Terminology

The terminology we use through the book is that of R.N. Elliott. To describe the various cycles of wave pattern, we use four descriptive in each Expert. The cycles are divided in fast (8%), moderate (13%), normal (21%) and slow (34%) for the normal volatility (NV) expert; they are divided in ifast (1%), inormal (3%), islow (5%) and fast (8%) for the low volatility (LV) expert used in the AOi Simple template.

These cycles correspond to intermediate, primary, cycle and super cycle for the normal volatility expert; they are minuette, minute, minor and intermediate for the low volatility expert. The correspondence is approximate since we use a mechanical approach to the evaluation. Sensitivity refers to the % used as a filter. In addition, there is a Futures’ expert with sensitivities from 0.3% to 1.6%, a HV (High Volatility) Expert with sensitivities from 34% to 144%, both are used in special conditions.

The Futures is used for high price conditions such as for indices or securities that vary very little over the studied timeframe. The HV is typical for Penny Stocks or securities with large price variations over the studied timeframe. This is the area where your own judgement will make the final decision as to which expert is the most adequate. To assist you in making the decision, use the AO ZZ (All4) indicator to display graphically the trends and corrections. You are looking for trends that deploy repeatedly over your preferred investment timeframe.

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