The Best Elliott Wave Software

Elliott Wave Theory was first developed by R.N. Elliott in the 1930s. It was further popularised by market technician Robert Prechter in the 1970s. Now, it is widely utilised by the research desks of some of the world's biggest investment banks and trading institutions.

In this article, you will learn the principles behind the Elliott Wave Theory and how to access the best Elliott Wave software, through the popular Forex trading platform, MetaTrader 5.

What is Elliott Wave?

Elliott Wave Theory aims to identify repetitive patterns in financial markets based on investor psychology. Elliott found that changes in mass psychology showed up in repeatable 'waves' within the markets. These waves are the core foundations of the Elliott Wave Theory.

While there are many Elliott Wave charting software programs in the marketplace, users still need to understand how Elliott Waves are formed to help them apply it on the chart. This will become more apparent when we look at the best Elliott Wave software further down the article. For now, let's look at the two types of wave formations that construct the Elliott Wave pattern.

1. Motive Waves or Impulse Waves

The first half of the Elliott Wave pattern is called the Motive Wave. This is formed by five smaller waves called impulse waves and diagonal waves. The impulse waves include waves 1, 3 and 5. The diagonal waves include waves 2 and 4. Both waves form a five wave pattern called the Motive Wave which typically forms in line with a larger trend.

Motive Wave Pattern in an Uptrend

1. In a broader uptrend, the first wave of a motive pattern consists of a weak rally with only a small percentage of traders participating.
2. Once wave one is over, the market retraces in wave two. Typically, the sell-off in wave two is vicious but does not take out the previous low, allowing the start of a turnaround and another rally.
3. This rally begins wave three which starts off slow, but after breaking the high of wave one, the rally picks up momentum with traders adding positions to 'not miss the move'.
4. Wave four consists of traders profit taking from the move higher causing a pullback in price, which is usually more orderly than the pullback in wave two.
5. As some traders would have missed the whole move higher, a few remaining buyers step in at the end of wave four to start another rally at the beginning of wave five. However, this rally lacks enthusiasm and eventually tops out.

Motive Wave Pattern in a Downtrend

1. In a broader downtrend, the first wave of a motive pattern consists of a weak sell off with only a small percentage of traders participating.
2. Once wave one is over, the market retraces in wave two. Typically, the rally higher in wave two is vicious but does not take out the previous high, allowing the start of a turnaround and another sell-off.
3. This sell-off begins wave three, which starts off slow, but after breaking the low of wave one the sell-off picks up momentum with traders adding short positions to 'not miss the move', or traders exiting long positions to get out while they can.
4. Wave four consists of traders profit taking from the move lower causing a pullback in prices, which is usually more orderly than the pullback in wave two.
5. As some traders would have missed the whole move lower, a few remaining short sellers step in at the end of wave four to start another sell-off at the beginning of wave five. However, this sell-off lacks enthusiasm and eventually bottoms out.

Typically, the motive wave cycles are numbered using the 'minor' Elliott Wave degree numbering system. Not all Elliott Wave trading software offers different wave degree numbering systems. However, in the best Elliott Wave software section, we will go through how you can access it completely free with Admirals' Forex trading software for Elliott Wave. For now, let's go through the second half of the Elliott Wave pattern.

2. Corrective Waves

Corrective waves can be a bit more difficult to master than motive waves. However, by sticking to the simple corrective wave patterns, with the help of a proper Elliott Wave charting software platform, it can be much easier.

Typically, corrective waves consist of three waves, and occur after a five-wave motive pattern. The three-wave correction is also known as an ABC corrective pattern, or a ZigZag correction, due to the Elliott Wave numbering system and how the pattern looks.

ABC Correctives Wave in an Uptrend

1. In a broader uptrend, wave A consists of a small decline in price as traders bank their profits and exit the market.
2. As the broader trend is up, some buyers step into the market at the beginning of Wave B, in a weak rally higher.
3. At the beginning of Wave C, more buyers exit the market after seeing the original decline in Wave A. This also attracts the interest of short sellers who also join in, pressurising the market lower.

ABC Corrective Waves in a Downtrend

1. In a broader downtrend, wave A consists of a small rally in price as traders bank their profits and exit the market on their short trades.
2. As the broader trend is down, some sellers step into the market at the beginning of Wave B, in a weak move lower.
3. At the beginning of Wave C, sellers are quick to exit the market after seeing the original push higher in Wave A. This also attracts the interest of buyers who also join in, forcing the market higher.

Now that we have covered the full Elliott Wave pattern consisting of Motive Waves and Corrective Waves, let us look at the best Elliott Wave software available to you.

What Is The Best Elliott Wave Software?

In the world of financial trading, it is important to use tools which offer the highest level of efficiency. For example, by using one Elliott Wave charting software, a different Elliott Wave trading software, a different Forex trading platform and a different stock trading platform, things can get overwhelming very quickly.

This is why the best Elliott Wave software is one that can cover the charting and trading of Elliott Wave, as well as enable access to multiple markets such as Forex, stocks, indices and commodities.

Fortunately, this is possible with Admirals MetaTrader 5 software. Here are a few more additional benefits:

• Trade CFD's on multiple assets like foreign exchange, stocks, indices and commodities
• Trade directly from the chart with an all-in-one platform
• Learn how to use the platform with a risk-free demo practice account
• Access the world's number one Forex trading software
• Access Elliott Wave charting software completely free

Once you have opened an Admirals live trading account, or a demo trading account, download the MetaTrader 5 platform to access the Elliott Wave tools as we discuss next.

How To Use Elliott Wave Charting Software

To access the Elliott Wave charting software tools, simply click on Insert > Objects > Elliott, as shown in the screenshot of the Admirals MetaTrader 5 platform below:

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

There are two options available for Elliott Wave charting: Elliott Motive Wave and Elliott Corrective Wave. Let's discuss how to use both of these tools to plot motive waves and corrective waves.

How to use Elliott Motive Wave in MetaTrader 5

When the Elliott Motive Wave tab is clicked on in the MetaTrader 5 software, the 'mouse arrow' will turn into a cross sign with a wave next to it. The trader then has five clicks to plot the five waves in an Elliott Motive Wave series. Only after five clicks used to plot the beginning of each wave, will the wave series be drawn and a pop-up box appears, as shown below:

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

The pop-up box allows traders to adjust the design and parameters of the Elliott Wave series:

• The Common tab allows you to adjust the size and colouring of the Elliott Wave numbering series.
• The Parameters tab allows you to adjust the 'degree' of the Elliott Wave numbering series.

In the above screenshot, there are a variety of 'degrees' to plot the Elliott Wave series. This allows the trader to plot different cycles within a broader trend. Here is the official Elliott Wave numbering and colouring system:

Source: Elliott Wave Forecast

As you'll see, all these options are available in the 'Degree' section of the Parameters tab. The colouring system and use of brackets enables traders from all over the world to use a standardised format when presenting Elliott Wave analysis. The most commonly used cycles are the Intermediate type in blue as shown in the chart below:

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

How to use Elliott Corrective Wave in MetaTrader 5

When the Elliott Corrective Wave tab is clicked on in the MetaTrader 5 software, the 'mouse arrow' will turn into a cross sign with a wave next to it, very similar to what is presented when clicking the Elliott Motive Wave tab.

However, in this instance, the trader has just three clicks to plot the three waves in an Elliott Corrective Wave series. Only after three clicks used to plot the beginning of each wave, will the wave series be drawn and a pop-up box appears as usual.

Once you have adjusted the degrees section and amended the colouring to fall in line with the standard system show above, a full Elliott Wave series will be drawn.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

In the above screenshot, both Elliott Motive Wave and Elliott Corrective Waves have been drawn consisting of five impulse and diagonal waves, and three corrective waves. Many Elliott Wave traders will also use other tools such as support and resistance levels, Fibonacci, moving averages or price action to help aid in identifying possible trading opportunities.

Conclusion

With the Admirals MetaTrader 5 platform as your go-to Elliott Wave software, you also have access to a wide range of other free charting tools, as well as the ability to trade directly from the chart - making it a very efficient all-in-one platform.

However, finding the right combination of tools and mastering Elliott Wave patterns in different market conditions does take some practice. Opening a demo account and downloading the platform is one of the best ways to start. Are you ready? If so, click the banner below to open a FREE demo trading account today!

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of, or recommendation for, any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.