Waves are one of the main tools that traders have to try to predict the behavior that a position will have.. That is why it is important to learn to read and understand the waves and from there develop a trading strategy.

E.g., the currency market moves in a fractal way, that is, in waves. That is why beginning to understand waves is essential. These waves reflect an ascending and descending behavior when the price of these oscillates.

Elliott wave theory?

In the 1920s a man by the name of Ralph Nelson Elliott discovered that within the stock market trades were traded in cycles rather than randomly and unpredictably. This theory is based on the fact that the rise and fall always occur in repetitive patterns, that is, in waves.

In this way, through the study of these waves or repetitive patterns, it is possible to predict the behavior that these assets may have in the near future.

How can these waves be measured and interpreted?

Within trading there are several ways to measure these waves. The main method used is the known "Fibonacci retracement". Thanks to this method, the retracement and projection of the waves can be measured and in this way predict what will be the next movement or rebound that the asset will have.

These setbacks allow us to know when to enter a position, when to buy or when to sell, to know what our objective will be and how much profitability can be achieved. 

A professional trader is able to use these signals to trade inside the stock market., know when to buy and when to sell, know when to wait.

what are waves in trading

Analysis of these Elliott Waves and Fibonacci Retracements is something that takes a long time to learn and, above all, requires a lot of practice to master. However, it is without a doubt the best option available to traders, and it is widely used as an investment tool.

How to learn to operate with waves?

Explaining all the necessary concepts to be able to analyze, understand and be able to operate using technical analysis would take a long time, this is something really complex and it takes a lot of time and effort, this article is a kind of initiation in waves and analysis technical.

However, as mentioned above, understanding or beginning to understand how waves work is vitally important to being able to operate safely.

If you are interested in learning to use the waves and being able to obtain an economic benefit from the ups and downs of the stock markets, it is recommended that you take a professional trading course, it is also worth mentioning that there are a lot of free resources that can be found on the internet.

With this publication we want to give you a general idea of ​​the waves and technical analysis, since it would be impossible to cover the whole subject in a single publication. 

There are many financial and investment terms that you may not be familiar with, even professional traders with years of experience often ignore some terms that are little known but are important during technical analysis. 


Without any doubt, waves are very important in trading, Through its study it is possible to predict when an asset will rise or fall in price. While it is true that this science is not entirely accurate, since markets can sometimes be manipulated by external factors, waves can become an excellent reference and are used by some of the best and most famous traders.

Not all traders fully understand wave behavior, even after using them for a long time and living with them. However, they tend to get big returns thanks to their predictions. Think of the waves as one more tool to improve your skills as an investor.

Trading is not easy, technical analysis is not easy either, this requires a lot of practice, many hours of study, and generally investing a large amount of time. That is why people who manage to master these techniques and make this their day to day, come to have great success in the world of finance.

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About the author: Pedro Martinez Gonzalez

I'll tell you a little about myself! I am a financial analyst and economist with a master's degree in finance.

About my studies: I studied at the University of Salamanca for a Degree in Economics and then did a Master's in Finance in Madrid.

Do you want more information? You can read more about me here in my biography.

A comment on «What are waves (trading)? Explained»

  1. Recommended-brokers.com Reply

    Very good explanation, it has clarified my doubts and I have understood it perfectly! Thank you!!

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