Top critical review
3.0 out of 5 starsFive Waves to Financial Freedom - An Elliott Wave Primer
Reviewed in the United States on March 19, 2012
This title has a nice resonance as it holds forth the promise of fulfilling the dream of financial independence held dear by many of us who enter trading are hoping to achieve.
This book is primarily aimed at beginners but the Author also addresses the experienced user and brings to the task over 20 years experience of writing technical commentary based on Elliott Wave analysis. The benefits of a long career at the top of one's profession when it comes to explaining a complex topic are that hopefully the Author can distill his experience and impart his knowledge simply and skillfully to a beginner in a manner that instructs rather than befuddles, and this task is largely achieved.
No book is perfect and neither is this one, the compromise for the Author was deciding how much to tell you about a difficult subject to get you started practicing the art of Elliot Wave analysis, while recognizing when too much information will just overwhelm. Exercising the best judgment about how to present the information that is given is vital, and it is here that some weaknesses begin to emerge. The book is well supplied with charts but these sometimes suffer from being hard to discern due to their size or indistinct labeling, they frequently contain illustrations in the early chapters of advanced topics not yet addressed. Additionally some charts contain confusing examples of topics already covered where the reader in trying to apply the knowledge just learned will be confounded by the wave count in the illustration. This last difficulty only serves to undermine confidence in what you just understood. There is an absolute dearth of diagrams and for this reason in some sections the reader is faced with long involved narratives explaining situations, which would greatly benefit from a diagrammatic or tabular presentation of the information to supplement the narrative. The order of presentation of information in early chapters tends to suffer from the usage of charts containing features such as wave extensions or complicated corrections at too early a stage when the reader is just being introduced to the basic form. A graduated approach explaining the uncomplicated ideal wave formation using firstly a diagram, then followed by a real chart example without these advanced topics would have been preferable.
The preface states that it is not the intention to make you an expert but simply to get you up and running in a short time, it is not intended to be a detailed reference book and consequently I would refer you to a title regarded as THE reference - namely - Elliot Wave Principle by Frost and Prechter (hereafter referred to as EWP). I would recommend buying EWP as well since it contains the detail that this e-book lacks especially in terms of diagrams explaining various types of wave behavior, and you can refer to the illustrations within EWP while reading FWTFF. For those wondering why not just buy EWP, the answer is that EWP is quite an intense read and I'm sure anyone attempting the study of Elliott waves for the first time will appreciate a somewhat lighter introduction to the subject as is provided by FWTFF.
Even if you know nothing about Elliott Wave and have just read some of the book reviews on Amazon or general articles on Google, it should become apparent that there is a big problem, namely the subjective nature of the wave count and the fact that even two experts faced with exactly the same chart may have differing interpretations. Anything therefore that reinforces your objectivity should be regarded as paramount material for inclusion. It is in this respect that this book suffers a glaring omission namely there is no chapter on the use of Oscillators to help confirm the wave count. Information on this approach can be found in publications such as - Technical Analysis for the Trading Professional by Constance Brown, High Probability Trading Strategies by Robert C Miner, and an upcoming publication due to be released in May 2012 called Mastering Elliott Wave Principal - again by Constance Brown. The Author refers to oscillators and divergence methods at the end of chapter five and encourages their use to support your main view while keeping Elliott Wave as your main tool, but there is nothing further said than that. Does the Author use them himself? - he does not say, but given the central difficulty of Elliott Wave subjectivity, failure to include a chapter on this topic is a real missed opportunity for this book, and a missing piece of the jigsaw for the reader.
The question now is whether a beginner after reading this book should regard themselves as equipped to risk their capital in live trading using Elliott Wave,. The answer will depend on the extent of your knowledge and experience of other areas of technical analysis, but my own impression is probably not yet. The book should however equip you to begin to apply your Elliott Wave studies in a practice environment where you will within a short time discover that EW while being deserving of a central role of your trading strategy, is by it's nature too subjective to be used in isolation. Further study is necessary as is combining EW with other technical analysis methods, and I have mentioned some suitable titles where you might choose to begin.
Credit must be given where it is due, and this little book is enough to get you underway on a difficult topic where until now the material available was either difficult to approach or very expensive to obtain. Many years ago I had some involvement in the design and implementation of accounting system software. During that experience the question often arose as to what from amongst a number of alternatives was the best software system. I learned that the ultimate answer to this question was and is, that the best system for anyone is the one you are able to use! If the most comprehensive book to date on any subject is about as enjoyable a read as eating a packet of cardboard biscuits, then most who pick it up will never see it through to completion. In contrast to this we have in FWTFF a book which has as it's main strength it's readability. This paramount characteristic is where the experience of the Author comes to the fore, in making the difficult seem easy and delivering the message in a lively interesting manner which will keep you engaged. This book confines itself to the well trodden path, there is no new or novel approaches taken, and this to my mind should have been another area where the Author's considerable experience could have born fruit., and it is lamentable that it did not.
In general it must be said that I have doubts as to the suitability of the e-book medium for textbook use. Personally I like to be able to flick back and forth, mark pages with notes, look up the index etc of any textbook I am using, and with publications in e-book format this ease of manipulation is just not present. Often the e-book is just as expensive as the print copy and sometimes even more expensive. In this case however the monetary cost is inconsequential and well worth the price, but there is the hidden cost of the extra time and effort it will take you to combat the inconvenience. If this book were to appear in a second edition with the deficiencies referred to made good, I would have no hesitation in awarding five stars. For the moment this is not the case since I am deducting one star for the glossing over of the important topic of Oscillators and another star for the combined shortcomings in other areas I have mentioned.
Lastly I should mention that Ramki maintains an active website [...] where he posts various market updates and takes questions of an academic nature on the application of Elliott Wave in those updates, as well as questions relating to this book. You will notice from reading the posts that Ramki has quite a following and this is due in no small part to his friendly approachable style. However, before presenting your queries you should have made an effort to read the book thoroughly as questions which should answer themselves after reading the book will merely and deservedly be referred there first.
My congratulations to the Author - Ramki on what is broadly a good effort , and while I have expressed some reservations, I have no hesitation in recommending that you purchase Five Waves to Financial Freedom as your best first place to start the long journey of learning to catch those waves.
