Wolfe Waves is an analytical tool for trading in international financial markets. Their main feature is that the trader does not adhere to the trend of increasing or decreasing, but with the help of building a chart analyzes the ratio of processes.
This is a five-wave structure, where a peak graph is built at the highest points of increase and decrease. There are 2 main types of building Wolfe waves:
«Bullish» pattern – based on the formation of a double top. The zone of opening long positions starts from the intersection of the beam between the base points of the first peak and the minimum of the correctional wave after the first peak.
The «bearish» pattern is the reverse reflection of the “bullish” one. This is the formation of a double bottom, where the second bottom is located above the first. The short position opening zone starts from the intersection of the ETA beam – the estimated arrival time.
Benefits of using the strategy:
- No additional tools required;
- There are no essential requirements for entry and exit;
- A small stop loss, the ratio of profit and risk is approximately 3 to 1;
- High probability of making a profit.
Disadvantages of using this analytics method:
- The presence of sufficient experience and knowledge of Forex;
- Subjective perception of plotting the lines of the chart;
- Psychological moment – the ability to analyze the situation and not follow the trend is required.
Thus, Wolfe waves are an analytical tool for quite experienced Forex market participants in Belarus, the skilful use of which allows us to make high-quality forecasts of the market situation.