Use Elliott Wave

EA, indicators & objects (PC)

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In MetaTrader5 (MT5), the object called the Elliott Wave is available. It is an analysis method heavily influenced by the Dow Theory, based on the idea that markets have a cycle. In MT5, the 5 upward trends are shown as the "motive wave" and the 3 downward waves are referred to as the "corrective wave".(*1)

Here, we'll take a look at how to display and adjust the Elliott Wave.

(*1)Elliott Wave is not available on MetaTrader4 (MT4).

Step 1

Click "Insert" in the menu. Hover the pointer over "Objects" > "Elliott" and select "Elliott Motive Wave".

Rules for the Elliott Wave

The Elliott Wave is made up of 8 waves. Waves 1~5 drive the trend and are called the "Elliott motive wave". Waves A~C which adjust the trend is called the "Elliott corrective wave". The motive waves are made up of waves that drive the trend (wave 1, 3, 5) and those that go against it (wave 2, 4). The theory states that the 3rd wave will never be the shortest. The correction waves are made up of waves that correct the trend (wave A, C) and those that go against it (wave B). The rule states that wave C will always have the biggest price gap in the Elliott Wave.

Step 2

Click on the end point of wave 1 of the Elliott motive waves, followed by the end point of wave 2, 3, 4, and 5. If you want to adjust the position of the Elliott motive waves, make sure the white dots are being displayed on the end points and move each dot as necessary.

If you cannot see the white dots, double-click near the Elliott motive waves to display the white dots.

Step 3

To modify the Elliott motive wave settings, right-click near the Elliott motive waves and select "Properties of (Elliott Wave name)".

Step 4

On the "Properties" window, edit the parameters in the "Common", "Parameters", and "Visualization" tabs and click "OK".

"Common" tab

Number	Item name	Descriptions
1	Name	Name the Elliott Wave.
2	Description	The description of the Elliott Wave can be displayed on the chart. Related article: Show or hide items on chart
3	Style	Set the color, line type, and line thickness for the Elliott Wave.
4	Draw object as background	Check this box if you want to place the Elliott Wave behind the chart.
5	Disable selection	Check this box if you want to disable the editing of the Elliott Wave.

"Parameters" tab

Number	Item name	Descriptions
1	Anchor point	Specify the end point of the wave to move.
2	End point position	Specify the end point position by date and price.
3	Degree	Specify the cycle for the Elliott Wave. Grand Supercycle: 100+ years Supercycle: About 50 years Cycle: About 10-20 years Primary: About 3-5 years Intermediate: About 30-50 weeks Minor: About 10 weeks Minute: About 3-5 weeks Minuette: Dozens of hours Subminuette: A few hours
4	Lines	Check this box when you want to connect the end points of the Elliott Wave with lines.

If the lines are displayed

"Visualization" tab

On the "Visualization" tab, you can specify the timeframes to use the Elliott Wave with.

Dow Theory and Elliott Wave

Elliott states in one of his books that "The wave principle, inspired by the Dow Theory, is an indispensable tool for market analysis". In other words, the Elliott Wave is a more sophisticated version of the Dow Theory. Interestingly enough, they both use "waves" as an analogy to describe the market. Elliott often used phrases such as "low tide" and "flow" to explain market behavior, hence the name, "Wave Theory".

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