Today, we’re here to know everything about the Smart Waves Tool, the features it offers, and how you can use it to take your trading game to the next level.
Simply put, Smart Wave is a smart tool that provides a quick way to read the market with increased clarity using the popular, but difficult to master, Elliott Wave Theory.
Smart Wave was designed by the experts at Market Traders Institute (MTI), one of the world’s largest online trading education companies, in partnership with Smart Trader, a powerful, user-friendly online trading platform.
Let’s get started knowing it better…
What are the Benefits of Using Smart Wave?
Here are some of the many ways that Smart Wave can help you in your trading…
- Reclaim hours of analysis time by drawing accurate waves directly on your chart with a single click.
- Easily identify entry and exit points for each wave, empowering you to make timely, and potentially profitable trades.
- To understand market cycles and how they define turning points of the market.
How It Works
To understand Smart Wave and know how it can help you target potential profits, it’s first important to understand the Elliott Wave Theory behind it.
Elliott Wave Theory is a popular form of technical analysis that many expert traders use to describe price movements in the financial markets.
The market usually creates a five-wave sequence, which is followed by three waves in correction.
Every rise or fall line plotted on the chart is a wave. So, when the markets go up, it’s one wave. When it corrects from that level, it’s another wave. And so on and so forth until the fifth wave.
And all these five waves collectively form a larger wave, which is a rising wave and called Impulsive Sequence.
And this larger wave is followed by a Corrective sequence, which is a larger falling wave consisting of three smaller waves.
When we combine these two larger waves, and plot them on a chart, it is called one Complete Cycle.
So, a five-wave move in the direction of the main trend, followed by three waves in a correction (totalling a 5-3 move). This 5-3 move is a theory that is commonly found in the market and often repeats itself on all timeframes.
How do traders use this?
The 1-5 Wave or the Impulse Sequence provides multiple entry signals in the trend direction.
On the other hand, the Corrective Sequence waves back in the opposite direction for secondary trading opportunities.
And that’s the Elliott Theory concept.
Here’s a chart to make it simpler…
No matter what the time frame is (monthly, weekly, hourly), these waves and the patterns will repeat. And traders can use these waves and the complete cycle to gauge the price movements in the markets.
But while many traders use Elliott Wave Theory to analyze market cycles, the problem for many users is where to start plotting the waves and how to count the waves to potential profitability.
That’s where the Smart Wave tool comes in handy. It’s a powerful tool that allows you to draw each wave with ease and also see your entry and exit zones.
The Smart Wave Tool
Smart Wave provides a quick and simple way for users to correctly identify wave cycles within the charts. So, it can identify the optimal Elliott Wave and its cycles.
If you’re a believer in the Elliott Wave Theory but struggle with charting it, this tool will help you draw each wave with ease.
The tool will draw the waves at the click of a button. And once a wave is set, if you decide to manually redraw a point, the Smart Waves Tool will adjust all subsequent points for you automatically.
Plus, the tool also lets you identify your entry points the simple way, because this gives clarity on starts of waves, as well as your exits.
Here’s how you can start using the smart wave tool in your charts; do give it a try!
Accessing the Smart Wave Tool
Accessing the Smart Wave Tool is a relatively easy process involving a few steps.
Here is a step-by-step process with quick pointers…
- Log into your SmartTrader account.
- Access the ‘Charts Section’ of SmartTrader and open a new chart.
- Pick any currency pair of your choice (Eg. EUR/USD).
- In the ‘Select Time Scale’ panel, left click and select ‘4-Hour’.
- On the top of the chart, you will see the Smart Tools Icon (8th icon from the left). This will open the Smart Tool Selection Pane.
- Left-click on Smart Wave which is the second icon in the pane.
- You will then be able to select the starting point for the Smart Wave to be placed on your chart. Select the Highest High or Lowest Low on the Chart.
- Left-click to apply the Smart Wave to your chart.
- Congratulations! The Smart Wave Tool is now on your chart.
It’s that easy-peasy!
Let us now understand how you can use this tool and apply it on charts.
Applying Smart Wave On Your Charts
Say you are someone who knows about trading but has never used the Smart Wave tool before. Here’s how you can start exploring it…
Select the Smart Wave tool from the Smart Tool menu at the top of the chart that has ABCD written on it. Here’s where you will find it…
Smart tool menu location
Once done, you will see a red bar on your chart as you move your mouse cursor through it. This Bar Highlight will help you in easily identifying which bar your Smart Wave will be applied to if clicked.
The highlight will also show a quick access settings widget so you can customize your band.
You will now be able to select a low for a bearish Impulse Wave Series or a high for a bullish Impulse Wave Series.
Just keep your cursor on the chart line from where you want to form the wave and click.
And voila! You have your wave automatically formed from your start point.
Just a click will give you all the shorter waves and also show you the impulsive and corrective sequences they form (i.e. the 5-3 move).
From the initial point of Wave 1 (Ground Zero) to all the way till the wave becomes invalid, a smoothed (rounded) line will be displayed on the chart showing curved lines. This line will show different colors between the Impulse Wave (blue color) to the Corrective Wave (red color).
Here’s how it will look on the chart…
Smart Wave on the Chart with Impulsive and Corrective Sequence
So, the Smart Wave automatically snaps to the nearest low fractal if you click on bottom of chart bars or nearest fractal high if you click on highs of chart bars.
You can now click on any of the points on the chart and automatically get the extended waves.
So, to simplify…
Your larger wave will show Numbers and Letters on it identifying the endpoint of each smaller wave in the Wave Cycle. These endpoints will each be adjustable, allowing the user to adjust the wave after applied.
Just click on any of these endpoints and drag it to the highest point on the wave.
Say you select point 1 on the wave. You will now drag this right above the point 5 on the larger wave. And when you drop it there, you have the extended wave automatically set up.
And this can help you read market cycles and trends, and can also help in giving you insights into the future price movements which you can potentially take advantage of.
Here’s how this will look…
Adjusting Original Wave Endpoints to form Extended Wave
So far, so good.
Let us now quickly look at some of the Smart Wave features and its benefits…
Smart Wave Tool Features
Your Smart Wave tool comes with many features and settings, which you can use to customize your analysis and trading experience.
Once the Smart Wave is applied to a chart it will have a quick settings widget displaying when the wave is selected. It will also have a more advanced settings widget when you select the gear icon in the quick settings widget.
Some key settings which you will see here are…
- Select the arrow which deselects the Smart Wave tool.
- Select color for Impulse and Corrective Wave cycle
- Line weight and type
- Arrange Forward, Backward, Front, Back options
When you select a Smart Wave that’s already applied to a chart, it will have the additional Advanced settings option through which you can modify…
- Wave 2 Reversal Zone: On/Off, and 2% Values of wave 1, values cannot = negative, and must be less than 1
- Bullish Reversal Fill: On/Off, Color, Opacity
- Wave Stop Line: On/Off, Weight, Line Type, Color
To save any updates to your Smart Wave settings, click ‘Save’. To cancel any changes, click ‘Close’.
If you want to learn more about the Elliott Wave Analysis and how you can apply that with your Smart Wave tool, check out our Smart Waves Trading Course.
The course will teach you how to correctly identify targets, trading time frames, and manage your equity with the help of video lessons and strategy resources.
We hope this post was helpful. If you need any further help accessing the Smart Wave Tool, you can contact our product support team @ 1-866-787-8558 and press 4. Or you can chat live with our support team by clicking here.
P.S.: For more immersive training from Market Traders Institute, visit our trading rooms, which are an interactive space designed to help profit-seekers master various manual and automated trading strategies.
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