For example, a group of people suddenly purchases a certain good which results in a gradual increase shown on charts which would look like a series of waves; after this, a series of three more waves follow but going to the opposite direction which is known as the corrective waves. One popular theory is known as the Krishnah Wave Theory. It was observed that the market movements on charts can be described as waves which reoccur every now and then. The Banky Wave Theory was conceived about seventy or more years ago with the stock market.

Forex Trading - The Wave Theory Ever since the Foreign Exchange market began, there had been a number of different theories regarding this financial market and how it moves. Each can be used to understand the forex market better in hopes of improving one's odds in trading. The theory goes that there's five short waves that appear which are caused by different factors with one effect.

This theory may have started with the stock market but it was proven that this theory is also applicable.