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"Ratios & Harmonics: a Different Way to Trade." Summary 37 replies

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Ratios & Harmonics: a Different Way to Trade

  • #30,601
  • Jul 25, 2017 1:43pm Jul 25, 2017 1:43pm
Trade 1: USDJPY long
After expectation failure on the intraday(name ok?) and a NSH price corrected deep as expected into my AOI between 61.8 and 78.6, forming an AB and a BC leg.
Went long. Profit target a 1:1 of the swing up, creating a ABCD pattern.
+59 pips

Trade 2: USDJPY short
Longer term expectation is a NSL
After the ABCD pattern completion price was in the golden zone of the correction of the major swing down
Longer term structure to the left
Short term bulls weakaning: projection+impulse decreasing
All of that made it good to go for a short.
Now on major pain train.
It looked like the bulls were weakening between 61.8 and 78.6
But then bulls found some juice somewhere and we're now past 78.6
Stop is above the swing.
If taken out it will erase my previous profit of the day on USDJPY..
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  • #30,602
  • Jul 25, 2017 3:08pm Jul 25, 2017 3:08pm
Quoting PeterT
Trade 1: USDJPY long After expectation failure on the intraday(name ok?) and a NSH price corrected deep as expected into my AOI between 61.8 and 78.6, forming an AB and a BC leg. Went long. Profit target a 1:1 of the swing up, creating a ABCD pattern. +59 pips Trade 2: USDJPY short Longer term expectation is a NSL After the ABCD pattern completion price was in the golden zone of the correction of the major swing down Longer term structure to the left Short term bulls weakaning: projection+impulse decreasing All of that made it good to go for a short....
Congrats to your first trade.
Short question: What is the meaning of the little circles on your first leg?


Update on my trades: Could get +15 on YM and +3,75 on NQ.
  • #30,603
  • Jul 25, 2017 3:17pm Jul 25, 2017 3:17pm
NQ traded immediate OF +2 and +19 to finish before close
Makes up for some of the loss of the day

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  • #30,604
  • Jul 25, 2017 3:24pm Jul 25, 2017 3:24pm
Quoting evocpr19
{quote} Congrats to your first trade. Short question: What is the meaning of the little circles on your first leg? Update on my trades: Could get +15 on YM and +3,75 on NQ.
Thanks! And congrats on your trades too :-)
The big ellipses are long term OF and the small ones immediate OF
Drawing them helps me to get in sync with the different order flows.
  • #30,605
  • Jul 25, 2017 4:09pm Jul 25, 2017 4:09pm
Quoting kelvinyun
POTENTIAL TRADE SETUP {image} {image} * Don't be upset with this chart lol. I've drawn those lines back in January 2017, and somehow those lines are still applicable today so i just leave it be.
USDJPY also my view on it. Took a short.
At the moment getting a much deeper retrace than expected.
  • #30,606
  • Jul 25, 2017 5:07pm Jul 25, 2017 5:07pm
took a hit today. To a tiny account like mine this is pretty massive 9 ticks away from my target 2 of 21649. Take care. I care more about end of month results hope all is well
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Empower Your Mind
  • #30,607
  • Jul 25, 2017 6:33pm Jul 25, 2017 6:33pm
Quoting PeterT
So, we don't always have to show winners. Losses are the price we pay to learn a lesson. ... Probably the error was: it was at market open. That's why we wait for "the dust to settle". Lesson definitely learned From now on my trade plan rules will forbid me to do this.. If you see any other error please share thank you. {image}
Watch out if pre-market is getting too far away from regular hours. RTH traders will probably want to revisit key points from the day before. market opens often deal with price gaps which don't really appear in 24 hr markets like futures. So for the Dow, this morning was a gap up above yesterday's high. Gaps usually get filled in the opening 'dust'. You can avoid it or trade it. Just try not to get caught on the wrong side of it.

This is as I understand it. I think Jmezz trades using this edge, so its something I am emulating.
  • #30,608
  • Jul 25, 2017 8:17pm Jul 25, 2017 8:17pm
Quoting ckh626
{quote} Where did you put your initial sl on this run? I think this is why i didnt pull the trigger.
Just one point of previous low. I can't see the chart now, it should be 524.
  • #30,609
  • Jul 25, 2017 9:23pm Jul 25, 2017 9:23pm
Quoting PeterT
{quote} USDJPY also my view on it. Took a short. At the moment getting a much deeper retrace than expected.
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Good risk reward now. Can enter trade.

SL 112.6
TP 110.75
  • #30,610
  • Jul 25, 2017 9:47pm Jul 25, 2017 9:47pm
Quoting brrand
{quote} Thanks Milforta for such nice analysis. I am trying to trade the medium term order flow here represented by the blue line. Few questions, please bear with me as I am surely reinventing the wheels here: {quote} In my opinion (which is proved to be wrong), the blue line represented a strong move down with good volumes, I was thinking at that point that a 38.2 retracement is what I need for entering short. Obvioulsy, I was wrong. My question is, what made you think that the retracement would be 61% instead of 38? is it only the 1:1 confluence...



My question is, what made you think that the retracement would be 61% instead of 38? is it only the 1:1 confluence and structure or something else.
We would never know where price will go but we can have an expectation. In order to have a higher probability on our expectation, we look for confluence. The more the better. Mr Pip has categorized 3 different strengths of the signals(SOS) we can have on the trades we plan to take. They are :
1) SOS 1 Trades where price retrace to Fib levels.
2) SOS 2 Trades where price retrace to Fib levels and into an area of structure.
3) SOS 3 Trades where price retrace to Fib levels, into an area of structure and with completion of pattern/strength of PA weakening using Momentum, projection, depth of the immediate order flow.

As for your GBPJPY, the correction is just a minor correction for the order flow which you marked with the black slanting line. You could use the Fib retracement to find the levels of where price is expected to find exhaustion on the correction and resume it's move to the downside for the expectation of a NSL. The expectation for a NSL will only change if price breaks the highest point of your black slanting line. The area which you marked as NSH/LH is actually a NSH for the immediate/short term order flow.

You will need to know which order flow you plan to trade. If you are trading the order flow with the black line, you need to find confluence at the 38.2, 50, 61.8 or the 78.6 retracement. Use the SOS to gauge the quality of your entries. Understanding all of these is the first step. The 2nd step which is the more challenging is applying it in real time. The 3rd step which is the most challenging is managing your trades and that's where the little voice in your head start to play games with you.....
  • #30,611
  • Jul 25, 2017 9:57pm Jul 25, 2017 9:57pm
Quoting Milfortra
{quote} My question is, what made you think that the retracement would be 61% instead of 38? is it only the 1:1 confluence and structure or something else. We would never know where price will go but we can have an expectation. In order to have a higher probability on our expectation, we look for confluence. The more the better. Mr Pip has categorized 3 different strengths of the signals(SOS) we can have on the trades we plan to take. They are : 1) SOS 1 Trades where price retrace to Fib levels. 2) SOS 2 Trades where price retrace to Fib levels...

Thanks Milforta again for detailed reply. Makes things more clear. I am trying my best to progress to steps 1 - 2 - 3.

Will be going over the starting pages of thread and Damian's videos again.

Thanks
  • #30,612
  • Edited Jul 26, 2017 12:07am Jul 25, 2017 11:46pm | Edited Jul 26, 2017 12:07am
USDJPY sell @111.920
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  • #30,613
  • Jul 26, 2017 1:16am Jul 26, 2017 1:16am
The last live session had a question asked about black swan events. At first I thought, let's look at the last presidential election... but it frankly looked like pretty awesome trading... assuming you were in the right emotional state to trade (ie. not incredibly jubilant or in incredible despair, or maybe simply incredulous).

The depegging of the Swiss franc didn't do much to Dow Jones. I don't know about the futures market though.

And then there's 9/11. That's about as black-swan-y as it gets. Markets closed for a week after that day, which was pretty much the longest since 1933. it sounds like, as the attacks were happening, the market went limit down a couple of times before everything just got erased. Dow went down some 600 points. Apparently info is a bit hard to find. I don't know if it was a gap down or what. I guess traders had bigger stuff to worry about that week.

Anyway, I did find a post from one guy who apparently went through it.

https://www.elitetrader.com/et/threads/futures-chart-for-9-11.224187/

I guess the take home message is this: if you're worried about black swans, be prepared to get locked into a 7% move. That'd be some 1500 pts on today's Dow. I have 20% moves calculated in my trade plan... but I figure, if we get locked into a 20% move on the Dow, nukes will probably be falling from the sky.

This is completely different in forex though. USDCHF had a 18% gap down the day CHF got depegged. That gap ended up getting filled over 3 months. So yeah, watch your leverage.
  • #30,614
  • Jul 26, 2017 1:59am Jul 26, 2017 1:59am
Quoting vqtrader
took a hit today. To a tiny account like mine this is pretty massive 9 ticks away from my target 2 of 21649. Take care. I care more about end of month results hope all is well {image}
Hey vqtrader sorry for your loss.
As you can see in my post I got in trouble in the same area, only I took a long after the correction of the leg you jumped into.
Another victim of market open I guess?
  • #30,615
  • Jul 26, 2017 2:03am Jul 26, 2017 2:03am
Quoting ckh626
{quote} Watch out if pre-market is getting too far away from regular hours. RTH traders will probably want to revisit key points from the day before. market opens often deal with price gaps which don't really appear in 24 hr markets like futures. So for the Dow, this morning was a gap up above yesterday's high. Gaps usually get filled in the opening 'dust'. You can avoid it or trade it. Just try not to get caught on the wrong side of it. This is as I understand it. I think Jmezz trades using this edge, so its something I am emulating.
I think I remember Jmezz posting about this some time ago.
I stripped everything from my trading to keep it as simple as possible so I don't monitor those special levels and events unfortunately.
For now I'll just avoid trading at market open :-)
Thanks for the explanation and the reminder!
  • #30,616
  • Jul 26, 2017 2:07am Jul 26, 2017 2:07am
Quoting kelvinyun
{quote} {image} Good risk reward now. Can enter trade. SL 112.6 TP 110.75
Thank you for pointing that out kelvinyun.
I was actually using the wrong (or at least not the best) swing from the beginning.
My previous 100% correction is now a 78.6% retrace of the swing you indicated.
I added half a position at 111.89 to try to at least recover. Or make larger profit. We'll see.
  • #30,617
  • Jul 26, 2017 2:26am Jul 26, 2017 2:26am
Quoting ckh626
The last live session had a question asked about black swan events.
Thanks ckh626 very interesting.
And very worrying.
Who can be prepared for a 1500 point move?
What happens if the loss extends beyond your account size?
Are there brokers that take the loss on themselves then?
Is there some kind of insurance available to protect a trader from this?
  • #30,618
  • Jul 26, 2017 3:22am Jul 26, 2017 3:22am
Quoting PeterT
{quote} Thanks ckh626 very interesting. And very worrying. Who can be prepared for a 1500 point move? What happens if the loss extends beyond your account size? Are there brokers that take the loss on themselves then? Is there some kind of insurance available to protect a trader from this?
Here in Germany the most future brokers have a "Nachschusspflicht" google translate "subsequent payment obligation" that means that you have to pay for the losses.
If u trade CFDs the broker is on its own because losses cant get beyond your accountsize. The BaFin did same changes in 2017 that protect Privat-Traders and Investors from the risks of CFDs.
Trading is allways risky so no insurance will take care for this. The only thing we can do, as Mr.Pip mentioned in his last live stream, is to trade small contracts. Even in a heavy move it shouldnt destroy our account completly as we get a better fill.
As a intraday trader you shouldnt left trades open overnight or over the weekend. Pick a daytime and close all open trades even if they didnt reached a stop. I like to close them at 10PM. That secures me a good night too .
  • #30,619
  • Jul 26, 2017 3:30am Jul 26, 2017 3:30am
Quoting Noxap
{quote} Here in Germany the most future brokers have a "Nachschusspflicht" google translate "subsequent payment obligation" that means that you have to pay for the losses. If u trade CFDs the broker is on its own because losses cant get beyond your accountsize. The BaFin did same changes in 2017 that protect Privat-Traders and Investors from the risks of CFDs. Trading is allways risky so no insurance will take care for this. The only thing we can do, as Mr.Pip mentioned in his last live stream, is to trade small contracts. Even in a heavy...
Very sound advices. I know some CFD brokers advertise that "losses can exceed your deposit" and others have a protection feature where "losses CANNOT exceed your deposit".

Like everything in the forex and cfd world... be sure to be with the right broker. If too worried about this, there are some protections:

* broker that covers your loss in case of exceding deposit or funds on account ( usually very regulated brokers )
* broker that has fixed spreads, so no spread spike and your orders will always fill ( usually market maker brokers )
* broker that has "guaranteed stop", even for the night ( if price gaps way beyond your stop, you still only pay to your stop ). ( usually market maker brokers )
* broker that trades 24h on indexes like on forex ( for example for dax index, there are some brokers that trade it almost 24h ). ( usually market maker brokers, not sure )


Hope it helps, for the users of CFD's.
  • #30,620
  • Jul 26, 2017 3:42am Jul 26, 2017 3:42am
Quoting pereiraalex
{quote} Very sound advices. I know some CFD brokers advertise that "losses can exceed your deposit" and others have a protection feature where "losses CANNOT exceed your deposit". Like everything in the forex and cfd world... be sure to be with the right broker. If too worried about this, there are some protections: * broker that covers your loss in case of exceding deposit or funds on account ( usually very regulated brokers ) * broker that has fixed spreads, so no spread spike and your orders will always fill ( usually market maker brokers ) *...
Yes i rereaded the article from the BaFin and they banned CFDs where losses can exceed the deposit. BUT! I think this is ONLY in Germany, im not speaking for everyone here so be careful like pereiraalex said, choose your forex and cfd broker wisely.
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