Ralph Nelson Elliott
Encyclopedia
Ralph Nelson Elliott was an American accountant
and author, whose study of stock market data led him to develop the Wave Principle
, a form of technical analysis
that identifies trends
in the financial markets. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves.
, and later moved to San Antonio, Texas
. He entered the accounting field in the mid 1890s and worked primarily in executive positions for railroad companies in Central America and Mexico. In 1903, Elliott married Mary Elizabeth Fitzpatrick (1869–1941), who accompanied him during his extended time working as an expatriate in Mexico. Civil unrest there brought the couple back to the United States and eventually to a residence in New York City, where Elliott started a successful consulting business. In 1924, the United States Department of State appointed Elliott to the post of Chief Accountant for Nicaragua (which at the time was under American control). Not long afterward, Elliott wrote two books based upon his professional experiences: Tea Room and Cafeteria Management
and The Future of Latin America.
During his time in Central America, Elliott contracted a debilitating intestinal illness, which forced him into early retirement at age fifty-eight. About this time, he decided to dedicate himself to the study of the behavior of the American stock market.
s. Soon after the publication of The Wave Principle, Financial World magazine commissioned Elliott to write twelve articles (under the same title as his book) describing his new method of market forecasting.
In the early 1940s, Elliott expanded his theory to apply to all collective human behaviors. His final major work was his most comprehensive: Nature's Law–The Secret of the Universe published in June, 1946, two years before he died.
In the years after Elliott's death, other practitioners (including Charles Collins, Hamilton Bolton, Richard Russell and A.J. Frost) continued to use the wave principle and provide forecasts to investors. Frost and Robert Prechter
wrote Elliott Wave Principle, published in 1978 (Prechter had come across Elliott's works while working as a market technician at Merrill Lynch
; his prominence as a forecaster during the bull market of the 1980s helped bring the greatest exposure to that time to Elliott's wave principle).
Accountant
An accountant is a practitioner of accountancy or accounting , which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources.The Big Four auditors are the largest...
and author, whose study of stock market data led him to develop the Wave Principle
Elliott wave principle
The Elliott Wave Principle is a form of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors...
, a form of technical analysis
Technical analysis
In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...
that identifies trends
Market trends
A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames...
in the financial markets. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves.
Early life and career
Elliott was born in Marysville, KansasMarysville, Kansas
Marysville is a city in and the county seat of Marshall County, Kansas, United States. As of the 2010 census, the city population was 3,294.-History:...
, and later moved to San Antonio, Texas
San Antonio, Texas
San Antonio is the seventh-largest city in the United States of America and the second-largest city within the state of Texas, with a population of 1.33 million. Located in the American Southwest and the south–central part of Texas, the city serves as the seat of Bexar County. In 2011,...
. He entered the accounting field in the mid 1890s and worked primarily in executive positions for railroad companies in Central America and Mexico. In 1903, Elliott married Mary Elizabeth Fitzpatrick (1869–1941), who accompanied him during his extended time working as an expatriate in Mexico. Civil unrest there brought the couple back to the United States and eventually to a residence in New York City, where Elliott started a successful consulting business. In 1924, the United States Department of State appointed Elliott to the post of Chief Accountant for Nicaragua (which at the time was under American control). Not long afterward, Elliott wrote two books based upon his professional experiences: Tea Room and Cafeteria Management
and The Future of Latin America.
During his time in Central America, Elliott contracted a debilitating intestinal illness, which forced him into early retirement at age fifty-eight. About this time, he decided to dedicate himself to the study of the behavior of the American stock market.
Elliott Wave Theory
In the early 1930s, Elliott began his systematic study of seventy-five years of stock market data, including index charts with increments ranging from yearly to half-hourly. In August, 1938, he detailled the results of his studies by publishing his third book (written in collaboration with Charles J. Collins), entitled The Wave Principle. Elliott stated that, while stock market prices may appear random and unpredictable, they actually follow predictable, natural laws and can be measured and forecast using Fibonacci numberFibonacci number
In mathematics, the Fibonacci numbers are the numbers in the following integer sequence:0,\;1,\;1,\;2,\;3,\;5,\;8,\;13,\;21,\;34,\;55,\;89,\;144,\; \ldots\; ....
s. Soon after the publication of The Wave Principle, Financial World magazine commissioned Elliott to write twelve articles (under the same title as his book) describing his new method of market forecasting.
In the early 1940s, Elliott expanded his theory to apply to all collective human behaviors. His final major work was his most comprehensive: Nature's Law–The Secret of the Universe published in June, 1946, two years before he died.
In the years after Elliott's death, other practitioners (including Charles Collins, Hamilton Bolton, Richard Russell and A.J. Frost) continued to use the wave principle and provide forecasts to investors. Frost and Robert Prechter
Robert Prechter
Robert R. Prechter, Jr. is an American author and stock market analyst, known for his financial forecasts using the Elliott wave principle. Prechter is an author and co-author of 14 books, and editor of 2 books , his book Conquer the Crash is a New York Times bestseller...
wrote Elliott Wave Principle, published in 1978 (Prechter had come across Elliott's works while working as a market technician at Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
; his prominence as a forecaster during the bull market of the 1980s helped bring the greatest exposure to that time to Elliott's wave principle).
See also
- Elliott wave principleElliott wave principleThe Elliott Wave Principle is a form of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors...
- Elliott Wave Theorist
- Behavioral FinanceBehavioral financeBehavioral economics and its related area of study, behavioral finance, use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market...
- Daniel KahnemanDaniel KahnemanDaniel Kahneman is an Israeli-American psychologist and Nobel laureate. He is notable for his work on the psychology of judgment and decision-making, behavioral economics and hedonic psychology....
- Robert PrechterRobert PrechterRobert R. Prechter, Jr. is an American author and stock market analyst, known for his financial forecasts using the Elliott wave principle. Prechter is an author and co-author of 14 books, and editor of 2 books , his book Conquer the Crash is a New York Times bestseller...