Mother Wave and Child Wave

In financial trading, we have to deal with almost endless of Fractal Patterns. Hence, it is important to understand the presence of Mother wave and Child Wave. Mother wave is the bigger wave which is made up from several small waves, child wave. For example, in the figure below, I have highlighted peak – trough – peak using borders for Mother wave. You can readily count how many child waves are inside this big mother wave. There are seven child waves inside the mother wave. This is only conceptual drawing for mother wave and child wave. In fact, we can have any number of child waves inside mother wave. For example, three child waves inside one mother wave is common structure in Harmonic Pattern and X3 Pattern. Remember that drawing is only generic illustration of mother wave and child wave concept.

Anyway, this is not a new concept. Elliott Wave Theory, Harmonic Pattern and X3 Pattern utilize the concept of Mother and Child wave in their pattern identification exercise.

However, here is something you have to understand for your trading. In Elliott Wave, Harmonic Pattern and X3 pattern, the ratio between the mother wave and child wave matters. As I mentioned before, this is the relative term of our prediction equation for Forex and Stock market. For the good prediction, we need both relative term and absolute term in our prediction equation.

For the absolute term, we use turning point probability of both mother wave and last child wave. We can use the turning point probability in price and time. To help you understand these concept easy, I have shown the practical example of mother wave and child wave in EURUSD H4 timeframe. I have made the conceptual drawing and practical example for cross referencing.

Here is what you should check in the top and bottom of screenshot.

  • Location of bordered trough – peak – trough
  • Location of Probability Price 0
  • Location of Probability Price 1
  • Location of Probability Time 0
  • Location of Probability Time 1

When you scan through above five points, you should be able to understand the concept of absolute and relative terms as well as the concept of mother wave and child wave.

These turning point probability for both price and time are calculated for your trading in Fractal Pattern Indicator. You might be wondering what is the probability in the diagonal boxes. They are called Joint Probability. However, this is more advanced concept. Hence, we will not explain these joint probability here. But you can google for sure. These probabilities are the absolute part of information and you should make use of them together with relative part of information, the ratio structure of patterns.

The screenshot attached has all the important information for your understanding. Give some time to understand them.

Below is the download link for Fractal Pattern Indicator.

In fact, if you have not done the training with Peak Trough Analysis, you should and you must do. Otherwise, it is difficult to understand the patterns in the financial market. If you want to become successful trader, then you need to understand patterns in the financial market. That is for sure.  Here is the download link for Peak Trough Analysis. We provide this indicator for free to educate people. You can also use Peak Trough Analysis indicator for your practical trading too because there are many traders are using them in real world trading.

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