How you can use Elliott Wave theory as a trading tool if it fails to explain and predict every single move?
It’s a huge misconception that Elliott Wave theory has to explain EVERY move! For some reason practitioners of the classic Elliott Wave first set that expectation which later became a trap for themselves and their followers. Let me ask you this. Do you want to get a good trading setup or you would rather want me to keep telling you a story? The Harmonic Elliott Wave theory is about price following specific patterns or fractals. There are reliable fractals like the Five Wave fractal. And there are less reliable corrective patterns. You shall not expect the same accuracy of predictions when using the HEW principles in analyzing impulsive and corrective waves! In my personal opinion, Elliott’s main discovery was the Five Wave fractal. He had to offer some explanation for corrective waves that connect impulsive waves. But, again, the true strength of the Elliott Wave Principle in the discovery that any trending move follows the Five Wave fractal. Ask an Elliott Wave analyst whom you have been following about his own preference in terms of a specific trading setup. Let me tell you what kind of an answer you are going to get. First they will tell you “buy any corrective wave in anticipation of another impulsive wave”. And that is a big BS because it does NOT answer your question. It’s like “buy when it is cheap and sell when it is expensive”. The second answer is “Buy the 3rd wave”. They love to say that! Let me tell you a painful truth. After years of applying the Wave principle and having counted tens of thousands of charts I do not have clear rules that would make that a high probability trading setup! That is surely a setup with a potentially high payback but at the same time that is not a high probability winning setup! In conclusion, my personal approach to practicing Elliott Wave theory is that you use the wave principle to find trading setups, not to explain every single squiggle drawn by price!