Trading with Elliott Waves

Whether you are in Indonesia or Norway or Cape Town, the examples posted in this blog will help you to get better at using Elliott Waves. The concept is the same. The example may come from a different market, but that doesn’t diminish the value of the lesson. So let’s take a look at Mahindra & Mahindra.

I was approached by a member of the Exclusive Club on 30th June to do an analysis of this stock. THis is what I presented him. Take a look. Best to right click and open each chart in a new tab!

Start with the weekly chart where we can locate a significant low around 2002. You can see that 4 major waves have already been posted, and we are in wave 5.

We are in Wave 5 of Mahindra & Mahindra
We are in Wave 5 of Mahindra & Mahindra

I have also suggested that we are in minor wave 4 inside the fifth wave as minor wave 3 was already finished as well.How did I figure that out? Here is how. I looked at the daily chart to see the pattern and relationships.

Minor waves within the fifth wave
Minor waves within the fifth wave

As outlined in the first chart, I was pointing the member towards buying the stock as we complete the fourth wave. It seemed reasonable to expect supports around 1114. The next chart also supported this idea.

Wave c was related to wave a
Wave c was related to wave a

However, my approach has always been one of ‘safety first’ and that required me to consider what else could be going on, and where I might be making a mistake. Also, if I made a mistake, can I safely parachute out without crashing with the stock?

MnM30jun14e

So you see that I have defined my risk tolerance, as well as my profit objective. How did I arrive at the profit target? Simple. This is explained in my book Five Waves to Financial Freedom as well.

Wave 5 target for Mahindra & Mahindra
Wave 5 target for Mahindra & Mahindra

And what do you think happened to this stock?

Mahindra and Mahindra was yet another profitable idea
Mahindra and Mahindra was yet another profitable idea

Well folks. That is nothing but the power of Elliott Waves at work! Needless to say this member is very happy!
You might ask me two questions. First, we had a buy level of 1120 and the low was 1128. So whats the big deal? Well, the big deal is this client is dealing big! And he is not stupid enough to wait for the last few cents to buy. To him, what mattered was the next direction, and the size of the next move. He is a trader and investor, not someone who idly watches prices to check if it reached the target or not. The second question is have we reached the top in M&M? i.e. should we exit our position here, or perhaps consider selling short? Well, that is a question you can answer yourself by looking at the internal waves of wave 5 within the fifth, and also considering whether we will get an extension etc etc..besides, I don’t know what my client is thinking either. He hasn’t told me or asked my views yet!

Remember, this blog is only trying to teach you Elliott Waves and its application. There are no trading tips here. Enjoy.

Elliott Waves Explained



11 Comments

  • M.D.Dharmendra

    Dear Sir,

    Thanks for posting Premium membership trades to educate the traders . As always we learn from your teachings

    Regards,
    M.D.Dharmendra

  • Stani

    Hello Ramki!
    And thank You for great lesson again!
    Btw it’s not clear enough to me, how You’ve defined the end of big wave III? Internal subsctructure of wave III doesn’t look to be a “5-wave impulse”. As You marked it in the chart, it seems to be consisted rather from 3 motive waves. Well, with use of a little imagination I can see 5 subwaves there, but the corrective subwaves are very disproportional then inside of III. Or are fibo levels more important than waves’ substructure when determining EW?
    With best regards,
    Stani

  • Graham Leavett-Brown

    A great example of the Elliot wave principle in action. Thanks for this

  • Galwin Fabian

    Hi Ramki,

    I’ve been reading your notes about Elliot waves and I’d like to thank you for sharing your knowledge. Would you mind sharing an idea if Elliot wave works with this a new stock? Specifically, I am talking about TFHI.PS Where do you see this? Thank you in advance.

  • rashmi

    Sir,I am a new entrant in the field of e waves and a keen learner.Please help me analyse bgr energy and jp ass from e wave perspective.
    Warm regards Rashmi

  • Jeya Nambiar

    I am new to trading.Came across Elliot Wave and read EW Principle and found it complicated.
    Have seen your website and see that yuor explanations are easy to understand.

    I have been trying to buy both your books from Amazon and Noble BUT they say it is not available.

    I am from Malaysia and have used Amazon for variour purchases previously.

    Cud you help with some other way to purchase the Books?

Leave a Reply