Crypto Academy Week 14 Homework Post For @fendit - Eliott Wave Theory

On this occasion I will try to answer questions from the homework given by professor @fendit, as for this week's class related to Elliott Wave Theory, well I will try to answer some of the questions that are given in this week's homework.

source and edit from coinmarketcap

Application of Elliot Wave Theory

In trading, expertise is needed to analyze the cryptocurrency market, one of which is analyzing the cryptocurrency chart, this is all needed by traders to minimize losses because trading has a large risk due to continuous fluctuation of cryptocurrencies. So as a trader we have to know when is the right time to enter the market and when is the right time to stop.

Elliot Wave Theory is a very good analysis in trading. With this theory, we will get a variety of information needed in trading, every trader must have their own analysis in trading. If done correctly and with the right decision, a trader will get multiple profits.

If a trader understands this theory, he will easily know and predict the charts of a cryptocurrency on the market. So by understanding this theory and applying it in trading, a trader can know when he will make stop-losses and take profits, the application of this theory is very helpful to reduce the risk of loss for every trader who will trade.

Impulse and corrective waves, and how to identify them

source

We will give a parable of the two waves so that it is easier to understand, every action must be accompanied by a reaction, as well as the two waves, each impulse wave will certainly be accompanied by a corrective wave. So we can think of an impulse wave as an action and a corrective as a reaction.

Impulse waves are usually marked with the code 1-5 on both bullish and bearish charts. All of these waves are caused by any behavior of investors who will buy an asset or sell the asset for a profit. So this is a human emotional attitude. So to be able to read graphs with this theoretical analysis, we must understand human emotions in investing. We have to be able to determine exactly when the first wave started, if we know it, it will be easier to determine the other waves. Other information in determining the wave correctly is that the 3rd wave is longer than waves 1 and 5. This is in my opinion the basic information that must be understood in advance to be able to determine other impulse wave waves.

Corrective Waves are waves that are opposite to impulse waves. Corrective waves are usually marked with code a-c. if the impulse wave is in a downtrend, the corrective wave will be in an uptrend and vice versa. This is the easiest way to understand corrective waves. A corrective wave occurs after wave 5 of an impulse wave.

Opinions about the Elliott Wave Theory

I think this theory is a very accurate theory to enter the market if we identify each wave correctly. If this theory is properly identified, we will get various information which is very important to enter the market and when we should stop, so with this theory we can also have a plan to determine our stop-loss and the take profit that we will set.

However, every trader is not necessarily able to perform analysis to determine these waves correctly and correctly, this is one of the challenges of using this method. The key is that we have to be able to determine the start of the impulse wave and what we have to remember is that the third wave is longer than the other waves. If we can solve all these challenges, the chances of getting profit in trading will be even greater.

Analysis of the Elliott Wave Theory of the Graph (Litecoin)

OK, I will try to do an analysis of the Eliott Wave theory by taking a graph, namely Litecoin (LTC), I took this chart when entering June 2020, let's first determine the impulse wave as shown in the graph below.

source and edit from coinmarketcap

As for the chart above, we can see that an impulse wave occurred during a bullish period. So first we have to find when wave 1 starts that is when investors buy the asset and the asset has increased, therefore it can be said that the impulse wave is in a bullish period. Another concept that I discovered while analyzing this chart is that wave 3 is longer than the other waves, which strengthens my opinion and makes it easier for me to determine other impulse waves. after that I determine the corrective wave like the graphic below.

source and edit from coinmarketcap

As we all know, the corrective wave is opposite to the impulse wave, so from the chart above we can see together that the corrective wave occurs during a bearish period. to determine the corrective wave is actually quite easy when we have found all the impulse waves. that is, the beginning of the corrective wave occurs after wave 5 of the impulse wave, the basic concept in determining the corrective wave is that this wave must be opposite to the impulse wave.

source and edit from coinmarketcap

The graph above is the result of my analysis by applying the Elliott Wave theory to the litecoin (LTC) chart.

Conclusion

Eliott Wave Theory is an analytical theory by determining impulse and corrective waves. with the Elliot Wave theory is very helpful for traders to make decisions. because this theory provides a lot of important information in trading. so in determining the wave we need to understand the basic concepts. it is all necessary so that our analysis is more accurate, so that we can make the right decisions.

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That's all I can explain in homework this week. I hope it's easy understand

CC : @fendit
CC : @steemcurator02