Using Elliot Wave Theory and Fibonacci Retracement and in Algorithmic Trading
DOI:
https://doi.org/10.37591/tmd.v7i3.4958Keywords:
Fibonacci series, Fibonacci retracement, Elliott wave theory, Dow theory, stock market, technical analysis, algorithmic trading, NSE, BSE, pattern recognition, Japanese candlesticksAbstract
The analysis technique used in predicting stock prices consists of Fundamental analysis and Technical analysis. These analyses are complex in nature and usually unreliable. The algorithmic trading systems offered today consists of primitive technical analysis techniques such as, simple moving averages, exponential moving average, moving averages convergence and diversions and volume weighted average price. The primitive nature of this techniques makes them very unreliable and has a low success rate. Using these primitive techniques in algorithmic system doesn’t only leads to entering into a wrong. trade but it makes it inevitable. The Elliot wave is a seasoned, tried and tested theory in used for decades that uses simple observation and recurring patters to gauge the trend and using Fibonacci retracement the system can have a better target and stop loss criteria.
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