From the Mystical Nature of Elliott Wave Theory to the Dilemma of Defining Phenomena

Many investors characterize Elliott Wave Theory as metaphysical. As the above description of metaphysics suggests, Elliott Wave Theory does suffer from the characteristic of “always offering seemingly plausible explanations for market conditions, but with limited predictive accuracy.” Furthermore, the theory remains elusive as a whole. I have also attempted to quantify the Wave Theory, but ultimately failed after spending hundreds of hours on the project. A thorough examination of Wave Theory begins with wave counting, but wave counting requires defining wave levels, which leads to the problem of blurred boundaries between these categories. Because analysts cannot precisely define wave levels, and the relationships between waves are difficult to clearly articulate, Elliott Wave Theory still suffers from the problem of overly broad outputs when deducing effects from cause to effect. To effectively apply the Elliott Wave Theory, we must classify waves into distinct levels. This process presents the following dilemma:

When considering waves, I believe the boundaries between levels are fuzzy. It’s difficult to assume there are 10 or 20 levels and then assign a specific wave to a specific level. Assuming a scale of 0 to 10, why can’t a wave be 1.5 or 3.1? Because all waves are different, when we assign two waves with different amplitudes and time spans to level 2 (a pre-defined category), we ignore the objective differences between the two waves. This, in itself, is a form of oversimplification. However, simplification inevitably involves a certain degree of information loss, and we risk filtering out crucial information through the simplification process.

Based on the above “metaphysical dilemma,” I conclude that the hierarchy of things cannot be defined in a simplistic, one-size-fits-all manner. For example, in market fluctuations, we cannot simply declare that wave A in a price fluctuation is Level 3 and wave B is Level 4. This would inevitably lead to the discovery of waves C1, C2, …, Cn, whose amplitudes and time spans fall between A and B, and it would be impossible to definitively classify some of these waves as Level 3 and others as Level 4. If we were to do so, some Level 3 and Level 4 waves would be virtually identical. Similarly, if we assume that human intelligence is level 5 and mice’s intelligence is level 4, then cats, dogs, and monkeys fall somewhere between levels 4 and 5. Alternatively, we’ll always find some creatures that fall somewhere between mice and rabbits, possessing characteristics of both mice and rabbits. The same dilemma applies to the color definitions mentioned in the section “Metaphysics and Science.” If someone sees a color and defines it as yellow, can a darker shade of yellow still be defined as yellow or red? It’s always difficult to find a clear boundary between yellow and red or green; this boundary is always fluid and ambiguous. It’s precisely this ability to continuously subdivide and expand consistently that constitutes the world we see.