Ratios & Harmonics: a Different Way to Trade

LV50% SELL- Harmonic

I met some problems on defining retracement ratio.

Sometimes waves are not that harmonic...

EASY Structure for EX.


Hard Structure for EX.

Does any have solution for this? thanks!

ABCD setup on EURAUD H1.

You hit the nail on the head. It's not always the case that waves are harmonic. What we do, as informed traders, is get an expectation of where we believe the greatest chance of success for a trade will happen. We can't predict the future, and price doesn't always do what we think it will do.


The optimal (according to Mr. Pip's teaching) retracement ratio is the one that gets you the best risk to reward ratio. That ratio is often between 61.8% and 78.6%, which is considered the "golden zone". The reasoning behind those specific ratios has to deal a lot with where you put your stop loss. You will want to put your stop loss below/above the swing and if you take a trade that has only retraced 23.6%, your SL still has to be below/above the 100%, which is roughly 80%. For example, if the swing is 100 points, then you really need to put your SL at 80 points! This is the safest place to be in order to assure you that if price reaches your SL, then you were wrong on your analysis OR price just decided to move the other direction. This is still a game of chance. And 80 points is a huge stop. But if you only put your stop at 50%, or 70%, and price dips down to touch it and then works on toward reaching your initial expectation, you've just lost money on a trade that actually would have been a winning trade had you either 1) waited to get into the trade later on or 2) put your SL where it should have been below/above the 100% of the swing. And over time, that's going to hurt you both in your wallet and psychologically. Your wallet because you're losing money, and your psyche because you're losing money on winning trades, and you end up losing faith in the system. Whereas, on that same 100 point swing, if you wait until the 61.8%, then your SL being below/above the 100%, would only be around 45 points. And if you wait for a turn at the 78.6%, then your SL is even better at only around 25 points.

What if price doesn't get to 50%, 61.8% or 78.6% and actually has the turn at 23.6%? You miss the trade and move on. You can't be in every trade and you shouldn't be in every trade. It is your responsibility, as an informed trader and a protector of your own money, to be patient in order to wait for the highest probability trades. :-)

If you're asking the group on how to trade the 23.6%, you're not going to get much more advice than "be prepared for a rough ride on the pain train", since price will more often than not swing against you deeper before turning in your favor.

Hope that helps!

Thanks Tim, you really helped me out!

On last EX. if i give up 23.6 signals, i will have 2 signals from 61.8 which is still good enough.

Interesting area on EURGBP.

Hello fellow traders,
The last 2 days have been pretty hard trading, due to holidays.
Hope everyone is doing well!
Finished the week with a 62% win percentage, getting a 7,02% return. ( in 1 week ), with not only trading 1-2 US open session, the rest was aftermarket hours. ( max 1/2 hours a day.)
Currently trading UJ and GU aside, since there isn't that much of a correlation between the two. risking both 1% on each on a single trade, doing pretty well to be honest. Only hard thing for me is to focus on 1 particular market. Like either Spot FX or future FX. I like futures more, but need to build capital first. Temptation is real, BUT I know my future self will be thankful for this. Going live pretty soon. I know the difference is really really hard. Need a couple of weeks more worth of forward trading to finally take the step and continue my live trades. Keep you guys updated. Maybe in the new year, who knows

Updated version:



PS: Will share them at the end of every week, to keep myself accountable.

-Mattie

Hey, een Nederlander ;-)

Nice results, keep posting charts please :-)

That's really impressive. You had in a range of approximately 60 trading days more than 450 trades which means that you have 7.5 trades per day. when i attended your youtube sessions you only had between 1 and 3 trades. i'm a bit confused about the high number of trades...

I think he mentioned that ninjatrader couldn't fill the whole order in at one given time, due to the high lot size ( slippage ) and that all of these seperate order fills, would count as multiple trades, which in reality is only 1 trade. I think it was something like that.

I personally like the second image more anyways. i see two easy trades there. and a third riskier one.

The first image makes me nervous. i'd probably watch price drop... just waiting for a reversal. if i had a big enough account, i'd maybe risk half a position.

Plus, on his larger order (150 contracts), he also 'scales in'. i would assume between 20-30 at a time, to get a decent fill.

My Sunday thought.

Man prefers to believe what he prefers to be true.- Francis Bacon

@Mr.Pip
Would you recommend DOM/Footprintcharts to get the best Entry possible?

Just one Thought:
When Price reaches your "Area of Interest" you zoom in on an "Inside the Bar" Chart and find the best Entry possible with minimum Risk.

Hello Traders, back from Thanksgiving break. I will go for an early flight since I missed flying and then I will be here to trade with you all. Don't forget the live stream on Tuesday and talk to you all soon!!!

https://www.youtube.com/watch?v=DNDK0hxKoj0

USDJPY Analysis

Intraday: NSL

- Price made a NSL an hour after market open

Expectation: Although price made a NSL after market open, i will wait for a little while before taking this trade. Looking for better RR

Longterm: NSL

- Market is overall bearish
- Confluence between immediate and long term

USDJPY M5, expectation NSL

Short at 111.253

SL at 111.467