Disliked{quote} This is what I have from my FXCM feed on TradeStation: {image}Ignored
I also wonder if that non-existing spike would have been able to take out a stop loss..
Ratios & Harmonics: a Different Way to Trade
- #31,423
- Sep 1, 2017 12:13pm Sep 1, 2017 12:13pm
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
{quote} There is an NT option on the right click menu in the charts, i think its "Reload Data". Try that the next time it happens. Sometimes it happens in NT, fxcm or futures ( Mr. PIP has a video where it also happens )
For some reason I didn't think about doing that this time.
- #31,424
- Sep 1, 2017 2:46pm Sep 1, 2017 2:46pm
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
Trade 3 of 20
USDJPY long.
Expectation:
Expectation was a little more difficult to read because of large swings in price due to high impact news events. For me expectation was a NSH in short term.
Strength assessment in direction of expectation:
Projection: strong
Impulse of last swing: strong
Depth: last correction was shallow
Bullish strength 3 out of 3
I was expecting at least 1 more good swing up because of this
There was a 1:1 harmonic completion in the large swing up after the NFP drop. The second leg of that 1:1 was also a 1:1 harmonic completion. So expected some exhaustion and a decent retrace.
Because of the strength I focused on the two sub-parts of the second leg of the larger swing (between 109.86 and 110.46). Although not very clear swings, there was a retrace of 38.2% between them, that’s why I saw them as legit swings.
And because of the strength up I didn’t expect price to come below the low of the second swing up. So I traded the leg between 110.09 and 110.46. Hence my SL placement.
Strength of entry signal:
FIB: Price came to 78.6% fib level of the smaller swing up. There was some acceleration into the zone. My trading rules say I should not enter then and wait for weakening first. VIOLATED RULE.
STRUCTURE: good structure to the left
HARMONIC: no harmonic confluence identified
--> SOS2 (minimum required according to trading plan)
Rotation candle:
Bullish rotation candle with no wick below the candle. Small wick on top. (candle appearance changed in the chart because of data reload). Took out previous candle, kept more than 50% of its body, so candle was ok.
Trade management:
SL at 110.05, that’s 4 pips below the observed swing.
Profit target at 110.52 - or a little lower because of the round number
Price started pretty good, even gapped up a little with a nice volume candle so I thought we were good. But price came back down and took my stop.
Price retraced into the golden zone of the larger swing between 109.86 and 110.46. There was also good structure there to the left. Maybe I should have placed my SL a little lower taking into account those factors. But then again, it was already 4 pips beneath the HL. And you only know in hindsight where price stopped and reversed. So no big deal.
Summary:
Risk: -16 pips (-12.1 euro)
Initial profit target: +31 pips (1:1 harmonic completion) (23.5 euro)
Actual profit: - 16 pips loss (-12.1 euro)
CONCLUSION: Violation of a trading rule made me lose. Had I waited for entry, I would not have found weakness into my AOI and I would not have entered.
USDJPY long.
Expectation:
Expectation was a little more difficult to read because of large swings in price due to high impact news events. For me expectation was a NSH in short term.
Strength assessment in direction of expectation:
Projection: strong
Impulse of last swing: strong
Depth: last correction was shallow
Bullish strength 3 out of 3
I was expecting at least 1 more good swing up because of this
There was a 1:1 harmonic completion in the large swing up after the NFP drop. The second leg of that 1:1 was also a 1:1 harmonic completion. So expected some exhaustion and a decent retrace.
Because of the strength I focused on the two sub-parts of the second leg of the larger swing (between 109.86 and 110.46). Although not very clear swings, there was a retrace of 38.2% between them, that’s why I saw them as legit swings.
And because of the strength up I didn’t expect price to come below the low of the second swing up. So I traded the leg between 110.09 and 110.46. Hence my SL placement.
Strength of entry signal:
FIB: Price came to 78.6% fib level of the smaller swing up. There was some acceleration into the zone. My trading rules say I should not enter then and wait for weakening first. VIOLATED RULE.
STRUCTURE: good structure to the left
HARMONIC: no harmonic confluence identified
--> SOS2 (minimum required according to trading plan)
Rotation candle:
Bullish rotation candle with no wick below the candle. Small wick on top. (candle appearance changed in the chart because of data reload). Took out previous candle, kept more than 50% of its body, so candle was ok.
Trade management:
SL at 110.05, that’s 4 pips below the observed swing.
Profit target at 110.52 - or a little lower because of the round number
Price started pretty good, even gapped up a little with a nice volume candle so I thought we were good. But price came back down and took my stop.
Price retraced into the golden zone of the larger swing between 109.86 and 110.46. There was also good structure there to the left. Maybe I should have placed my SL a little lower taking into account those factors. But then again, it was already 4 pips beneath the HL. And you only know in hindsight where price stopped and reversed. So no big deal.
Summary:
Risk: -16 pips (-12.1 euro)
Initial profit target: +31 pips (1:1 harmonic completion) (23.5 euro)
Actual profit: - 16 pips loss (-12.1 euro)
CONCLUSION: Violation of a trading rule made me lose. Had I waited for entry, I would not have found weakness into my AOI and I would not have entered.
- #31,425
- Sep 1, 2017 3:16pm Sep 1, 2017 3:16pm
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
Trade 4 of 20
USDJPY short.
Expectation:
There was an expectation failure in the short term, a small NSH was made.
Because previous swing down was kind of strong and because bulls took that swing out with a lot of effort (a lot of small candles but they eventually got there), I expected a deep retrace before a NSH in the short term was made.
A small resistance zone was formed (blue zone) and price seemed to have difficulty getting past it. Produced a few ‘rotation candles’. I took the fourth one.
To me it looked like price would continue down.
So I decided to trade the retrace and trade the immediate OF.
I wrongly assumed that the candle I took produced a very small NSL, breaking the expectation in the immediate OF. The expectation failure actually happened some time after my entry.
Expectation in immediate OF at the time of entry was actually NSH. So I was trading against the OF.
So there was an (involuntary) violation of a trading rule.
Strength assessment in direction of expectation:
Projection/Impulse/Depth
Difficult to apply for this trade.
Strength of my expectation was assessed as described above.
Strength of entry signal:
FIB: Rotation candle was formed at 61.8% retrace of swing down.
STRUCTURE: A small resistance zone was formed for the immediate OF (blue zone)
HARMONIC: no harmonic confluence identified
--> SOS2 (minimum required according to trading plan)
Rotation candle:
Bearish rotation candle. Took out previous candle, kept almost it’s whole body, so candle ok.
Trade management:
SL at 110.33, above the blue resistance zone and the swing.
Profit target: deep retrace expected in short term to at least 110.14, which is the 61.8% correction level of the short term swing up. That would give me a 1:1 R:R
Kept my SL where it was until 3 minutes before closing time. Price finally started to drop and I managed to get out of this trade with a loss of -2 pips.
Summary:
Risk: -8 pips (-6 euro)
Initial profit target: +9 pips (61.8% correction after short term NSH) (+6 euro)
Actual profit: - 2 pips loss (-2 euro)
USDJPY short.
Expectation:
There was an expectation failure in the short term, a small NSH was made.
Because previous swing down was kind of strong and because bulls took that swing out with a lot of effort (a lot of small candles but they eventually got there), I expected a deep retrace before a NSH in the short term was made.
A small resistance zone was formed (blue zone) and price seemed to have difficulty getting past it. Produced a few ‘rotation candles’. I took the fourth one.
To me it looked like price would continue down.
So I decided to trade the retrace and trade the immediate OF.
I wrongly assumed that the candle I took produced a very small NSL, breaking the expectation in the immediate OF. The expectation failure actually happened some time after my entry.
Expectation in immediate OF at the time of entry was actually NSH. So I was trading against the OF.
So there was an (involuntary) violation of a trading rule.
Strength assessment in direction of expectation:
Projection/Impulse/Depth
Difficult to apply for this trade.
Strength of my expectation was assessed as described above.
Strength of entry signal:
FIB: Rotation candle was formed at 61.8% retrace of swing down.
STRUCTURE: A small resistance zone was formed for the immediate OF (blue zone)
HARMONIC: no harmonic confluence identified
--> SOS2 (minimum required according to trading plan)
Rotation candle:
Bearish rotation candle. Took out previous candle, kept almost it’s whole body, so candle ok.
Trade management:
SL at 110.33, above the blue resistance zone and the swing.
Profit target: deep retrace expected in short term to at least 110.14, which is the 61.8% correction level of the short term swing up. That would give me a 1:1 R:R
Kept my SL where it was until 3 minutes before closing time. Price finally started to drop and I managed to get out of this trade with a loss of -2 pips.
Summary:
Risk: -8 pips (-6 euro)
Initial profit target: +9 pips (61.8% correction after short term NSH) (+6 euro)
Actual profit: - 2 pips loss (-2 euro)
{quote} Sure. It's just a list of simple rules, nothing fancy :-) Still in development so may change in the future. Wait until price gets into your AOI, with enough room to protect and good R:R. The standard reward is a 1:1 harmonic. Try to enter at least at 50% correction. That way you have at least a 1:1 when reaching structure, at the point you go to BE. If price arrives in AOI with strength, don’t take it. Not even if there is a very strong reaction in the opposite direction. You saw strength against you, that usually doesn’t just disappear!...
Let me just add one more point , "Don't consider any swing a correction, unless it passes at least 38.6% fib level"
( i am referring you to your previous post which you divided a single swing up ,into two legs ,and this resulted in wrongly entering at lower fib correction and ,wrong SL location.)
thanks again for quick response and perfect detail (You are a writer indeed...
)
{quote} If price arrives in AOI with strength, don’t take it. Not even if there is a very strong reaction in the opposite direction. You saw strength against you, that usually doesn’t just disappear!
I also had this as a written rule but it kept me out of many successful trades and there were also many times when I entered on what seemed to be weakness and I got taken out. So I've changed this rule to: "Don't take a trade if the momentum against you is excessive" and what I mean by that is the speed of the correction...example: If price made a bullish swing for the last 30 minutes and the correction to my AOI lasted 30 seconds ...well no matter how it looks ..bears are most likely very strong. And even in that scenario I've seen expectations hold so I might cross out that one and use OF strength just to determine where my AOI is and if I should be looking for extended targets or take profit at the 1:1 completion.
I'm not saying this to make you change your rule. I'm just sharing my thoughts on this.
Weakening is not equal to a correction or reversal!
{quote} Thank you so much Peter, seem totally reasonable, i try to remember your points from now on ,in my trading . Let me just add one more point , "Don't consider any swing a correction, unless it passes at least 38.6% fib level" ( i am referring you to your previous post which you divided a single swing up ,into two legs ,and this resulted in wrongly entering at lower fib correction and ,wrong SL location.) thanks again for quick response and perfect detail (You are a writer indeed...
I thought one more rule that may be added is :
If because of high sos and strength of flow ,you decide to take a trade at 38.6% correction , enter with smaller lot size (1/2 of your total acceptable risk), because of a bad R:R ratio, then the only place that you may add to a losing trade , is when it goes against your expectation and at 61.8% fib correction, with other (1/2 lot size ), to average the risk ,to more reasonable amount.
I appreciate if other people, share their idea on this matter..., am i getting it right ?
- #31,434
- Edited Sep 4, 2017 3:42am Sep 3, 2017 11:11am | Edited Sep 4, 2017 3:42am
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
Thanks for your suggestions parviz1953
For me, 38.2% is enough to call it a correction, it doesn't have to be more than that.
Especially when there's large impulse, there usually is no deep correction.
Normally I use clearer swings. It was the strength that convinced me to use the smaller swing, thinking it would be strongly defended by the bulls.
Well I was wrong. I'll take it with me as an experience, but no need for me personally to add an extra rule.
I like to keep the list as basic as possible for now.
I agree with that one. I will avoid entering at worse retracement than 50%, but it could happen.
I would probably enter with half the risk, but could also enter with the full risk, depending on the situation.
Can only add to the trade if the maximum risk is not exceeded.
I believe Mr. Pip said in one of his videos, that he would only add to the trade after a 1:1 completion in that correction.
So if you entered at 38.2%, you could add the other half at 76.4%, or to make it a zone: between 61.8 and 78.6%.
It's a rule in my head, I didn't write it down (yet).
I like to keep the list simple for now.
It's actually a list of the rules that I violated too often.
I wrote those down so I can keep myself accountable for bad trades.
But you can add any rules you want for yourself of course
{quote} ... Let me just add one more point , "Don't consider any swing a correction, unless it passes at least 38.6% fib level" ( i am referring you to your previous post which you divided a single swing up ,into two legs ,and this resulted in wrongly entering at lower fib correction and ,wrong SL location.) ...
Especially when there's large impulse, there usually is no deep correction.
Normally I use clearer swings. It was the strength that convinced me to use the smaller swing, thinking it would be strongly defended by the bulls.
Well I was wrong. I'll take it with me as an experience, but no need for me personally to add an extra rule.
I like to keep the list as basic as possible for now.
{quote} Hi : I thought one more rule that may be added is : If because of high sos and strength of flow ,you decide to take a trade at 38.6% correction , enter with smaller lot size (1/2 of your total acceptable risk), because of a bad R:R ratio, then the only place that you may add to a losing trade , is when it goes against your expectation and at 61.8% fib correction, with other (1/2 lot size ), to average the risk ,to more reasonable amount. I appreciate if other people, share their idea on this matter..., am i getting it right ?
I would probably enter with half the risk, but could also enter with the full risk, depending on the situation.
Can only add to the trade if the maximum risk is not exceeded.
I believe Mr. Pip said in one of his videos, that he would only add to the trade after a 1:1 completion in that correction.
So if you entered at 38.2%, you could add the other half at 76.4%, or to make it a zone: between 61.8 and 78.6%.
It's a rule in my head, I didn't write it down (yet).
I like to keep the list simple for now.
It's actually a list of the rules that I violated too often.
I wrote those down so I can keep myself accountable for bad trades.
But you can add any rules you want for yourself of course
- #31,437
- Sep 4, 2017 12:02am Sep 4, 2017 12:02am
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
USDJPY Short Protected at BE Out +20 {image}
- #31,438
- Sep 4, 2017 12:25am Sep 4, 2017 12:25am
- | Joined Nov 2016 | Status: Trader | 1,121 Posts
{quote} This one is a bit debatable. Damian discussed it in his last live stream. I also had this as a written rule but it kept me out of many successful trades and there were also many times when I entered on what seemed to be weakness and I got taken out...
I do believe the rule is too strict and needs nuance. So I will keep it in mind and also watch the last live stream (I'm a bit behind)
{quote} ... I'm not saying this to make you change your rule. I'm just sharing my thoughts on this.
{quote} ...I really like this...might as well add it to my plan before you charge for copyrights
