What is the Elliott Wave Principle?

Definition of Elliott Wave Principle: This principle is a kind of industrial analysis that is used by most of the investors for forecasting the developments in the fiscal markets. This is done by using pattern acknowledgment. This principle indicates that cooperative investor psychology moves the markets in an ordinary order ranging from hopefulness to distrust and vice versa. These variations make patterns, as displayed by the cost behavior trends in the market. Every change plays an important role and may take place durations ranging from few minutes to decades. A professional accountant, named as Ralph Nelson Elliott, created the concept in 1930. He suggested that the market costs unfold in waves, which is today popularly known as Elliott waves. The analysts of Elliott wave says that every wave has their own characteristics and signature which reflects the psychology of the existing investor. It is very important to understand the personalities before applying the Wave principle. The followers of this theory studies the cost charts and develops trends to differentiate waves and the structure of waves and forecast movements of price in the market. Most of the critics say that the procedure is too subjective and the market has several patterns in the existing price, therefore suggesting that the cost of the theory has enough space.