What is important for market participants to be aware of regarding the nature of human beings and trading?
Most investors do not have extensive knowledge or experience in the area of investing, so they look to others to provide direction. They look at the tape and watch which way prices are going, they read the newspapers, they listen to financial television, they go to cocktail parties and talk to their neighbors, anything other than doing their own personal research, getting their own education and formulating their own convictions. They are getting their conviction, or lack thereof, from others. The Wave Principle develops because it’s a reflection of unconscious thought patterns and not the rational faculty of human beings. People always generate mental visions of glorious worlds when a market goes up and annihilation when it goes down. The herding impulse creates trends and extremes. Once you can read Elliott waves, you can forecast probabilities for any market quite often and usually when it matters. You can also anticipate broader societal changes. If you know the signs, you can use
