Mindblown: a blog about philosophy.
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3 Cardinal Rules of the Elliott Wave Theory
As you may have guessed, the key to using the Elliott Wave Theory in trading is all about being able to correctly identify waves. By developing the right eye in recognizing what wave the market is in, you will be able to find out which side of the market to trade on, long or short. There are THREE…
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Fractals: Elliott Waves Within an Elliott Wave
Like we mentioned earlier, Elliott waves are fractals. Each wave is made of sub-waves. Huh? Let me show you another picture. Pictures are great, aren’t they? Yee-haw! Do you see how Waves 1, 3, and 5 are made up of a smaller 5-wave impulse pattern while Waves 2 and 4 are made up of smaller 3-wave…
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Corrective Waves
The 5-wave trends are then corrected and reversed by 3-wave countertrends. Letters are used instead of numbers to track the correction. Check out this example of a smokin’ hot corrective 3-wave pattern! Just because we’ve been using a bull market as my primary example doesn’t mean the Elliott Wave Theory doesn’t work on bear markets. The same 5-3 wave…
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Introduction to Elliott Wave Theory
Elliott Wave is a form of technical analysis that was developed by a dude who noticed that financial markets move in repetitive patterns due to underlying crowd psychology based on greed and fear. Back in the old school days of the 1920-30s, there was this mad genius and professional accountant named Ralph Nelson Elliott. By analyzing closely…
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Heikin Ashi Cheat Sheet
Heikin Ashi is a type of price chart that consists of candlesticks. Modified Japanese candlesticks. A Heikin Ashi chart filters market noise and provides a clearer visual representation of the trend. For beginner traders, this means that the trend is easier to see. For experienced traders, the Heikin Ashi charts help keep them in trending trades, while…
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Limitations of Heikin Ashi
What are the limitations of Heikin Ashi? Unfortunately, Heikin Ashi is not the holy grail. Heikin Ashi definitely ain’t no Ed Sheeran song. It ain’t perfect. Just like any other tool used for technical analysis, Heikin Ashi is useful but it does have some weaknesses or limitations. Let’s go over what these limitations are. Heikin Ashi candlesticks…
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How to Trade Using Heikin Ashi
How do you trade Heikin Ashi? As mentioned in a previous lesson, using a Heikin Ashi chart makes trends easier to identify. Heikin Ashi allows traders to look for the emergence of new trends or for the reversal of already existing trends. Here are five basic ways to use Heikin Ashi charts in your trading. 1. Green candlesticks signal an uptrend.…
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How to Use a Heikin Ashi Chart
How do you use Heikin Ashi? Now that you’ve learned how to calculate Heikin Ashi candlesticks, let’s discuss how to use and read a Heikin Ashi candlestick chart. The idea behind using a Heikin Ashi chart is that it filters market noise. And since noise is filtered, you basically see the naked trend. Because the Heikin Ashi candlesticks…
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How to Calculate Heikin Ashi
How do you calculate Heikin Ashi? Let’s learn how Heikin Ashi candlesticks are calculated and plotted on a chart. Like we mentioned in the previous lesson, to a noob’s eye, they may look like regular candlesticks but they….are….not. It’s kind of like being able to tell the difference between a wolf and a dog. Looks cute and…
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Heikin Ashi Candlestick Chart vs. Traditional Japanese Candlestick Chart
How is Heikin Ashi different from a typical candlestick? Let’s learn the difference between a Heikin Ashi candlestick versus a traditional Japanese candlestick chart. A picture is worth a thousand pips so let’s look at some actual charts. First, here’s a traditional Japanese chart of GBP/JPY on the daily (1D) timeframe: Here’s the same GBP/JPY displayed with a Heikin Ashi candlestick chart:…
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