Elliot Wave Impulse - Guide

The Elliot Wave Impulse is a pattern identified in the Elliott Wave Theory, a form of technical analysis used to analyze financial market cycles. The Impulse Wave is considered the strongest and most powerful part of the Elliott Wave cycle, as it represents the primary direction of the market trend.

The Elliot Wave Impulse consists of 3 Waves that move in the direction of the overall trend. These waves are labeled as Waves 1, 3, and 5. They represent the primary directional movement of the market, whether it's an uptrend or a downtrend.

Now, the key idea behind our strategy is to enter a trade at the start of the Wave 3 because it's the longest and strongest wave within the Elliott Wave Impulse pattern. Wave 3 tends to offer significant profit potential because it shows the most momentum and conviction from traders.

Here is an example:

When you get an entry signal at the start of the wave 3:

1- You place your horizontal stop loss level at the start of wave 1.
2- You place your horizontal take profit level at the end of wave 1, start of wave 2. 

Here is an example:

Since the Wave 3 within the Elliot Wave Impulse pattern is the longest and strongest wave, you usually get an incredible profit ratio! If you're especially trading on higher timeframes such as H1 & H4, the profit potential is huge! 

Here is an example using our strategy on the H4 timeframe with gold. That single entry trade gave us over 2,400 pips!

The Elliot Wave Impulse strategy can work on any timeframe as long as you're using trading confluence with other technical analysis to confirm your trade. On higher timeframes, the strategy can be used as a standalone confirmation because of the accurate entries. 

Our own recommendations would be to start with the M15 timeframe for Intraday traders and M30 for Day traders.

• Elliot Wave Impulse Length: 10 // That is the minimum number length of the entire Elliot Wave Impulse waves. If you want more trades/alerts, you can lower this number but will also result in more false signals. If you want less trades/alerts but more precision, you can keep the number high. By default, 10 is the perfect balance for any timeframe. 
  
  
• Retracement Ratio: 5 // That is the number that automatically adjusts the ratios to try having the exact equal retracement ratio. That doesn't need to be changed or tested.
  
  
• Entry Signal Percentage: 30 // When Wave 2 is formed, the entry signal appears after 30% reversion of Wave 2. This number can be changed. When the number is high, there is a higher precision of signals. When the number is low, there can be many false signals.
  
  
• Elliot Wave Impulse Width: 2 // That is the line width of the Elliot Waves. You can change this number between 1 to 4 for your visual purposes.
  
  
• Elliot Wave Impulse Style: Solid // You have 5 options to pick from. That is the style of the Elliot Waves line. 
  
  
• Wave Number Color: White // When a Wave is formed, it will automatically print the number. You can change the color according to your preference. 
  
  
• Replace Entry Line With Buy/Sell Arrows?: true // When a new signal appears at the beginning of Wave 3, you have the option to visually see an arrow(buy or sell) or an entry horizontal line.
  
  
• Buy Arrow Color: Blue // When a buy signal appears, you can change the color of the buy arrow.
  
  
• Sell Arrow Color: Red // When a sell signal appears, you can change the color of the sell arrow.
  
  
• Use Fixed TP/SL: true // If true, this option will visually show you your take profit and stop loss levels.
  
  
• Stop Loss Color: MediumSlateBlue // If your stop loss is hit in real time, it will visually show you the level in that color.
  
  
• Take Profit Color: Gold // If your take profit levels are hit in real time, it will visually show you the levels in that color.
  
  
• TP 1 (in points): 100 // Your 1st take profit level in points. 100 = 10 pips.
  
  
• TP 2 (in points): 300 // Your 2nd take profit level in points. 300 = 30 pips.
  
  
• TP 3 (in points): 500 // Your 3rd take profit level in points. 500 = 50 pips.
  
  
• SL (in points): 500 // Your stop loss level in points. 500 = 50 pips.
  
  
• Popup Alert: True // When a new signal appears, it will send you the alert to your MT4 terminal.
  
  
• Push Notification: True // When a new signal appears, it will send you the alert to your MT4 application in your phone. 

💡How to enable alerts on your MetaTrader 4 phone app?
Go to Tools --> Options --> Notifications --> Check Enable Push Notifications --> Check Notify Of Trade Transactions --> Enter Your MetaQuotes ID --> Click on OK.

If you want a very good combination with Elliot Wave Impulse, we recommend using it in confluence with our other indicator called Katana. Katana uses moving average to detect the current trend. Here is a very good example on how to enter a trade with both indicators combined! If you purchase Elliot Wave Impulse, contact us in private and you could get Katana for FREE!