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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

  • #36,101
  • Jan 27, 2018 2:17pm Jan 27, 2018 2:17pm
Quoting PeterT
{quote} Fantastic motivating words! I started the year with a firm belief that for a lot of thread members including myself, this will be the year of the turnaround. And for those who just started, if not this year, then certainly the next! Your selflessness and your drive to keep supporting this thread and make videos amaze me every time, really. Infinite gratitude! After this motvational explosion I can't wait until Monday. No wait, I have that feeling every weekend
"After this motvational explosion I can't wait until Monday. No wait, I have that feeling every weekend"

Life of a motivated trader, me too man, just can't wait until it is Monday, can't imagine people hating Mondays, they are doing something wrong with their life..
"Luck is when opportunity meets preparation"
  • #36,102
  • Jan 27, 2018 2:33pm Jan 27, 2018 2:33pm
Quoting Mr. Pip
{quote} Risk/reward my friend is the secret.
I just realise that it's so true! You can have a great system but if you don't have a good risk/reward then you probably don't make much money. I took trades where my risk/reward was arround 1:1 but that's far more difficult to recover from when you have a losing streak. In fact, the more you think about what you have achieved the more respect to you Sir.

You have the 3 main ingredients for a succesformula: 1/ a system with a big edge
2/ great risk/reward entries
3/ a very good trademanagement formula (when goes SL to BE, when start trailing etc.)

Thanks for opening my eyes (again) I don't gonna take entries when the R:R is <1:1.5. I think my problems are solved now
  • #36,103
  • Edited 8:05pm Jan 27, 2018 5:19pm | Edited 8:05pm
Quoting Nikster
{quote} You have the 3 main ingredients for a succesformula: 1/ a system with a big edge 2/ great risk/reward entries 3/ a very good trademanagement formula (when goes SL to BE, when start trailing etc.) Thanks for opening my eyes (again) I don't gonna take entries when the R:R is <1:1.5. I think my problems are solved now
Would I be right in saying that a R:R of 1:1.5 or greater basically means not taking an entry unless the entry candle on retracement is beyond the 50% fib (from 50%-78.6%)?

I just practiced this for a week on market replay from Feb last year and there seems to be merit to it. It certainly forces me to be more patient which is not a bad thing. I always want to jump in on a pretty candle without waiting for price to get completely to my AOI. This seems to help me avoid that.
  • #36,104
  • Jan 27, 2018 9:14pm Jan 27, 2018 9:14pm
Quoting AzizLight
{quote} Would I be right in saying that a R:R of 1:1.5 or greater basically means not taking an entry unless the entry candle on retracement is beyond the 50% fib (from 50%-78.6%)? I just practiced this for a week on market replay from Feb last year and there seems to be merit to it. It certainly forces me to be more patient which is not a bad thing. I always want to jump in on a pretty candle without waiting for price to get completely to my AOI. This seems to help me avoid that.
You would be right to an extent. It depends on your profit target. What I mean is if you are shooting for the 127 extension at the least, you have more room for your R:R.

I personally shoot for the test of structure as minimum profit target (NSH or NSL you are working off of). I will never take a trade above the 50% (38 or 23) retracement. If you consider that it has to give a rotation to signal entry, you are already well above the 50 by the time that happens. I only take a 50 entry if I have some serious confluence of structure or harmonic completion. Much safer to wait for 61 or 78. The R:R is superior. If you realize it is a percentage, an entry after rotation from 78.6 would likely give you about a 70% or so entry so 30% risk compared to 70% reward at the test of structure. Just an example. Doesn't always line up like this and your stop will likely be a few points lower than the 100%, but you get the idea.

My results have dramatically improved waiting for the 61 or 78. It has helped with impatience too.
  • #36,105
  • Jan 28, 2018 5:10am Jan 28, 2018 5:10am
Wow man, really great results! Currently up arpund 2,5-3% this week. Going to focus on one trading instrument in stead of switching all the time. This seems to be my problem. Whenever I encounter somes losses I want to switch dona different pair instead of keep trading that one. Really great to see a fellow forextrader get such results even in january. Most traders have some bad results in january, keep it going and post charts so we can all learn from the next Mr Pip.


Quoting PeterT
Gonna call it a week. The Friday evening trades are usually losers so not gonna look for one today. Total net profit for the week +73 euro, +7.3% account. Profit curve still going up. +23.6% for the month so far. Trading stats not optimal yet. I can feel that it is not all good yet. But at least going in the right direction I think. I'm gonna put in some time to learn how to interpret the stats and improve my trading. Have a nice weekend! {image}
"Luck is when opportunity meets preparation"
  • #36,106
  • Jan 28, 2018 5:12am Jan 28, 2018 5:12am
Quoting AzizLight
{quote} Would I be right in saying that a R:R of 1:1.5 or greater basically means not taking an entry unless the entry candle on retracement is beyond the 50% fib (from 50%-78.6%)? I just practiced this for a week on market replay from Feb last year and there seems to be merit to it. It certainly forces me to be more patient which is not a bad thing. I always want to jump in on a pretty candle without waiting for price to get completely to my AOI. This seems to help me avoid that.
Yes that’s what I meant. If you review Damians trades you’ll see that he always had a risk/reward bigger then 1:1.5.

I knew that already but didn’t pay attention to it since I thought that trading the expectation alone will be profitable over the long term. But it makes a big difference if your R:R is low. Like he said “ risk/reward is the secret”
  • #36,107
  • Jan 28, 2018 5:13am Jan 28, 2018 5:13am
So tou are taking profit at previous low / high? Doesn’t that give some bad R:R sometimes? I don’t know but maybe something to backtest, or take partial profit when touch of previous hogh / low . Maybe interesting to backtest! Good idea!
Quoting csternfx
{quote} You would be right to an extent. It depends on your profit target. What I mean is if you are shooting for the 127 extension at the least, you have more room for your R:R. I personally shoot for the test of structure as minimum profit target (NSH or NSL you
are working off of). I will never take a trade above the 50% (38 or 23) retracement. If you consider that it has to give a rotation to signal entry, you are already well above the 50 by the time that happens. I only take a 50 entry if I have some serious confluence of structure or harmonic...
"Luck is when opportunity meets preparation"
  • #36,108
  • Jan 28, 2018 5:37am Jan 28, 2018 5:37am
Quoting Sheeep44
Wow man, really great results! Currently up arpund 2,5-3% this week. Going to focus on one trading instrument in stead of switching all the time. This seems to be my problem. Whenever I encounter somes losses I want to switch dona different pair instead of keep trading that one. Really great to see a fellow forextrader get such results even in january. Most traders have some bad results in january, keep it going and post charts so we can all learn from the next Mr Pip. ...
Thanks man, and congrats with your week result, it's positive!
I don't even deserve to be mentioned in the same sentence as Mr. Pip but thanks for your enthousiasm, although it is just a liiiittle bit exaggerated
  • #36,109
  • Edited 9:22am Jan 28, 2018 8:04am | Edited 9:22am
Quoting Sheeep44
Wow man, really great results! Currently up arpund 2,5-3% this week. Going to focus on one trading instrument in stead of switching all the time. This seems to be my problem. Whenever I encounter somes losses I want to switch dona different pair instead of keep trading that one. Really great to see a fellow forextrader get such results even in january. Most traders have some bad results in january, keep it going and post charts so we can all learn from the next Mr Pip. ...
I do not see a problem of switching to a different Instrument, if the PA is more appealing to you on a given day (I do it often and it works well; not because of losses).

I initially posted my results of the week, but since it has created some general dicusssions in the past. I removed it. However, it was a perfect week.
  • #36,110
  • Jan 28, 2018 9:34am Jan 28, 2018 9:34am
Quoting Slovaktrader
{quote} I am just trying to understand system and make some trades, but there is still a lot of context, which I am missing. Would you be so kind and paint me to my picture, how would you trade it? or why you would not trade it at all? thank you in advance.
Hi Slovaktrader,

It is a bit hard to draw in paint and I could not add fib ratios. I do not trade currencies, so I do not have this chart.
I said this initially only, because of the fact that the last leg before your entry showed a strong bull move (When entering short, I would like to see more weakness in the current up leg => ideally bulls which have substantial troubles to reach the short term 1:1 up).

On the leg before, you had some reaction of bears (but not really strong) and for me it looked more that price wanted to realign with long term expectation of NSH.

Would be nice, if you could give an update on how that trade (AUDUSD M5) ended? (Maybe I saw it wrong)
  • #36,111
  • Jan 28, 2018 10:37am Jan 28, 2018 10:37am
I'm trying to find visual representations of rotation candles. Does anyone have or know where I can find a screen capture or a simple graphic showing what to look for?

I have a decent idea but think maybe I'm missing out on a few details.

Thanks!
  • #36,112
  • Jan 28, 2018 10:44am Jan 28, 2018 10:44am
Quoting AzizLight
I'm trying to find visual representations of rotation candles. Does anyone have or know where I can find a screen capture or a simple graphic showing what to look for? I have a decent idea but think maybe I'm missing out on a few details. Thanks!
Hello, watch the bar by bar video of mr.Pip. You’ll then know what to look for plus you also know what a decisioncandle is
  • #36,113
  • Jan 28, 2018 11:01am Jan 28, 2018 11:01am
Quoting evocpr19
{quote} Hi Slovaktrader, It is a bit hard to draw in paint and I could not add fib ratios. I do not trade currencies, so I do not have this chart. I said this initially only, because of the fact that the last leg before your entry showed a strong bull move (When entering short, I would like to see more weakness in the current up leg => ideally bulls which have substantial troubles to reach the short term 1:1 up). On the leg before, you had some reaction of bears (but not really strong) and for me it looked more that price wanted to realign with...
Update:
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD.png Size: 28 KB
  • #36,114
  • Jan 28, 2018 11:14am Jan 28, 2018 11:14am
Quoting Nikster
{quote} Hello, watch the bar by bar video of mr.Pip. You’ll then know what to look for plus you also know what a decisioncandle is
Thanks, Nikster.

I'll check it out again and take some notes. I am admittedly a lazy bones and didn't know if there was already something out there in the attachments I didn't know about.

Hope everyone is having a good weekend! The flu is going through our house but I've managed to dodge it so far.
  • #36,115
  • Jan 28, 2018 11:19am Jan 28, 2018 11:19am
Quoting crixus
{quote} Update: {image}
Thank you
  • #36,116
  • Jan 28, 2018 1:53pm Jan 28, 2018 1:53pm
Quoting AzizLight
{quote} Thanks, Nikster. I'll check it out again and take some notes. I am admittedly a lazy bones and didn't know if there was already something out there in the attachments I didn't know about. Hope everyone is having a good weekend! The flu is going through our house but I've managed to dodge it so far.
There is also a Mr. P video called how to judge market rotations.
Wow! I've got some experience to gain.
  • #36,117
  • Jan 28, 2018 2:47pm Jan 28, 2018 2:47pm
Quoting Lawnman
{quote} There is also a Mr. P video called how to judge market rotations.
Found it! Thanks!
  • #36,118
  • Jan 28, 2018 6:27pm Jan 28, 2018 6:27pm
Quoting Sheeep44
So tou are taking profit at previous low / high? Doesn’t that give some bad R:R sometimes? I don’t know but maybe something to backtest, or take partial profit when touch of previous hogh / low . Maybe interesting to backtest! Good idea! {quote}
My plan is to take partial profit at structure when I move up to 2 contracts or more on YM. Already been backtesting it. My results are quite nice. So right now I'm implementing half of my future strategy so to speak.

If I only take trades at the 61.8 or 78.6 I'm almost always over 1:1 on R:R. Only time I wouldn't be is if the rotation took it over the 50 line for my entry. Also with a high win/loss ratio, the R:R is ok being only at 1:1.

However, I do need to be more patient to see if structure breaks and the 127 is achieved. Sadly most of my trades are not simply mechanical. It depends on a lot of factors. Is the rotation entry to structure only 20 points or is it 50? If its only 20, I might be more inclined to take it at structure since any pullback may take me out easier since I protect at 20. If its 50 til structure I can trail a little as well. I'm not willing to let it test structure at 50 points and go back to BE or a loss. Maybe if I move to a longer term I would be.
  • #36,119
  • Jan 29, 2018 12:25am Jan 29, 2018 12:25am
It was friday. I was afraid to have open position during weekend. So at the moment It was possible, I moved SL to BE. As you can see, than it went against me, so I was lucky, that I do not lost.

Quoting evocpr19
{quote} Hi Slovaktrader, It is a bit hard to draw in paint and I could not add fib ratios. I do not trade currencies, so I do not have this chart. I said this initially only, because of the fact that the last leg before your entry showed a strong bull move (When entering short, I would like to see more weakness in the current up leg => ideally bulls which have substantial troubles to reach the short term 1:1 up). On the leg before, you had some reaction of bears (but not really strong) and for me it looked more that price wanted to realign with...
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD2612018_result.JPG Size: 199 KB
  • #36,120
  • Jan 29, 2018 5:09am Jan 29, 2018 5:09am
GBPUSD trade

I had to close it manually but nice to see it reached the 127 extension
Attached Image (click to enlarge)
Click to Enlarge Name: Image1.png Size: 72 KB
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