliott wave pattern) is enough to allow anyone who can read and write to note whre the market is today and where it is likely to go.While the most obvious use is for stock market investing the education perhaps is even more important. The elliott wave theory says that all moves consist of 8 waves given symbols 1,2,3,4,5,a,b,c,.In a bull market 1,3,5 and b are moves upward and 2 4 a & c are downward moves.Therefore if you can workout which wave your stock is in you can predict its next move.Each 8 wave move is followed by another 8 wave move and every move is interelated.The dow appears to be in the start of wave a with a long and sharp decline in the near future. I have read the book twice and I need to read it again as it makes more sense each time.

Ever heard how Fibonacci mathematics is everywhere - in the shapes of our bodies, in art, in animals and in nature? Everyone knows that, but did you realise that Fibonacci mathematics is just as common in Financial Markets? That's not so strange when you think about it - since humans and nature have so much Fibonacci mathematics then it makes sense that it will show up in markets as well.

Question: does you favourtie Financial guru talk about Fibonacci mathematics very often? This one does - Prechter and Frost's book Elliott Wave Principle.

Their book is about a method of analysis invented by R.N. Elliott during the 1930s. Unlike most other methods of analysing financial markets this one is full of Fibonacci mathematics, and it makes markets seem as natural as a shower of rain or a summer breeze.

This is the book that shows the connection between great works of art, the chaos of life on earth and the strange moods of financial markets.

This book is not for everyone - you have to be ready to challenge the mainstream ideas about financial markets. It is like a gigantic puzzle that requires some patience before you see the big picture.

It is much recommended for people who think most of what they read about finance is complete garbage manufactured by people who want to sound important. It is also much recommended for people who enjoy finding out things that are a bit harder to understand than everyday things. It is also recommended for people who like to find out that we are all human, no matter how much we play with numbers, computers, regulations, media releases and dictionaries.

If it is possible to predict what any financial market will do way in advance or even an hour from now, this might be the book to get you on your journey of discovering what it is. Predicated on the hypothesis that there are only 13 possible patterns for any financial market to unfold in, within any given time frame, this is both an intrigueing art and science.I myself am a professional stock investor and I was awed by Prechters knowledge. I went so far as to have him and his services be the first affliliate on my YAHOO BOARD called: http://finance.groups.yahoo.com/group/MarcVinsonStocksandfutures/That said, this book is so in depth and intense, it caused me to have to re-read many of the pages several times. Not the easiest read. My only complaint is he gave us "too" much detail!

This is the first place to start, to "understand" wave theory. I ended the book with the eagerness of feeling "Wow, if I can just decipher not all of the Elliot patterns, but just one that is forming that signals a huge market reversal, and if I can do it just one time, all the reading and research will be worth it." DEFINITELY WILL REQUIRE SERIOUS STUDY TO UNDERSTAND! To understand what your options are about what to "do" with your money, buy his other book "Conquor the Crash." Better yet, get them both. Once I read his book, I was hooked on spending my remaining years searching and uncovering all I can about E.W. theory. It's addicting! -) I would love to hear from anyone who has read his book or any of the fascinating Elliot material out there. We should form a club on Elliot Wave theory! Edited review:

09/15/08-This book is nonsense. I got all excited at learning wave theory and realized it just confuses you more. If you put 10 people in a room each counting waves, you'd get 10 different opinions. I do think most trends have 5 waves as prechter says. But...what about the ones that have 7 waves, or 3? Or just 2, up, down and then flat for a year! My advice is that after 5 waves just get out and take the money. The odds of more waves coming make it worth waiting for a reversal not a continuation. I retract my original comments. Do not waste your money on this book. Just learn how to count waves on your own and use your own waves. I now give it one star. On top of it I hear his newsletter was about the worst performer in the country that Hulbert Digest tracks! My name is Marc Vinson, and if you need further clarification, email me at:mince38@yahoo.com I now trade professionally and this book hindered me for a long time. I kept seeing what either wasnt there...or what was unimportant to place a trade! I threw years away studying this nonsense. Let me save you the time.

Interesting theory that goes beyond investing. The rigid market analysis is too narrow and assumes mechanical evolution of human behaviour vis a vis markets. Prechter missed the complex dimensions of the end of the century. He has consistently failed for years to call the market correctly. In 1993 he was massively short just before the great bull market. Yet he marches on oblivious and falls back on his habit of offering two outcomes to every situation. One essentially bullish and the second (sometimes called lesser) as bearish. That way he curve fits his results and avoids facing his failure.

Either you are a so-called Elliottician or simply curious about one of the most discussed market histyory, this book is a must have.
Robert Pretcher is from far the best author I have read on Elliott wave theory. The book is clear and contains all the tenets you need to get a firm, sound grasp of the Elliott Theory.
Do not expect trading systems or magic formulas, but at least a good, well written, concise but still complete analysis of the key Elliott's principles.
Suggested read.

I will avoid a long discussion about stock market efficiency and the efficacy of simple technical analysis, and point you in the direction of Malkiel's A Random Walk Down Wall Street. I would suggest further readings if you want to delve into the academic debate behind it.

That being said Prechters's book offers a basic guide into the fundamentals of Eliiot Wave analysis. The principles of the analysis are the belief that there is information to be gained from the price action of stocks (e.g. the implict information of transactions by traders) and that there is a natural flow to these price movements (e.g. stocks don't go up in one direction).

In incorporating price information, the belief is that stocks move in a 5-wave impulsive pattern, which can be either bullish (up) or bearish (down). A 5-wave move is followed by a 3-wave corrective pattern. Larger cycles are basically an aggregation of many 5- and 3-wave patterns. If believed to be true, the practical benefit of understanding waves and cycles is that investors can use this information to identify "where" they are in the cycle of a stock's movement.

The book follows the basics of identifying waves and cycles with some historical and matehmatical background information. This is where Pretcher ties the material in with nature. He believes that waves move in a natural way, which can be described by the Fibonacci sequence and Fibonacci ratios. He advocates using Fibonnaci ratios to forecast the distance (e.g. percent change) and timing of stock price movements. I found this material to be the most informative since it provided background reading on Fibonacci numbers which many technical traders employ in the various tools they use. Now I know what they are talking about.

The rest of the book can be skipped. It is primarily an application of Elliot Wave to various historical contexts. Of course, Pretcher draws on examples that fit nicely with the belief that Elliot Wave has strong predictive abilities. If I recall correctly, the author does close the book with his predictions for the stock market and did correctly predict a long-term bullish Wave 5 coming out of 1982-83.

I think its very good read if you want to know what happened after it happened. The truth of the matter is, since waves don't know how big or small they will be, it can be any of the waves, minutett, minor, primary,
intermediate. That defeats the purpose of the whole pshchology part of it. The key to market is being simple. In this case you really have to fiddle with the waves to see what you want to see. Which in my opinion is dangerious because your expecting from the market. If you mess around with any indicator you can make it to fit your subconcious need. Im sorry my english is not that good but, this is good book to read for entertainment reasons but never useful to using in the market. I was told to buy this book by several people who are elliotticians. I took the same chart to all 3 of them and all 3 of them had diffrent waves. I would not recommend this for anyone to use in the market but for fun yes good read. If you want to understand market pshychology, read Elder and Mark Douglas. This is total waste of time.

The Elliott Wave Principal offers the reader an unclear understanding of the multitude of wave cycles, an unclear application to making investment decisions while it's anniversary addition offers charts with the most recent dated 1982. Clearly, it was a mistake to offer this book to investors and any readers other than theorists who might thrive on an unnecessarily complicated outdated presentation of a system and theory plus out of date documentation with no application to the present. The serious investor is wasting his time with this text. Respectfully, Mark L. Fideler

The Elliott Wave principle is dangerous to your financial health.

Its a convincing theory that works very well in hindsight. The problem is that it doesnt predict the market successfully. Worse still the patterns can be so convincing (but in hindsight plainly wrong) that you trade your bias rather than the markets price behaviour.

If you do read it apply the test of assuming the market makes a move up, down and sideways over the next 5 days. Then explain why it happened. Then ask yourself if there is any value in your current view.

These guys get it wrong all the time and have been predicting the big crash regularly since 1987.

Look instead for books by Van Tharp, William O'neil, Charles Le Beau and Alexander Elder.