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What is a wave count?
How do I use your charts for trading and investing?
What do the labels on your chart mean?
What is the difference between the labels (w) and (a) in a corrective wave?
What is the difference between the Preferred and Alternate wave counts?
What do the non-numeric labels mean?
What do the ratings stand for and how are they computed?
What is considered a high rating?
What are 'Macro' and 'Micro' signals?
Can I copy your charts for my own use?
I don't receive your Charts Update newsletter. Why?
How can your analysis of a single stock change in a week?

Q: What is a wave count?
A: An Elliott Wave count is an interpretation of how the Elliott Wave Principle applies to a specific chart. It simply shows the beginning and end of the completed waves on the chart, as well as the current wave. To learn more on the Elliott Wave Principle, click here.

Q: How do I use your charts for trading and investing?
A: Our free charts consist of the major stock and sector indices. These indices are not directly tradable the way stocks are. However, these indices have their corresponding Exchange-Traded Funds (ETFs), options, and futures. These instruments move in exactly the same way that the stock indices move.

Using the same principle for trading waves 3, 5, and C, you may use the charts to identify these tradable waves whenever they occur, and trade accordingly the instrument of your choice. Read our General FAQ for more on this.

Note: Trading ETFs, options and futures involve risk and are not suitable for all investors.

Q: What do the labels on your chart mean?
A: The labels on the chart indicate the end of the specified wave, and the beginning of the next wave. For example, if the wave is labeled (2), this means that the point where the label is located is the end of wave (2), and the start of wave (3). The different wave degrees are labeled differently from one another as follows:
 

Wave Degree

Motive Waves

Corrective Waves

Supercycle

(I) (II) (III) (IV) (V)

(A) (B) (C)

Cycle

I II III IV V

A B C

Primary

Intermediate

(1) (2) (3) (4) (5)

(a) (b) (c)

Minor

1 2 3 4 5

A B C

Minute

i ii iii iv v

a b c

Minuette

1 2 3 4 5

a b c

Source: The Elliott Wave Principle

Q: What is the difference between a (w) and an (a) wave?
A: Both the (w) and the (a) waves are corrective in nature. However, the (w) wave signifies the start of a double or triple three, while the (a) wave indicates the development of either a flat or zigzag correction.

Q: What is the difference between the Preferred and Alternate wave counts?
A: In applying the Elliott Wave Principle, you will find that there are actually a number, sometimes up to millions, of ways to interpret a chart. The preferred wave count is our interpretation of a chart that has the highest confidence level. The alternate wave count, on the other hand, has our second highest confidence level.

Q: What do the non-numeric labels mean?
A: The non-numeric labels indicate the start of either a motive or corrective wave, depending on the label. The following describes these non-numeric labels:

Motive waves:
im - impulse wave
ld - leading diagonal
ed - ending diagonal

Corrective waves:
ct - contracting triangle
fl - flat corrective wave (regular, expanded, and running)
zz - zigzag corrective wave
dz - double zigzag
tz - triple zigzag
d3 - double three (denoted by w-x-y)
t3 - triple three (denoted by w-x-y-xx-z)

To learn more about motive and corrective waves, please visit our Tutorial section.

Q: What do the ratings stand for and how are they computed?
A: The ratings are determined through a point system used by the analysis software.  Part of the rating is computed based on points for each rule and guideline satisfied by a certain Elliott wave interpretation. Therefore, the more guidelines are satisfied, the higher the rating. However, a good part of the rating computation is based on the rank of a single interpretation as compared to the other possibilities.

Nevertheless, it provides an objective assessment on the probability of the interpretation. However, a high rating still DOES NOT guarantee that the analysis is 100% correct.

Q: What is considered a high rating?
A: The ratings can sometimes go as high as 500, but is actually infinite in the upper boundary. Lowest possible rating, of course, is zero, but those would naturally not merit any consideration. We would consider a good rating as between 120 and 180. However, a rating lower than 120 does not necessarily mean it should be ignored. Most of the time, a certain interpretation will be the best forecast despite a low rating.

Q: What are 'Macro' and 'Micro' signals?
A: Macro signals are wave charts that give a 'bigger picture' of the wave analysis. These wave charts usually start at a major high or low.

Micro signals, on the other hand, are wave charts that give a 'close-up' of the wave analysis, usually a detailed wave count of the currently unfolding wave in the corresponding Macro signal chart. These wave charts usually start at the latest minor high or low.

Q: Can I copy your charts for my own use?
A: The Elliott Wave Signals website, including our charts, is copyrighted. However, you may copy our charts for your personal use provided that no alteration is made on the images. Elliott Wave Signals should be given full credit on publication and copyright.

Q: I don't receive your updates newsletter. Why?
A: If you don't receive our regular newsletter updates, your email address may have been removed from our mailing list. Here are the possible reasons:

  • You may have unsubscribed from our list on your own free will.

  • The email address you provided during registration may have been invalid. Company ID reserves the right to remove anyone from our mailing list for the purpose of keeping our list "clean" and valid. Company ID removes an email address from our list ONLY when our newsletter emails get "bounced back" three times in a row. If you wish to re-join our subscriber list, you may re-enter your email address here.

Q: How can your analysis of a single stock change in a week?
A: The Elliott Wave Principle, just like any other analysis procedure, is not error-proof. The principle makes use of past (actual) data to analyze and project a future target. And most of the time, a single graph results in two or more valid wave counts, some more probable than others. In each day that the stock market operates and trades are transacted, new data becomes available and, therefore, becomes part of the past data on which an analysis is based. And so, as new data becomes available, and depending on the actual market movement (as compared one's analysis and projection), a previous wave count that was the least probable could suddenly become the most probable wave count.

An occasional change in wave count is not bad at all. The more important point to remember, however, is to be just as flexible as (if not more than) the market. There is never a definite path that the stock market will take. Therefore, a trader should be flexible enough to enter/exit the market when necessary, especially when market movement is not as expected.

Remember, more important than knowing this path is to know the direction that the market is headed. And in EW terms, more important than knowing whether a correction's wave form is a zigzag or a flat, for example, is to know that a correction is taking place. Therefore, you can prepare yourself to enter the market when that correction is over.


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Last updated on 02/06/2010.
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