Part V. Trading Elliot Waves. Commander in Pips: Today we start the last part in the chapter that is dedicated to Elliot waves theory. And, as usual, we will discuss its practical application – how to trade them. You probably have guessed already, that the approach to EW is based generally on rules that we’ve specified in previous parts. Based on these rules we will estimate the wave, future direction where to place stops and other important moments. Pipruit: Ok, I’m ready. \ Commander in Pips: Here is the first chart – daily EUR/USD and 5-wave impulse move. Let’s start from it: Chart #1 | EUR/USD Daily Let’s assume that we take a look at point  and assume that this is the second wave. Here we could apply Rule #2 - “Second wave never could be beyond the start of 1st wave”. This rule tells us where we should place our stop according to EW theory – below the low of the 1st wave. Second that we know – “Waves 2 and 4 typically retrace to Fibonacci retracement levels”. Here we see that market has reached 0.382 Fib support from wave 1. Pipruit: Wait a minute. I have a couple of questions already, Sir. First – how do we know, that market will not retrace to deeper Fib support? Second – why in general you’ve decided that this is second and retracement wave?