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An Introduction to Forex and Elliot Wave Degrees
By Adrian Pablo

As a Forex trader you will always be attempting to make more profits than losses from the fluctuations of exchange rates between currencies in the forex market; in short, this is what is called forex trading.

 

And if you want to become a profitable forex trader you will need a good technique to forecast the market behavior with time; i.e., how the currencies value will fluctuate in the next period of time you are interested on trading.

One of the best techniques you can use to forecast the Forex markets is by using the Elliot Wave Theory.

Ralph Nelson Elliot also observed that the market has strong trends that seem to follow a repetitive pattern in all the different time frames; and after analyzing a great number of charts he discovered in the late 1920’s that the markets move in a repetitive manner that is far away from being a totally chaotic behavior.

And this was not all Elliot discovered; he also realized that this patterns had a fractal nature. This means that the patterns not only repeated with time but that in a given period of time the characteristic wave pattern would repeat at different scales (days, hours, minutes).

This is the most basic concept in Elliot’s theory; i.e., the largest wave structures are composed of smaller sub waves, and these in turn are composed of even smaller sub waves, and in principle this goes on to infinity.

 

 

Elliot gave a name to these wave structures calling them “wave degrees”, depending on the time frame you are looking at. The range of these degrees goes from centuries to hours.

Elliot distinguished Nine Wave Degrees in his studies, they are known as:

- Grand Supercycle
- Supercycle
- Cycle
- Primary
- Intermediate
- Minor
- Minute
- Minuette
- Sub Minute

In principle these degrees can go to infinity and they clearly show you can choose the time frame you like better, according to your trading objectives, and the patterns you will see will be the same in any of these time frames.

Adrian Pablo is a Forex freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of trading,
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http://www.1-forex.com

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts