Quad Candle System

GN

Harmonic on the M5 is trying to complete.

Not all harmonics reach their expected target so we need to know how to handle the situation when a failure unfolds.

Masterrmind..............

EU

Closed out for a winner.

Target not hit but pips in the bag.

1/1.

Masterrmind...............

EU

Attention to news events is a critical requirement.

Notice the candle where I closed out, shortly after a major move up the chart occurred !

Lets call this 'attention to detail'.

Masterrmind...............

Time for the weekend now so that's all from me.

More harmonic trades from my real account will follow from next Monday.

As soon as I have covered the basics I will ramp up the volume so the gains are far more appreciable.

Perhaps a few other traders might like to trade alongside, I am sure there will be an abundance of pips on offer.

Masterrmind...............

Follow up on the EU trade

MT5 platform shows the news events on the chart so its very easy to keep in sync with the times when volatility is expected to change dramatically.

The time I closed out of the trade can be seen along the lower section in the screenshot which was simply 5 minutes prior.

Trading the M5 TF simply meant closing the trade out one bar before news release.

Masterrmind...............

Harmonic Basics

ABCD Pattern

Valid Fib ratios for pullbacks are between the 38.2 and 88.6 ratios.

Masterrmind..............

Shallow versus Deep pullbacks

The 1 to 1 simply means that the leg CD should complete at the same number of pips as that of leg AB.

It does not mean that the trade outcome is 1 to 1.

The RR will depend on where you can place your SL in a reasonable and realistic location with an expected target at the 1 to 1 completion area.

Obviously the smaller the stop, assuming a fixed target area then the higher the RR would be, nevertheless, making stops too tight runs the risk of being knocked out of the trade far too early.

It then becomes a business of managing your risk as well as your stop placement such that the trade has a reasonably good chance of success.

Masterrmind............

Failed Examples

Options for handling failures:

1. Use trailing stop;
2. Close for a few pips;
3. Focus on longer term averages by seeking to hit close to the assumed target zone having applied good RM;
4. Apply a W/L logic such as:
i) increase volume after a win, minimize volume after a loss,
ii) after X_losses stp trading for that day,
iii) after X_percent loss stop trading for that day,
iv) in a winning streak stop after predetermined %gain for the day,
v) many other examples can be given here.

Next week I will show some live examples where I use specific volumes to trade starting low and increasing as win rate continues.
When the win streak stops then I will reduce trades by a specific volume.

Traders choice !

Masterrmind..........

The objective is always to keep a relatively high strike rate.

Although an average RR>1 over the longer term will go a long way towards achieving success in trading.

How the trader handles the losing streaks will be a critical moment.

My approach to these shorter term harmonic trades being applied whilst the longer term cycles play out in the background is to have a simple plan in place prior to commencement.

The plan for harmonic short term trading will be something such as the following:

1. Max risk per trade = $100 (you all know where this came from ... right ?);
2. Max volume per trade = 0.45 lots (likewise for this value);
3. If volume >= 0.1 lots and losses in a row >=3 STOP TRADING for that day.

Point 3 clearly offers me some flexibility, if I have 3 losses in a row with volumes >= 0.1 lots then I can still trade but I would have to use lower volumes eg 0.09 or less.

Some traders might need to make the rules far more rigid (no flexibility) depending on thier own trading abilities and psychological outlook.

Next, I'll post some examples of the sorts of trade outcomes that are possible based on my own trading account values.

Masterrmind.............

Examples of Trading Volumes and Chart Setups

Symbol: EURUSD ($10/pip @ Vol of 1 Lot)
TF: M5
Sessions: London & NY
Max Risk = $100
Max Vol. = 0.45 Lots (45K)

Examples:

Assumption: Trading intraday on the EURUSD symbol so an expected average SL would range from 15 pips to 35 pips depending on actual setup.

Trading Range Volume could be [0.1; 0.2; 0.3; 0.4].
Trdae 1 @ 0.2 lots (if winner Trade 2 @ 0.3; if winner Trade 3 @ 0.4; then fix volume based on ARPA eg max out at 0.45 lots and not more).

0.10 Lots ($1.00/pip)
SL: $100/$1.00/pip = 100 pips

0.20 Lots ($2.00/pip)
SL: $100/$2.00/pip = 50 pips

0.30 Lots ($3.00/pip)
SL: $100/$3.00/pip = 33 pips

0.40 Lots ($4.00/pip)
SL: $100/$4.00/pip = 25 pips

0.45 Lots ($4.50/pip)
SL: $100/$4.50/pip = 22.2 pips

What these numbers suggest on a chart:

There is no necessity to engage in using max available risk in this case its about 2.4% of Equity (2.4/100*$5040 = $120.96).

I have simply rounded it down to $100 to ensure I remain within the allowable risk profile (ARPA).

Also just because a given setup assumes a SL of lets say 25 pips this does not suggest that 0.4 lots should be traded.
In fact any volume up to 0.4 lots could be traded.

My view on this will be to assess each setup on its own merits and if I think the setup ranks as a higher probability setup then I may apply a higher volume up to the allowable maximum.

Further, if the trade happens to be the first one for the day then a lower volume will be applied.

The reasoning behind this is to allow for a higher volume reward type trade to be applied as a result of a previous successful trade.
On the other hand a losing trade would result on a lower volume being traded on the next entry.

If (Trade 1 @ 0.2 Lots ==> Winner)
Trade 2 = 0.3 Lots (reward volume)

If (Trade 1 @ 0.2 Lots ==> Loser)
Trade 2 = 0.1 Lots (penalty volume)

This also suggests that starting Trade 1 at the mid point volume is logical.

Here is a near 'perfect' setup on the EU symbol.

And a not so perfect setup on the GJ symbol (although certainly not bad !)

Price pulls back into the 78.6/88.6 Fib zone with little follow through and then a nice move down to complete a perfect 1to1 harmonic move.

SL on this was a mere 3 pips with 10 pips on offer.

This type of setup, using the 78.6/88.6 zone is my favorite when trading harmonic shorter term setups !

The reason should be obvious, a deeper pullback suggests that a smaller stop may be applied and therefore a higher RR for a given 1to1 H target.

Based on the above setups where stops range between 3 to lets say 10 pips, even using a 10 pip stop at max assigned lots (here its 0.45 lots) the risk applied is less than half since we know we have about 22 pips at 0.45 Lots on hand.

Therefore, an entry on another symbol might be possible ?!

Some considerations are:

1. Speed of Symbol (slow, medium or fast mover);
2. TF being traded (higher TF might suggest a higher SL);
3. Session being traded (or within sessions or overlapping sessions eg LO/NY or end of the day NY close or start of day Sydney Open etc);
4. News proximity;
5. Spread issues.

Good trading,

Masterrmind..............

HI Mastermind , I love your system i would like to start this week ,but i am like a few pages ,to a quarter of the thread,and also reading through the MTTTM thread so much information ,i favored the QCS,for my account is half the DL1.Thanks for sharing. Totustuus

Pending Order Technique

Another important technique that can be applied in harmonics or trading Fibonacci ratios in general is the pending order technique.

Short Entry:
Wait for price to tag the 88.6 Fib and immediately place a Sell Stop order at the 78.6 Fib price level.

If price keeps racing on up the chart it doesn't matter since your order has not been triggered.

Long Entry:
Wait for price to tag the 88.6 Fib and immediately place a Buy Stop order at the 78.6 Fib price level.

If price keeps racing down the chart it doesn't matter since your order has not been triggered.

Important:

What you will observe on most occasions is that price drifts down just below the 78.6 Fib level not actuallytagging the 88.6 Fib so an alternative approach is to place the pending order as soon as the trading plaform allows based on your brokers allowable distance for pending orders.

Otherwise for the keen traders simply enter at market and monitor the entry with interest.

There is nothing difficult to understand in harmonic trading.

It is actually very simple to understand and yet it can be highly effective.

Make sure you keep in tune with important news release times so you don't get an 'unexpected' dose of extra volatility that spoils your trades' outcome.

Masterrmind.............

Welcome totustuus.

The basis of the QCS methodology is acyaully very simple but as always there are many factors to be aware of such that a 'better'outcome occurs over the longer term.

QCS is for D1 primarily.

The harmonic section I am posting now is simply an additional technique that traders can use to generate additional gains whilst their longer term Quad Cycles play out in the background.

Both techniques (QCS and Harmonics) can be traded completely independently from eachother and both techniques can be highly profitable given a well versed trader who has put in the hard yards on the charts.

I hope I see a TE from you in the near future and I wish you all the very best in your trading.

Good trading,

Masterrmind.............

Hi Masterrmind,
I like to start to trade with the methodology and knowledge which has been taught by you! I like to report any progress here and start to trade the Forex the right way!

Cheers,
Jeff

EURUSD [M5; Harmonic]

Very nice 1to1 harmonic completed.

Now we expect to see a 61.8 retracement of the whole move up.

This does not mean that price will pull into the 61.8 Fib area only that we expect it too.

So the idea here is to wait and observe PA.

If price pushes off hard to the upside then the market might be ready for higher levels in which case our bias should also be to the long side.

Note: Other majors such as AUDUSD, GBPUSD, USDJPY can also be analyzed for potential trades.

Masterrmind.............

Opening up a trade in the EURUSD....It will go to the downside

Cheers.....Jeff

Looking at the astrological levels and where the New York session opened up on the Pair EURUSD we do see a down-trend...past the MO/UR SQuare

Cheers..........Jeff

GBPUSD [M5: Harmonic]

May look for an entry into GU but risky at this stage.

Trade 1 will be 0.2 lots.

Masterrmind............

This is reason enough why it was viewed as risky !

EU

GU

Masterrmind.............

EU

Price breaks down below the 1to1 harmonic where might price go ?

Harmonics can fail ok but look at the level price reversed off on this momentum rush to the downside.

Not bad... right !

Recall I generally only use the 127.2 and 161.8 extentions.

Masterrmind..............