Ideas on Trading Elliott Waves

Ideas on Trading the Elliott Wave

According to Bob Prechter’s brilliant book on Elliott Wave there are basically two major types of waves with many variations within those two types.

  1. Motive Waves
    1. Impulse
    2. Extension
    3. Truncation
    4. Ending Diagonal
    5. Leading Diagonal
  2. Corrective Waves
    1. Zigzag
    2. Flat
    3. Horizontal Triangle
    4. Combination
    5. Orthodox Tops and Bottoms

Repeat after me, “I love Theta Decay”.

Corrections can become complex. A zig zag can be followed by an X.

Impulse Waves can be tricky. Completed wave counts can extend.

What’re you going to do when the thrill is gone (from an impulse move)?

Identifying impulse moves and corrective moves is key. If the impulse move is upward, sure, buy an in the money call but also sell some puts. Look into bull put spreads but stay away from butterflies and iron condors.

In a wave four chop fest? Try an iron condor or a butterfly, but don’t buy puts and calls.

A word about spreads. If it moves close to your short strike get out. Don’t think about getting out, get out! Buy some courses from

Theta Decay is your friend.

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