by Nico Isaac
Updated: June 26, 2015
I always say trading forex markets is like riding a bike -- except that said bike has one flat tire and the ground beneath it is covered in ice.
So why are they so popular, you might ask? In fact, forex is the most liquid market on earth, where trillions of dollars change millions of hands every day.
The reason people are so willing to ride that bike -- so to speak -- is because if you can stay on, the rewards are often unmatched. The trick, of course, is staying on. .
There's no such thing as a fool-proof strategy. Slips and scrapes are bound to happen. But as the title of Elliott Wave International's chief currency strategist Jim Martens' go-to guide reveals, there is definitely a way "The Elliott Wave Principle Can Boost Your Forex Success."
Here below, you can read an exclusive excerpt from Chapter 1:
Chapter 1: A Useful Trading Methodology
Of the many ways the Wave Principle can improve trading success, for me, points 1, 2, and 6 are the most important. I like to trade with the trend, and the Wave Principle allows me to identify that trend...
The setup waves — the waves we're trying to identify in order to prepare for the trading opportunities — are wave (2), wave (4), and wave (B)...
Let's concentrate on trading wave (3), since it is usually the strongest and longest wave, and its trend is clear. That means that we want to identify the wave (2) that will lead into a strong third wave.
Now, let's jump off the page and into the real world where you can see exactly how Jim used this one simple lesson to identify a major turning point in euro/dollar (EURUSD).
The time was mid-2014. The euro was orbiting a 2-and-1/2 year high against the U.S. dollar. But, as early as mid-May, Elliott wave patterns already showed cracks in the euro's bullish case. And on June 27, Jim recorded an urgent video for his Currency Pro Service subscribers in which he warned the buck's luck was about to change.
You can listen to a clip from Jim's June 27, 2014 Currency Pro Service video right here. Note the basis for Jim's dramatic forecast -- an imminent third wave.
Soon after, the EURUSD followed its Elliott wave script. The third wave initiated the market's largest annual decline since 2005 and pushed the U.S. dollar to its highest level in 12 years.