ANSWER:

This question was sent in by Nitin Bagde (location, unknown). Under orthodox Elliott Wave, there are few, if any, limits on the complexity allowed between waves. Under NEoWave theory, there are not only specific complexity limits between patterns, but specific price and time limits, also. 

Addressing Nitin’s question first, the complexity of wave-X should be no less than that of the least complex wave of the previous, same degree, correction. It should also be no more complex than the entire, previous correction (i.e., the entire, previous Flat, Zigzag, Triangle or Diametric before it). 

From a time perspective, wave-X must take at least as much time as the least, time-consuming leg of the prvious correction and at least as much price as the smallest price-leg of the previous correction.

The above rules refer to the absolute minimum requirements for an X-wave. Most often you can expect wave-X to take no less than 1/3 the price, time and complexity of the previous correction and no more than 100% of the time and complexity of the previous correction. Finally, after a Flat, wave-X can be as much as 161.8% of the PRICE coverage of the previous, same degree Flat.

ANSWER:

If I had to pick one rule that is broken more often than any other, especially by “orthodox” Elliott Wave practiioners, it is the NEoWave Rule of Similiarity and Balance. Failure to adhere to this one rule will assure you of an inaccurate wave count and forecast – both of which will need revision later. 

As discussed on pages 4-3, 4-4 and 4-5 of Mastering Elliott Wave, for Price Similarity to exist, the smaller of two adjacent waves should be no less than 1/3 the vertical price coverage of the larger wave. For Time Similarity to exist, the shorter time pattern should be no less than 1/3 that consumed by the larger, adjacent wave. 

Quoting directly from Mastering Elliott Wave on page 4-4, “If in any comparison, neither of the above Rules is obeyed, the likelihood two adjacent waves are of the same Degree is very slim.” So, in answer to the above question, for two adjacent waves to be considered “same degree” candidates, at least one element of the Rule of Similarity & Balance (Price or Time) must be followed.

ANSWER:

My answer to this question, sent in by Karun Verma, may jar some of you. During the first five years of my career, I spent a great deal of time studying concepts presented by W.D. Gann. I read his books – most of which were poorly written and organized – and tried to apply the ideas in real time. At first, the process appeared promising, interesting and challenging, but ultimately unfruitful. By far the most useless and illogical Gann concept is that of “Fan Lines.” Moving up at a “45 degree angle” is different (for the same market) depending on the time and price scale employed, even if using the same Daily, Weekly or Monthly bar chart in each instance. 

It wasn’t until many years later, after wasting at least half a decade studying the concepts, that I realized the problem with Gann’s work. Nearly all of his techniques produce a plethora of potential outcomes, but leave no certainty. Therefore, instead of narrowing down possibilities, his techniques increase the number of possibilities, preventing one from arriving at any logical or rational game plan for trading.

All good trading techniques must first focus on risk management and risk reduction, then stop movement and lastly position liquidation. No such process is clearly or logically spelled out with any of the Gann techniques I’m familiar with except his Swing Trading process. After 5+ years studying Gann, the only thing I came away with was an upgraded approach for following market advances and declines (based on Swing Trading). This new process I call the MotionLine and is a crucial part of my new NEELY RIVER trading technology, which I teach in my private trading classes.