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Elliott Wave International's tutorial is the most comprehensive introduction to the Elliott Wave Principle available in cyberspace. All ten lessons have been adapted from Prechter and Frost’s Wall Street bestseller, Elliott Wave Principle - Key to Market Behavior.

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For a quick overview of some of the Rules & Waves, read on:

The basic Elliott Wave Rules are:

1. Out of the 3 impulse waves (waves 1, 3 and 5), wave 3 can not be the shortest wave.

2. Wave 2 can not retrace more than 100% of wave 1.

3. Wave 4 can never overlap the orthodox end of wave 1.

Corrective Waves

I would term the left diagram as 'a normal a-b-c correction' and the other 2 as irregular (mainly becuase wave 'b' extends past the starting point).

It's the irregular ones that tend to catch you (me) out.

Wave Extensions

Waves can often 'extend', particularly wave 3.

An extension is when one of the waves subdivides into 5 waves.

This is an example of a 3rd wave extension, so you can see 1, 2, (1, 2, 3, 4, 5), 4, 5 = 9 waves in total.

More on Extensions

You think wave 3 has started but it ends very short of what you'd expect, since wave 3 is 'often' the longest wave. Then, what you think is wave 4 overlaps wave 1 – which is against the EW rules.

What has happened is that the wave you thought was 3 is in fact i of 3. And the next wave is ii not 4.

Basically you need to apply the 3 main rules.

Also, the i, ii, iii, iv, v waves will 'tend' to be smaller in price and time than the 1, 2, 3, 4, 5 waves - since they are one lesser degree. (One lesser degree means that that i, ii etc waves make up the 3 wave).

It also comes from experience.

Disclaimer: This is for educational purposes only and is not trading advice. These are personal views of the author. The reader should always seek professional advice to suit their personal circumstances.