It was in 1934 when Ralph Nelson Elliott noticed one crucial thing about price action charts. Instead of the chaotic and unpredictable manner in which everyone considered the market trends to behave he identified an intrinsic narrative. Elliott saw that the patterns were behaving in a repetitive cycle. These cycles represented the predominant emotions of investors worldwide and reappeared on the market from time to time. The upward and downward swings were the reflections of the traders’ emotions and these swings got the name of “waves”.
Ralph Elliott used quite a lot from the Dow Theory and borrowed three impulses and two correlations. However, the Elliott Wave theory is a unique concept that has been brilliant in describing the fractal nature of various financial markets. The theory is widely accepted nowadays and actively used in the day-to-day trading of both beginner and expert traders. The main application of the theory for any trader is to detect the presence of the most destructive wave formation which later can be used in one’s favour. However, EW theory is rarely used as a stand-alone approach and is often combined with the principles of Fibonacci ratios or other Support & Resistance levels.
However, today, a lot has changed in terms of the application of R.N Elliot’s theories and many took unorthodox turns to transform the existing principles into hybrid routes. One of the greatest examples is the appearance of the Elliott Wave in crypto trading. However, much of the theory has been retained in the Forex industry but the labeling, set-ups, and main themes have been modified to an extent that it has become almost unrecognizable from its origins. Today, we will cover the very essentials of EW concepts in Forex trading, the strategies and indicators in combination with it, and the best Elliott Wave software reviews that traders can access today.
We will not go in-depth of the theory itself to uncover every detail and concept the author developed as it would take us through a long journey. Instead, we will provide a general overview of the system to make it clearer for our readers how they will need to apply the theoretical notions since it will help them choose the proper EW charting software programs. Hence, you will be acquainted with the core foundations of EW theory, but if you would like to become an expert in the matter it is better to read the original theory itself and modern updates.
Elliott Waves pattern comprises two major types of waves. The first one is the Motive Wave which consists of five smaller waves. Three of them are impulse waves (waves 1, 3, and 5), and two are diagonal waves (waves 2 and 4). The pattern of the motive wave can be an uptrend or downtrend.
The first wave of the uptrend pattern contains a weak rally of a very tiny amount of traders participating. It is followed by wave two which has a vicious sell-off but still allows the starting of another rally – wave three. Wave three starts slow but as soon as it breaks the high point of wave one the rally starts to pick up the momentum. It is the most active stage at which market participants are aggressively adding the positions. Wave four is a period of profit-taking resulting in a pulled back price, but way more orderly than in the case of wave two. For the last wave, only a few traders who have missed the previous moves are entering the market to start another rally. But the number of participants is not sufficient to boost it up and hence tops out eventually.
The motive wave downtrend features a similar dynamic but mainly in an opposite direction. It all starts with a wave one with a weak sell-off involving a limited number of market participants. In wave two, the rally gets higher but still allows a turnaround to start with another round of sell-off. The third wave involves the most active sell-off which breaks the law of wave one and sets the pick momentum with participants opening short positions or others exiting the long positions. The fourth wave is a profit-taking move which causes a serious pullback in asset prices. Finally, at the stage of wave five, a few short-sellers will enter the market to start another sell-off, however, it will not be enough to sustain another rally and will eventually bottom out.
Corrective waves are a bit more complex than motive waves. Hence, it is crucial that a trader uses a high-quality Elliott Wave charting platform not to get confused. In general, the corrective wave pattern follows the five motive waves that we described above. It consists of a three-wave correction or otherwise known as the ABC corrective pattern (ZigZag correction). Similar to the motive wave patterns, we have uptrend and downtrend corrective wave patterns with similar characteristics in opposite directions.
n a broader uptrend corrective wave pattern, the first wave or Wave A features a small drop in the price as participants bank their profits and start exiting the market. Since the trend still remains up, some traders will enter the market and will initiate the beginning of the second wave – Wave B. But as the first wave decline is obvious to buyers many of them will decide to exit the positions resulting at the beginning of Wave C. At this point, quite a few short-sellers are attracted to join in pushing the market further down.
n a broader downtrend corrective wave pattern, the first wave consists of the participants who begin to claim their profits and exit their short trade positions. Downtrend attracts few sellers to enter the market at the beginning of the second wave, or Wave B initiating a weak rally move. As the third wave (Wave C) begins, those sellers observing an increasing move in Wave A will quickly exit the market prompting other buyers to join in and push the market higher.
We have described the wave behavior in the previous paragraph using Elliott Wave theory and observed how market participants initiate various stages of the wave patterns. But how do you interpret those waves and how do you identify when it is the right time to enter or exit the market? The key idea in Elliott Wave trading strategy is to understand the psychology behind the market and quickly recognize the optimistic and pessimistic swings. In other words, we need to know when the markets are becoming bullish and when they will be bearish. The market in a bullish state consists of investors with a strong appetite for placing more trades and going long. But this state slowly fades away as the sellers’ remorse sets in and investors begin to release some of their holdings. It is the correction phase of the market.
Before you start following the EW theory in an actual market, you need to know where you start counting the waves. It is not always easy to identify the wave type at any given moment. Hence, we recommend that you count at an extreme swing high or low. It means that you are identifying the movement of the price in the opposite direction. For example, if you start counting at the high you’re observing the downside trend and vice versa if you count from low. Of course, it is the simplified application of the theory which will not be very useful for advanced traders. If you want to analyze the market wave pattern in-depth it is better to start counting the waves from the weekly or monthly charts. The EW principles state that a trader should count from the end of the previous impulse wave.
We have mentioned previously that not many traders rely on the Elliott Wave method as a stand-alone strategy to trade Forex anymore. Instead, they combine various tools and technical indicators to achieve efficient trading. The most frequent strategy that EW Forex traders take is supporting their EW analysis with the following three technical tools:
Some of the patterns described in Elliott Wave theory, such as corrective wave patterns are too complex to handle for a beginner trader. It even confused professional ones from time to time. That is why experts frequently recommend using the specialized platform for EW trading that offers advanced Elliott Wave charting functionalities, supports required technical indicators such as RSI, MACD, and Fibonacci, and has a simple interface. In most cases, you will meet the MetaTrader 4 and MetaTrader 5 platforms with EW strategy implementation, but sometimes the proprietary software options work the best. We will cover several Forex trading software for the Elliott Wave theory application that proved to be the best choices currently available on the market.
SWAT stands for the Simple Wave Analysis and Trading (SWAT 2.0). It is a ground-breaking MetaTrader 4 system often utilized by various types of traders due to its flexibility and suitability for different strategies and trading applications. However, the SWAT has become increasingly popular among the Elliott Wave traders as the software seeks to incorporate Forex wave analysis into EW traders’ routines. The extensive range of numerous combinations of advanced tools and theoretical rules SWAT allows its users to approach both trending and ranging markets in an efficient way. The guides that come along with the system provide insight into the application of Elliott wave Forex analysis and indicators used for determining entry and exit levels and scaling in and out.
SWAT can be an infinite resource for Elliott Wave analysis offering reliable rule-based and discretionary-based solutions. Apart from various methods and tools supported on the platform, traders can access original five-wave trading systems out of which three are with the trend and two are counter-trend. One of the unique concepts of SWAT is Wizz target levels which allow traders to spot the wide-open spaces on the price charts and apply EW analysis for identifying the top trending spots with the help of Fibonacci sequence levels. Wizz levels are also often used for safe targeting of the existing trades.
Furthermore, SWAT offers lifetime access to world-class indicators and strategy templates with custom-designed analysis tools and charting systems. The users can track the markets, conduct various analyses and use multiple tools on three available dashboards. The platform does not come with any hidden costs, or even upgrade requirements. Apart from all the benefits that EW traders can get from SWAT, there are numerous educational materials available for the platform users with lifetime access including videos, templates, additional indicators, and complete support from Chris Svorcik (the author of SWAT) and the EliteCurrenSea team.
Another thing that SWAT designers paid a lot of attention to is risk management. The clients can access multiple risk and trade management setups along with the money management systems such as risk to reward rations (R: R) and take-profits and stop-loss systems. For advanced traders, SWAT provides access to ecs.SWAT live trading sessions but for a limited period of time. These live trading sessions offer an insight into how Chris and the rest of the class use Elliott Wave analysis for Forex trading.
To summarize what SWAT offers let’s look at the specifications. There are three SWAT approaches – discretionary (entry options and analysis), Elliott Wave strategies (trend and reversals), and rule-based (with MACD, Basic, Classic, and Pro). The educational package includes Forex basics which is a 13-hour course covering MetaTrader 4, Candles, Trend Channels, Patterns, and more, and SWAT, a 9-hour course including proprietary tools and strategies, three trading approaches, and more. The list of the available indicators on SWAT 2.0 includes:
Finally, we have to cover the pricing of the product. The price of SWAT will differ for wave traders and non-wave traders. Those who are familiar with Elliott Waves trading can subscribe to a monthly SWAT plan for 473 euros including the platform and setups along with the listed technical indicators and strategies. For non-wave traders, SWAT will offer simple indicators such as swat.CANDLES, moving averages, and Fibonacci without further peculiarities of EW theory. It is available for 695 euros for a 4-month subscription with platform and setups.
WaveBasis is a web trading platform that is primarily used for technical analysis and automated Elliott Wave trading. This proprietary web-based software provides access to exclusive tools that target wave analysts using EW patterns in day-to-day trading. WaveBasis runs an advanced pattern recognition engine that is automated to determine high probability and valid EW counts. WaveBasis was built using its special Smart Tools and Wave Count Scanner to suit the needs of the most professional Elliott Wave trading experience along with low-risk potential identification features and a price pattern-based risk management system.
The company is expanding rapidly and currently offers using Elliott Wave analysis for all major markets including stocks, Forex, CFDs, cryptos indices, and futures.WaveBasis is now present in over 200 countries worldwide and so far it has calculated more than 1.5 million automatic wave counts. WaveBasis is renowned for its highly customizable and flexible workspaces along with ground-breaking charting and technical analysis functionalities. It is considered one of the best Elliott Wave software with high-quality features for both experienced and novice EW traders. The features of the platform include:
The platform was established in 2015 April and since then the software has gone through numerous upgrades and new releases. In 2018, WaveBasis made major improvements to the system and introduced new features. One of the most significant changes is concerned with engines. WaveBasis has the strongest Elliott Wave pattern detection engine which many refer to as V2.
The engine does automatic wave calculation and counting in two main phases that are detection and analysis. After the improvement, the detection system began precisely identifying which wave count was best capturing the market’s true pattern context. The main measurement methodology used here is based on probabilities thanks to which the system produces consistent and reliable data. Users can now identify good entry setups and exit points with higher profitability indices.
The quickest solution to get started with WaveBasis EW trading is to immediately begin with Automatic Wave Count on the chosen financial sector. It takes only three steps to begin your very first wave count using WaveBasis. At first, you choose a market symbol from the function ‘symbol chooser’. Then you select the resolution for your chart either in minutes, hours, days, weeks, or months. If you want a more specific resolution you can also set a custom timeframe. Finally, you click the button to start the automatic wave count. As the system runs it will display various wave labels wherever it identifies Elliott Wave patterns.
WaveBasis is extremely rich in technical indicators for Elliott Wave trading. It includes more than 100 different chart indicators including Volume Underlay, Relative Strength Index, Stochastics, MACD, Moving Average, Bollinger Bands, On Balance Volume, and many others. Let’s briefly explain how you can use each of these indicators for trading Elliott Wave patterns. The Volume Underlay indicator displays the overall volume as a bar chart below each time frame. Using a volume underlay indicator should be the very first step of every EW trader as it shows the relative worth in a market.
One of the most useful indicators for differentiating Elliot Wave structures is the Relative Strength Index (RSI). It is used to distinguish Impulsive EW patterns from Corrective EW patterns as impulse waves end with RSI divergence while corrective waves end without it. The Relative Strength Index trend line will break whenever the cycle is complete. Stochastic is a momentum indicator that is used by EW traders to predict the future price of an asset. The indicator compares current asset price to the price range over a certain timeframe to make the projection.
The combination of Elliott Wave analysis and moving average technical indicators is another powerful tool that many traders use today. Moving average provides insight into the market and the price pattern, whether the value is trending up or down. Bollinger bands indicator is mainly used to count the Elliott Waves and identify impulsive wave patterns even during the corrective waves. People often consider On Balance Volume to be the parent of all the volume indicators. OBV is used for trend confirmation, divergence, and trend lines.
WaveBasis offers three subscription plans – 49 USD per month for casual traders, 169 USD per month for regular traders, and 399 USD per month for an active trader with various benefits. Clients can also start with a 14-day free trial version for any subscription pack to test out the platform and Elliott Wave trading system.
ELWAVE is an advanced Elliott Wave software offering a thorough Elliott Wave analysis with extensive functionalities, a sophisticated engine, and a plethora of tools and indicators available for users. It is one of the first EW products on the market to offer the complete package of Elliott Wave theory including the fractal nature of EW without further simplification or shortcut methodologies. Despite the complexity of the theory itself, the platform remains surprisingly simple to use thanks to its highly user-friendly interface and comprehensive instructions on how to use it.
Most beginner Elliott Wave traders believe that they need to find the one best wave count and build their trades based on it. However, the truth is that there is more than just one valid wave count. That is what the ELWAVE platform can perform best – to identify multiple valid EW wave counts and provide signals based on their degree of consensus. The Summary Inspector and the Target Clusters of the software display a clear picture of market condition, wave trends, and many other details that traders would otherwise have to calculate themselves manually.
ELWAVE has an EW analysis engine which represents the analytical power stored in the Automatic module of the system. This module will generate several wave counts, will label the chart, and draw the trendlines, target, and exit levels. The system runs the analysis in the background, not interfering with whatever the user is doing with his or her charts. After the analysis is done, traders can see the statistical summary of all counted valid waves for indicated timeframes. The results include the trend, current wave, reward, risk and risk/reward ratios, targets, etc.
One of the best things is that even if you are a complete novice in Elliott Wave theory trading using ELWAVE analysis you will quickly grasp the main technology behind the analysis and use it to your advantage. The features of the platform allow users to combine targets from every single wave count and time frame and overlay them graphically in the chart. You can immediately spot the trend, as well as the price target. The chart can also be used to spot the discrepancies between trends and targets using the opposing wave counting.
However, the software is not only beneficial to use for beginner EW traders. Advanced and expert users can also use the Expert Advisor inbuilt within the software which interprets the analysis results in a textual manner. It saves traders a fair amount of time in terms of analysis, results in interpretation, and decision making. Each and every set of rules and guidelines enables users to analyze every individual sub-wave, create their own wave counts from the scratch, automatically generate the EW count, and check for mistakes and inconsistencies.
As for the technical features, ELWAVE supports numerous indicators, charting mechanisms, and drawing tools. The users can easily draw trend lines, trend channels, speed lines, Fibonacci time projections, and logarithmic spirals. Some of the rarest technical indicators are available on the platform as well apart from the traditional RSI, MACD, Stochastic, Bollinger Bands, and Elliott Oscillator. The users can choose from numerous indicators such as Alligator, DSS Bressert, Ichimoku, Keltner Channels, and many more. Let’s go through each of them and see how you can implement these indicators with the ELWAVE Elliott Wave trading strategy.
The first indicator – Alligator is used for performing the trades during the trend moves and missing out on sideways markets. Hence, it’s one of the favorite indicators of Elliot Wave automated trading followers. The DSS Bressert is a type of stochastic indicator which is the smoother operator. It identifies oversold and overbought market conditions and continues with exponential moving averages before applying raw stochastic. The Ichimoku indicator is the best assistant indicator in Elliott Wave theory trading. It is used for identification and confirmation of the trends and bullish and bearish markets. The three most popular indicators for trend confirmation that work best with Elliott Wave theory are the Relative Strength Index (RSI), Jurik RSX, and Keltner channels. RSI and Keltner channels are both supported on the ELWAVE platform, but as we have covered RSI several times we are not going to explain it further. On the other hand, Keltner channels use an exponential moving average and a multiplier on the ATR to identify the upper and lower bands on the chart. It is very similar to Bollinger Bands but is often used as an alternative.
There are numerous plans available for Elliott Wave trading users including Basic, Automatic, Trading Signals + Trading Clusters, Expert, Scanning, Regular Service Contract, Premium Service Contract, Second License, etc. All of them come with different functionalities and pricing schemes. Most of them have a one-time fee payable ranging from 80 US dollars to 520 US dollars depending on the plan. If you are unsure, you can approach the shop assistant bot on the ELWAVE website which will ask 6 questions to analyze your Elliott Wave trading needs and suggest which plan works best for your goals, budget, and expertise.
MotiveWave was quite a successful company even without the software that became increasingly popular lately. The privately held company was established back in 2008 in Kelowna, Canada. The development of the software officially began in 2010 and since then there have been six different editions of the MotiveWave Elliott Wave trading platform with various other modifications. In 2021, the company released the latest version of the software – MotiveWave 6.2.
Since all six editions of the software are freely available electronically, we will cover each of them to demonstrate what are the most significant features of each version, their respective pricing plans, and overall if they are worth it or not. These editions offer extra benefits apart from their differences that could range from free functionalities to advanced trading tools. The six MotiveWave editions are:
The MotiveWave Community is a free charting software with high-quality functionality, Replay Mode, and inbuilt trade simulation. The charting tools available at Community edition include more than 280 inbuilt studies, such as Volume Profile and VWAP, around 20 standard linear bar types, numerous analysis tools including lines, channels, forks, etc, various chart templates and Fibonacci tools – retracement, expansion, fan, circle, extension, and arc.
The MotiveWave Standard is a paid software with a complete set of studies and indicators. The edition exceeds 290 tools available for technical analysis with the additional possibility to create an infinite number of chart templates. The users can also create studies for various time frames in a single chart. The additional features of the platform are the Harmonic Tools pack, Depth of Market, and Gann Tools pack.
The Order Flow MotiveWave edition contains extensive and customizable charting functions and tools making it easy to identify the best market conditions using volume, order flow, and depth of market. The following tools are available to Order Flow edition users: PO, Volume Imprint, Depth of Market, Bid/Ask Volume, DOM History, Big Trades Study, DOM Power, Speed of Tape, Speed Gauge, Delta Volume, Cumulative Delta, Extra 2 Order Flow TPO, and Volume Profile Components, and Time and Sales.
The MotiveWave PRO edition is one of the most advanced Elliott Wave trading packs that users can find. It comes with simultaneous integration of various brokers along with extra tools for options trading and analysis. The edition also includes strategy backtesting, option chains, advanced Fibonacci pack, Auto Harmonic Pack, Gauges Panel, Quote Sheets, Study Scanner, Desktops, and many more.
Elliott Wave Lite Edition of MotionWave is also available on a 14-day free trial for the users. It offers a complex charting platform with advanced analytical tools where all EW patterns and degrees are supported. The users can compose and decompose wave formations to multiple levels with great ease and conduct both time and ratio analysis on every single wave to predict the asset price direction, as well as buy and sell points. EW waves are automatically labeled which reduces the manual analysis time significantly.
The MotiveWave Ultimate Edition is the most all-encompassing and sophisticated version of Elliott Wave trading software that professional EW traders can find on the market. It combines all the MotiveWave modules found on other editions with additional updates and supports upcoming updates every year.
The Ultimate edition contains all of the MotiveWave modules, including Elliott Waves, Scanner, Harmonic Trading, etc. The Hurst Cycles Study and the Advanced Elliott Wave Pack are also only available in the Ultimate edition. FiboCross Indicator and SwingCatcher Indicator are available exclusively to Ultimate edition users. This is the perfect choice for the traders who would like to get all-in-one Elliott Wave functionality with great value for the price.
The pricing of the MotionWave software depends on the edition that you choose. As we have already mentioned, the Community MotionWave edition comes free of charge with its charting and simulation platform. The MotionWave Standard edition and trading platform cost 245 US dollars, but it is a lifetime license without any requirements to upgrade the software. The Order Flow MotionWave edition, a full-featured trading platform, costs 595 US dollars for a lifetime license, and similar to the Standard edition it needs no upgrades, as well. The PRO advanced trading platform of the MotionWave software requires 1,495 US dollars to purchase a lifetime license. The Elliott Wave Lite trading platform costs a bit less than the Pro edition – 1,395 US dollars with a lifetime license. Finally, the full-features advanced trading and Elliott Wave platform Ultimate edition comes with a price of 2,295 US dollars for a lifetime license.
Elliott Wave theory is one of the oldest and the most respected Forex trading theories in history, so basically yes – it is worth your time. If you dedicate enough time and attention to the basic principles along with modern additions and recommendations to the original concept of Elliott Wave trading you will gain tremendous insight into the specifics of the Forex market. You will be able to spot the best moments for entering and exiting the markets based on the current wave count apparent on the trendline. As you master identifying the trendlines and wave types, you will have a significant advantage over other traders who have no knowledge of Elliott Wave theory.
Experts think that the best time frame for Elliott Wave is a month. Of course, it depends on the financial instrument that you are trading. In extremely volatile markets or instruments, many traders will prefer to go for intra-day or even hourly trading with Elliott Wave theory. However, when conducting the wave count analysis the most experienced users will never rely on a single time-frame such as daily or monthly. Instead, they will conduct the count on various time-frames to have a complete picture. However, the monthly time frame also allows insight into the market condition in daily or even yearly time frames. That is why it is the most optimal choice.
Elliott Wave Theory is legit and has been tested by time and by numerous experts historically. Even though the original theory is quite outdated nowadays and almost no one utilizes it in its original form many new wave theories have emerged from it. Numerous concepts of EW theory are still applicable in modern Forex trading and momentum trading on many different financial markets. Elliott Wave theory offers some of the complex and significant insights into market participants’ behavior and price trend lines which every intermediate and advanced trader should be aware of. It is definitely worth your time to give it a look and check out the latest updates on Elliott Wave theory modern versions.
You can get an EW trader for free or for almost 3,000 US dollars. As there is no single universal Elliott wave trader and instead there are numerous options you can find any level of pricing you are looking for. However, the free Elliott Wave traders will offer limited functionalities and thus you would have to intervene manually for conducting analysis. The premium solutions start from 250 US dollars but for a lifetime access license. Some of the best Elliott Wave software choices with a great value for price are SWAT, WaveBasis, ELWAVE, and MotiveWave. Most of these platforms offer various subscription plans and paid packages. Some of them even provide free software and trading tools like MotiveWave.
At this time, SWAT is the best Elliott Wave trading software available on the market. First of all, SWAT operates on a MetaTrader 4 system and is highly flexible and sustainable for various strategies and trading applications. It offers one of the most advanced Forex wave analysis interpretation and implementation into EW traders’ routines. SWAT 2.0 supports dozens of methods and tools ranging from traditional technical indicators to proprietary and ground-breaking tools such as Wizz target levels, Fibonacci sequence levels, SWAT pullback, and many more. Most importantly, SWAT has a great value for price and is available at 473 euros.