This chapter is intended to address the basic concepts of Elliott Waves Theory, like what it means “fives waves up corrected with three waves down.” Under this concept, a sequence of five waves up it is being called an impulse, and a sequence of three waves down it is being called a correction. As simple as that.

The complicated part comes from the fact that each and every wave from the five waves up for example, it is being formed by another sequence of five waves up, but from a different degree, a smaller degree. And those five smaller waves are being corrected by three waves of a smaller degree as well. And so on, and so on, and so on.

The complexity of Elliott Waves Theory comes exactly from this subdivisions when counting the waves. Knowing where to start the count from and in what kind of a wave degree are you with the counting is crucial and this is one of the most difficult tasks for traders.

Elliott Waves Theory is by all means a sum of scenarios that one makes, each of them being excluded once invalidated, until the real one stands the test of time and becomes the right one. Having different scenarios/alternatives for a possible count and being all right is very common when counting waves. What needs to be done is to check all the time if the rules are respected, and by the moment one is invalidated, it should be eliminated.

This chapter will have three different recordings showing you practical examples about what this five waves up/three waves down means and the examples will be accompanied by more details about what to look for after such a series and what to do next.