1 Identify trends

Wave theory can determine the direction of major trends. Five waves rising represents the upward trend, and five waves falling represents the downward trend. Why is this important? I'm glad that it's easier to follow the trend fairly and there is less resistance.

2 identify counter-trends

The third wave is the adjustment wave. If we know that the current price trend is only the adjustment of the previous trend, it will provide a new opportunity for traders.

3 Determine the extent of the trend

Through the waveform, we can know where the current trend is, so as to finance different trading strategies.

4 Provide price targets

Have a clear price target, don't blindly follow it.

5 provides a clear iron law

Three iron laws of wave theory: wave 2 cannot retreat more than 1100%; Wave 4 cannot enter the range of wave 1; Compared with Wave 5, Wave 1 can't be the shortest. If the iron law is violated, it means that the wave number is wrong, and traders should take corresponding measures in time.