Forex Trading System- Goodman versus Elliot

OVERVIEW

When I tutor traders on Goodman, I break up the study into ordinal and cardinal.
We study Goodman wave theory (GWT) without respect to measurements first, and
only then overlay a study of the Goodman measurement theory (GMT). These both in-
volve Goodman ordinal rules and Goodman cardinal rules.
Here is a nice formation to look for in GWT. It has some high probabilities, espe-
cially with the use of filters and GMT (the latter beyond the scope of this short primer).
Charlie called it the “Return.”
Elliott identified the basic market wave as having five components (See Figure 37.1.)
This is incorrect. The basic market wave has three components. (See Figure 37.2.)

This propagation rule can be extremely useful in and of itself in anticipating the or-
dinal template of the market as it unfolds, but further details are beyond the scope of
this short overview. There are 16 basic propagation schemes or templates.
THE RETURN

Charlie identified what he called a “return”—defined here as the price location (+/–) in a
wave propagation where the secondary wave of the primary wave approaches the sec-
ondary wave of the complex component. (See Figure 37.4.)
This feature has some interesting ramifications for anticipating the basic market
template. But for the purposes of this overview, I want to draw your attention to a single
idea as a possible short-term trading tactic.

To use this in isolation as a short-term trading tool you will need a timing method—
I recommend a three-box reversal point and figure chart. Also helpful would be moni-
toring the Goodman templates at one higher and one lower matrix. The return can also
be useful in identifying the market template itself.
Typically (but not always) if the return falls short of the point of the BC wave, the
market will build a bit before reversing. If the return is past the point of the BC wave,
the market will often spike through the return point and then reverse.
When this is overlaid with the Goodman cardinal rules, it becomes a very powerful
tool in the broader scope of Goodman studies.