Best Books on Elliott Wave Theory

Elliot theory can help you immensely in making the right market predictions because it uses crowd psychology or investor psychology. It is an advanced form of technical analysis, so some people find it a little complicated and overwhelming at times. It might not have a steep learning curve when you are learning this form of technical analysis, but it is definitely one of the best tools to forecast the market.

Here you will get a brief on the Elliott Wave Theory and also the names of some of the most exciting books in the subject. These books on Elliott Wave Theory can help you understand and use it for your daily forecasting too so you can effectively start trading with this technique.

Before moving on to the actual theory, you must understand the following waves:

Impulse Wave: The impulse waves move in the direction of the market trend. In this phase, massive moves happen in terms of changes in prices, and they take lesser time. Hence, the trending move is very attractive for trading.

Corrective Wave: The corrective wave has a price behaviour that is in the opposite direction of the market or the impulse waves. They are smaller when it comes to the changes in prices and often take more time. This makes them less attractive to trade as compared to the impulse ones.

To sum up, if there is a bullish trend, then the corrective wave would trend in the bearish direction. Similarly, in the case of a bearish trend, the correction would be bullish.

Moreover, there is also a price consolidation phase where no visible trend exists. Many times, these consolidations work in relation to sideways or ranging price movements. However, it is essential to note that correction might take various forms that illustrate specific patterns of charts. These chart patterns can be helpful at times to forecast the price developments in the future.

When Ralph Elliott discovered essential patterns in the market, Elliott Wave Theory came into existence. He discovered the five waves that are formed when the price is trending in the market. He named three of them as impulse waves and the other two as corrective waves. As already mentioned, one moves along the market trend direction, and the other one walks in the opposite direction. 

He also found that after the exhaustion of the trend phase, the price action moves from impulsive to corrective. This can be tracked within three moves. Hence, he figured that there are five moves in the trending phase, where three would be in the same direction, and two would be in the opposite direction.

However, these are just the basics of the theory. If you want to go deeper into understanding it so that you can make the right market forecasts, you can check out some books on Elliott Wave Theory.

The bible to understanding this theory is the Elliott Wave Principle - Key to Market Behavior. Also, other books like High Probability Trading Strategies: Entry to Exit Tactics for the Forex, Futures, and Stock Markets, Five Waves to Financial Freedom: Learn Elliott Wave Analysis, and Visual Guide to Elliott Wave Trading are also some good ones.