When it comes to various theoretical techniques in foreign exchange trading, many people find it more complicated. Take our more common wave theory. If you look at the theory alone, it is more complicated, so some investors always cannot judge when Waves appear, and how to deal with them.
Wave theory can only be used as an analysis model for market trend and approximate interval prediction. As a specific basis for entering and exiting the field, it seems very passivated. Because wave theory gives an expected range of prices in the future rather than specific points
And what says wave theory is useless is probably to take the wave theory to 5 minutes an hour or 4 hours or even daily use. Because the price changes in these time intervals are abnormally unstable. So there is no wave. Just like you point to a wave in the tide on the sea to analyze the size of the wave. The user confuses the use range of wave theory, and in terms of the correct time range, wave theory only gives an approximate expected range of prices.
Foreign exchange wave theory
First: Wave theory starts with determining the end of a given trend
In other words, to determine the unfolding of a new wave, one must determine the end of the old wave or trend
Is the wave theory reliable in foreign exchange trading?
At the level of phenomenon, it is a technical analysis tool. The content is a summary of the general laws of a certain trend. In essence, it is an attempt to predict and analyze the market with a minimal structure of the trend, and then guide transactions. It is essentially no different from other theories such as chaos theory. Please note that I am using an attempt. An attempt is not the only one. If it is the only one, it is a pure right-hand transaction, which is the truth. However, there is no certain technical truth in the market, and all technical applications should unfold and change with the unfolding of the trend itself. If a construction theory of a technical analysis tool is used to replace the subjective understanding of the trend itself, it is purely right-hand trading, that is, the uniqueization of truth, and the expectation of a certain technical induction to complete the right. The capture of profits only emphasizes the objectiveness of the trend, but does not emphasize the subjectiveness of the trader. This is a precursor to getting into the trap. If someone claims to be a pure left or right trader, how far away you are Go as far as you can, otherwise he is not crazy, you are crazy. Therefore, wave theory is only useful when it is used as a technical tool. Without subjective overall guidance, it is useless to apply wave theory purely based on the objective performance of trends.
From a certain point of view, for example, the original exchange rate is determined by the country’s gold reserves, and now it has a considerable degree of connection with the country’s economy, so from this perspective, the wave theory is applied. However, the method used may be different. Some people believe that the waves in the foreign exchange market are an eternal joint adjustment pattern, that is, the three-wave structure is followed by the X wave, then the three-wave structure and then the X wave, and so on.
In general: wave theory is also a way of technical analysis. The principle is to compare the stock trend with the sea waves, the big wave sets the medium wave, the medium wave sets the small wave, the small wave sets the small wave… one wave after another. Therefore, it is very difficult to count clearly. At present, there are not many people using wave theory in the international financial market that use wave theory to accurately deduce the rise and fall of more than 50%.