Author:
Vladimir Hlystov
The Elliott Waves Indicator doesn’t draw the waves for you, but it’s an essential tool for identifying them.
Let’s dive into how it works:
Understanding the Elliott Waves
1. The WAVE. First things first, you’ll need to draw a trend line using Fractals and label it in this format: "1
The dotted line with the rectangle indicates the expected price movement. If you’ve defined the wave correctly, the price should hit that estimated rectangle. Here, V represents the average volume in the first wave.
Next, we wait for the lower fractal and rename the dotted line to 2 wave (make sure to keep that number and space!). Now, drag the end of that line to the next formed lower fractal, and you’ll get the estimated price movement for the 3rd wave:
If you try to move the line to a bar without a fractal, the indicator will notify you and attempt to adjust the line based on its calculations. If it doesn’t move the line, you’ll need to do it manually.
Once the price reaches the rectangle (in this case, the price moved higher than expected), rename the dotted line to 3 wave and shift it to the upper fractal. Here’s how it looks:
Keep in mind, the average volume in the 3rd wave is always greater than in the 1st wave. This suggests that our wave definition might not be spot on.
Regardless, we’ve hit our target, and we can keep going!
After the price reaches the estimated target and the next fractal forms, rename the dotted line to 4 wave and adjust the end to the fractal:
Next, wait for the upper fractal at the estimated target and draw the "a b c" retracement. For more details, check out Bill Williams' book, "Trade Chaos."
Recommendations
The "Fractals.mq4" indicator (attached here) is great for drawing the initial line. Avoid placing orders right after the fractal; it’s wiser to wait for the price to move in the expected direction. Sure, this might mean smaller profits, but the risk stays the same. I recommend setting a Stop Loss as advised by Bill Williams.
Final Thoughts
Note: This is a localized version of the original Russian article.
If you have any questions for the author, suggestions, or comments, it’s best to post them here.
If you find this code helpful for trading or educational purposes, don’t forget to give a shout-out to the author!
Related Posts
- Unlocking MetaCOT 2: Your Ultimate CFTC Indicator Toolkit for MT4
- Unlock Trading Insights with Volume Profile + Range v6.0 for MetaTrader 5
- Unlocking the Power of Master Tools for MetaTrader 4
- Mastering the MACD Candle Indicator for MetaTrader 4
- Hourly Buffers for Data Collection in MetaTrader 5: A Simple Guide