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[Jason Rogers] How To Use Elliott Wave Indicators

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[Jason Rogers] How To Use Elliott Wave Indicators

Postby Nikolay.Gekht » Wed Feb 10, 2010 4:06 pm

The article was initially published at Forex Factory by Jason Rogers. We publish this article here with kind permission of Jason Rogers, FXCM.

Just to give some background for everyone, there are 3 Elliott Wave Indicators in the Marketscope charting package: Elliott Wave Oscillator, Elliott Wave Indicator, and Elliott Wave Number. I remember seeing this indicators in Marketscope since I first started at FXCM (2005), and have rarely had someone ask about it . You may be only the second person out of thousands of people I have spoken with.

With that said, I urge caution when using these indicators because they try to quantify something that is very subjective.

First, let's go over Elliott Wave Indicator and Elliott Wave Number. Elliott Wave Indicator gives either a +1 or -1 signal. +1 indicates a long position and -1 indicates a short position. The indicator will always be -1 or +1. You could use the changing of the direction to indicate the start of a new wave. Elliott Wave Number attempts to tell you which wave number the market is currently in. Again, trying to quantify something that is very subjective. The chart below contains both indicators. The indicator at the very bottom is Elliott Wave Number, and the one right above is Elliott Wave Indicator.

elliottwaveindicators.jpg

(click on the image to see it in its full size)

You can see the Elliott Wave Number in red. It starts at 0, jumps to 3, and then 4. Then it jumps back to 3 and finally back to 4. This doesn't make sense to me, and personally think I could do a better job just eyeballing the chart and adding the elliott wave patterns myself.

The indicator above that in blue is the Elliott Wave Indicator. It gives you the +1 and -1 readings. Just flipping back and forth. I added a +1 and -1 label to the chart every time it flipped.

The last indicator Elliott Wave Oscillator is one I was not able to find much information on and have no previous knowledge of. Additionally, our Elliott Wave Oscillator is unconventional when you compare it to other Elliott Wave Oscillators. Most indicators like this will subtract the 5 period simple moving average from a 34 period simple moving average and then create a histogram. The most extreme point of the histogram should be wave 3 and then you can identify the other waves from there. I have inquired with our programming team if they know more information how it is used. I will let you know if they give me additional insight.

-Jason
Nikolay.Gekht
FXCodeBase: Base Builder
 
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Re: [Jason Rogers] How To Use Elliott Wave Indicators

Postby Nikolay.Gekht » Thu Feb 11, 2010 10:52 am

Thanks Jason for his criticism of the standard Marketscope's EWO indicator.

An updated version of EWO can be found here
Nikolay.Gekht
FXCodeBase: Base Builder
 
Posts: 1222
Joined: Wed Dec 16, 2009 6:39 pm
Location: Cary, NC


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