-
How to start trading?
If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.
-
How to open an FBS account?
Click the 'Open account' button on our website and proceed to the Trader Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.
-
How to withdraw the money you earned with FBS?
The procedure is very straightforward. Go to the Withdrawal page on the website or the Finances section of the FBS Trader Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.
What is an extension?
We can face with an extension in the most impulses in a position of motive waves. Generally, an extension is an extended impulse structure with enlarged waves inside, which are almost the same height and length as the other waves of the impulse. So, if a usual impulse has a five-wave structure, an impulse with an extension in one of the motive waves subdivides into nine waves.
Where an extension occurs?
Only in the motive waves, so we could find an extension in the first, the third and the fifth wave of an impulse. The most impulses have an extension only in one of the motive waves, most commonly in the third wave. From time to time we could face with two extensions inside a single impulse, but that's a pretty rare case. Also, during a long and strong trend, it's possible to have an extension inside another extension, which is called a multi-extension.
An extension and other impulse's waves
If the third wave an extension forms, then the fifth wave will likely be quite the same as the first wave. If the first and the third waves are about the equal amplitude, the fifth wave could be extended. It's obvious that it's just impossible to have an extension in both waves one and five because in this case wave three turns out to be the shortest, which violates the main rules.
So, let's say, you try to count a developing extension in the third wave, for example. Because of all the motive and corrective waves are nearly the same, you could have few other wave counts at hand. Sometimes, it's not easy to choose the best scenario to be the main one. The best thing to do in a moment like this is just to pick up a wave scenario with a relatively modest prediction.
An extension and correction patterns
As you already know, we could have an extension in the motive waves only. However, sometimes it’s possible to observe something like an extension inside a zigzag. In this cases, one of the motive waves (A and C) of the pattern is much longer than another. There’s no any mention about an extension inside zigzags in the book ‘Elliott Wave Principle: A Key to Market Behavior’, but sometimes such a disproportion between waves A and C takes place.
Examples
The chart below represents an impulse with a huge extension in wave ((3)), which subdivides into five waves, which are quite the same as waves ((1)), ((2)) and ((5)). As you can see, after wave ((4)) we had a tiny price movement in the fifth wave. In most cases, it’s likely that if you have wave three more than 1.618 multiple of wave one, there’s a green light for a relatively small wave five.
Sometimes, the fifth wave of an impulse forms an extension, which occurs during massive rallies on the markets. As you can see from the next chart, wave (1) could be wave ((5)) itself, so only a three-wave decline and the subsequent pullback pointed out that the extension started. Moreover, a triangle in the wave (4) confirmed that there’s a developing impulse from the ending of the wave ((4)). Thus, we should be extremely careful with an extension in the fifth wave in the real-time wave counting.
An extension in the first wave doesn’t form often. The next example shows a five-wave advance with the longest wave ((1)). Keep in mind, if the wave one is extending, wave three usually is smaller than wave one. In this case, in the absolute majority of cases, an impulse with extended wave one usually has the shortest wave five. The third wave can’t be the shortest, by the way.
It also possible to have an extension on both waves one and three of an impulse, we can see this situation on the following chart. Waves ((1)) and ((3)) are much bigger than wave ((5)). Also, waves ((1)) and ((3)) have a very detailed structure, but wave ((5)) doesn’t.
Another option is an extension in both waves three and five. It usually happens during a strong and long trend. As shown on the next chart, wave ((1)) is small while waves ((3)) and ((5)) are huge and we can see all subdivisions of these impulses.
The trickiest type of an extension is a multi-extension. It usually forms on the stock market. During a multi-extension, we face with a lot of similar waves, so sometimes it’s pretty hard to do a wave count. The key to recognizing a multi-extension is a series of corrections, which form smaller and smaller one after another. If this happens, we could predict a multi-extension, but at the same time, we also should try to find alternate wave counts with fewer expectations. By doing this, we also could find the critical levels, which supposed to be red lines for a wave count with a multi-extension.
The Bottom Line
Extensions are an essential part of impulse waves. They happen all the time on all the markets. Moreover, in terms of trading, extensions bring the most interesting opportunities, but we also should always remember to keep risks at a reasonable level.
2022-04-04 • Updated
Other articles in this section
- Structure of a Trading Robot
- Building a Trading Robot without Programming
- How to Launch Trading Robots in MetaTrader 5?
- Algorithmic Trading: What Is It?
- Fibonacci Ratios and Impulse Waves
- Guidelines of Alternation
- What is a triangle?
- Double Three and Triple Three patterns
- Double Zigzag
- Zig Zag and Flat Patterns in Trading
- Advanced techniques of position sizing
- Truncation in the Elliott Wave Theory
- Ichimoku
- Ending Diagonal Pattern
- How to trade gaps
- Leading diagonal pattern
- Wolfe waves pattern
- Three drives pattern
- Shark
- Butterfly
- Crab Pattern
- Bat
- Gartley
- ABCD Pattern
- Harmonic patterns
- What is an impulse wave?
- Motive and corrective waves. Wave degrees
- Introduction to the Elliott Wave Theory
- How to trade breakouts
- Trading Forex news
- How to place a Take Profit order?
- Risk management
- How to place a Stop Loss order?
- Technical indicators: trading divergences
