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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

  • #50,201
  • May 4, 2021 5:15am May 4, 2021 5:15am
How long did it take to be consistently profitable? For Me Feb was +20%, March +%11, April knocked me out with -50%. I was using vwap to identify structures. In the hindsight big mistake. But it has only been about 3 month since I adopted this. I am still working to make this my own.
  • #50,203
  • May 5, 2021 2:48am May 5, 2021 2:48am
Quoting mudT
How long did it take to be consistently profitable? For Me Feb was +20%, March +%11, April knocked me out with -50%. I was using vwap to identify structures. In the hindsight big mistake. But it has only been about 3 month since I adopted this. I am still working to make this my own.
It wasn't until I met this thread before I became consistent. I had an old strategy that involved lots of general knowledge that involved the regular patterns ie. flags, wedges, cup and handle and other strats not involving patterns. When I came here, I began to understand those patterns and strategies and why they are formed. Take the Head and Shoulders pattern for example an old favourite of mine. The right shoulder is the LL or HH of the break of an expectation ready for a swing trade. If it happens at a place of resistance or support (structure) with consolidation beginning (complex corrections) then there is a good chances there is going to be a good trade. When I came here I found Mr Pip was able to explain the rules I knew were already there though I couldn't fully put them together myself.

I mention all this because it is about the learning of the market. Once you learn the market then you stop looking at results in figures but rather at your strategy producing the results. When I understood this I forgot my results page and concentrated on the charts. My account suffered at first but I ignored it. My only aim was to understand what I was doing because I knew it worked. I ended up trading for months on lower risk but I was still in the game though ignoring everything but my strategy. At the end I look back over my results and realised I had made a bucket load of pips but was also not impressed because I still had work to go on my strategy.

The last few months I have being working on a weakness of mine: when the markets fly or nose dive. I have always struggled in these conditions but I have now come up with a solution. I am now in the testing / training of this improvement of my strategy. I identified the problem in my strategy and worked diligently until I could find a solution. It actually took me quite a few months to find an answer but it was always in the back of my head when I was looking at the charts.

What I am trying to say is that every path is different. How long I or someone else manages to create consistent results has no bearing on another's path. Keep working at your strategy, it may seem you are at a brick wall at times but keep working at it until you knock it down.
As the lights go by so too do the shadows move
  • #50,204
  • May 6, 2021 4:28am May 6, 2021 4:28am
I was going to wait to see if my latest trade would complete before posting this but I think it is a point of interest regardless of winning or not.

I have 2 Order Flows marked. The Longer Term OF Dark Blue the Short Term Light Blue. My Expectation is for a further push to the topside (DB). I however traded the Complex Correction in the shorter term OF (LB). I am now long in the larger OF on the 1:1 of the Complex Correction. I will however be covering the position fairly quickly if available due the strong correction to almost 100%.

It looks like the trade is about to fail but I thought it interesting to show a bit more of what I have learnt and how I trade. These types of trades are often very successful though obviously, don't always work out.

The chart is quite busy and may need to be studied to be understood.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd 355.png Size: 109 KB
As the lights go by so too do the shadows move
  • #50,205
  • May 7, 2021 5:43pm May 7, 2021 5:43pm
Quoting Matts Micro
I was going to wait to see if my latest trade would complete before posting this but I think it is a point of interest regardless of winning or not. I have 2 Order Flows marked. The Longer Term OF Dark Blue the Short Term Light Blue. My Expectation is for a further push to the topside (DB). I however traded the Complex Correction in the shorter term OF (LB). I am now long in the larger OF on the 1:1 of the Complex Correction. I will however be covering the position fairly quickly if available due the strong correction to almost 100%. It looks like...
I get why you took short on 1:1 correction. But the long on the larger swing is kind of confusing. I mean the immediate order flow doesn't show any signs of breakdown, wouldn't it be more appropriate to wait for a break in the immediate order flow and then decide whether to trade the larger swing. But that would increase the risk and I am not so sure. How much it would help with the expectancy of the trade.
  • #50,206
  • May 8, 2021 2:02pm May 8, 2021 2:02pm
Quoting Matts Micro
I was going to wait to see if my latest trade would complete before posting this but I think it is a point of interest regardless of winning or not. I have 2 Order Flows marked. The Longer Term OF Dark Blue the Short Term Light Blue. My Expectation is for a further push to the topside (DB). I however traded the Complex Correction in the shorter term OF (LB). I am now long in the larger OF on the 1:1 of the Complex Correction. I will however be covering the position fairly quickly if available due the strong correction to almost 100%. It looks like...
Sorry, for bugging you again and again. You can ignore this comment if you like.

What is your take on the psychological side of the trading. Because currently I am in a drawdown and the thoughts I have during a trade are quite extreme. I am chickening out of trades that are panning out. Leaving profits on the table and by some strange irony the only trades that I follow by my rules end up failing.
  • #50,207
  • May 9, 2021 7:42am May 9, 2021 7:42am
Quoting mudT
{quote} I get why you took short on 1:1 correction. But the long on the larger swing is kind of confusing. I mean the immediate order flow doesn't show any signs of breakdown, wouldn't it be more appropriate to wait for a break in the immediate order flow and then decide whether to trade the larger swing. But that would increase the risk and I am not so sure. How much it would help with the expectancy of the trade.
Quoting mudT
{quote} Sorry, for bugging you again and again. You can ignore this comment if you like. What is your take on the psychological side of the trading. Because currently I am in a drawdown and the thoughts I have during a trade are quite extreme. I am chickening out of trades that are panning out. Leaving profits on the table and by some strange irony the only trades that I follow by my rules end up failing.
Hey mudT,

It's no bother to reply if I can help you at all. You are correct about your thoughts on my trade. The expectancy was lower because there wasn't a slowing of PA. There were a few factors that I was looking at for confluence of the possibility the trade would work. There was the 1:1 which was the main reason for the trade and the overall expectancy was for a HH and was going to be true until it wasn't, there was an excellent rotation candle in an area of interest- the first candle went into an area of structure but then was immediately spat back out with the rotation candle. The trade failed as I mentioned was likely as I watched the progress. The R:R however was worth the risk as the factors for making the trade were good. It was a little deep but if the buyers came in, as I was looking for it could have worked out to be a 4:1+ trade.


On the face of your drawdown problem it sounds like you have too much risk on the table. If your account can't handle a few+ losses in a row then you need to reevaluate your money management. I have gone through periods where the market has reacted badly to my strategy and I have lost multiple trades in a row. I am well familiar with what you are experiencing and I know it's not fun.

I have actually just recently recovered from a mistake I made a couple of weeks ago where I thought I set a SL from my Tick chart (I need to swap charts to make actual trades) but failed to do so. It wasn't until sometime later I realised the trade was still open in quite a big drawdown. It put me behind in my trading plan but I dropped my risk to the appropriate level and continued to trade as if nothing had happened (was fuming a little inside however).

Faith in your trading plan is important. You have to have faith in your plan to stop all those beastly emotions beating you up. I have worked with my newest plan (aside from a latest addition recently) for nearly 12 months. Aside from a few mistakes outside of the plan my account is steadily growing. Those mistakes actually just reinforce my plans stability and creates a further emotional input to keep to it true.

As I mentioned if you and anybody else finds this helpful don't hesitate to ask questions.
As the lights go by so too do the shadows move
  • #50,208
  • May 18, 2021 4:42am May 18, 2021 4:42am
Hi Matts,

I noticed on Mr Pip's videos that he is trading futures on the YM and GBP/USD. What is the difference and why do you think he switches between the two? Mostly he trades the YM. What do you trade and how would I select the futures that I'm supposed to trade.

Thank you

Daubert
  • #50,209
  • May 18, 2021 8:04am May 18, 2021 8:04am
Also, I noticed in the past the Mr Pip was trading with a 233 Tick chart, but in the later videos, he is using 144. Which is the better one?
  • #50,210
  • May 19, 2021 6:01am May 19, 2021 6:01am
Quoting Daubert
Hi Matts, I noticed on Mr Pip's videos that he is trading futures on the YM and GBP/USD. What is the difference and why do you think he switches between the two? Mostly he trades the YM. What do you trade and how would I select the futures that I'm supposed to trade. Thank you Daubert
Yo Daubert,
I think Mr Pip was mainly on YM on most of his videos. There are many factors in choosing an instrument to trade but mainly it comes down to a personal choice, everybody trades a little different even if they are using the same strategy.

Some of the characteristics you may look at when choosing an instrument are:
-How much does the instrument cost ie spread, commissions, minimum costs per point ($1 or $100), volatility (is there 5 pips in 5 minutes or 50?), to think of a few.
-What is your time table? Is it in the Asian, Euro or US session- choose an instrument that is active during your business hours.
-Again with the time table, how long do have to trade per session? depending on period of time depends on what chart TF you may want to trade. If you only have a few hours per week then maybe a longer term chart is advisable but if you spend a few hours per day then a smaller 5 minute or tick chart may be applicable.

After you have established these factors (probably along with many more than I can't think of off the top of my head at the moment), what you are are aiming for is a matter of personal preference. I look into an instrument to see the type of consistency that I am looking for in my type of chart- That the swings are fairly smooth without out too many large candles or getting stuck in consolidation for large periods of time. That is entirely up to you however and is a personal choice to suit your style of trading.

Mr Pip probably changed his tick charts to regulate himself with the market mood. If the 233 tick chart was taking too long to fill candles he may of dialed back to the 144 tick chart so he could make trades in his allotted trading session or for a similar reason. The market changes often and you need to malleable to change with it ie if the session is producing large wide ranged candles with a 40 pip / point range instead of a the usual 20 pips then you have to realise the risks have increased and you may need to change position size if you can't afford to trade in those quantities or maybe change instruments to a slower moving chart...

There are lots of reasons for choosing an instrument but in the end it is all about yourself and what you are comfortable trading.

Hope this helps,
Matt.
As the lights go by so too do the shadows move
  • #50,211
  • May 19, 2021 7:29am May 19, 2021 7:29am
Quoting Matts Micro
{quote} Yo Daubert, I think Mr Pip was mainly on YM on most of his videos. There are many factors in choosing an instrument to trade but mainly it comes down to a personal choice, everybody trades a little different even if they are using the same strategy. Some of the characteristics you may look at when choosing an instrument are: -How much does the instrument cost ie spread, commissions, minimum costs per point ($1 or $100), volatility (is there 5 pips in 5 minutes or 50?), to think of a few. -What is your time table? Is it in the Asian, Euro...
Hi Matts,

Thank you once again for your reply. It really helps a lot.

I think I know most of Mr Pip's strategy and I am now ready to start backtesting. I really like the YM's smoothness, but will have to check when it is active (probably in the US session which will be a problem for me since I'm in South Africa). The GBPUSD seems much better. It is 9 AM here in SA when London opens, which is great. I can trade in the morning if my workload at the workplace allows, but that will only come after I have done a proper job on backtesting and feel confident that I have enough experience.

The other thing that I'm struggling with is the platform. I always used MetaTrader, but MetaTrader feels a little rugged and static. I would like something more smooth like Tradingview or even NinjaTrader. I played around with both but Tradingview does not support Tick charts. Ninjatrader on the other hand is good, but it is also expensive, especially if I convert South African Rands to Dollars. I will probably try my best to do backtesting on Metatrader. Maybe there is an alternative.

What platform are you using? Also what instruments are you trading and are you also using tick charts?

I just want to start with backtesting as soon as possible. Don't see myself working till I die one day. Trading has always been a passion of mine. Currently my goal is to do thorough backtesting until the end of 2021, start trading early in 2022 and resign at the end of 2023. I hope and pray that I will be profitable enough by that time to quit my job and trade full-time.

Anyway, thank you for your response.

Kind regards

Daubert
  • #50,212
  • May 19, 2021 1:18pm May 19, 2021 1:18pm
Quoting Pair-me-up
{quote} I find issue with Mr. Pips boxes. Yes, he uses them in a way that works for him. However, he never explains where his anchor points are based on. The same thing for his rotation candles. Price doesn't just turn around for no valid reason as one candle consuming another. Of course, I don't use rotation candles, because from my experience they lag the true price action and take focus away from the over all picture of price action. However, maybe they are awesome and I just don't understand them. For those boxes.. I use the reginal highlight...
What platform are you using to trade Pair-Me-Up? Metatrader does not have that tool.
  • #50,213
  • May 21, 2021 10:47am May 21, 2021 10:47am
Quoting Daubert
{quote} What platform are you using to trade Pair-Me-Up? Metatrader does not have that tool.
I use Ninjatrader 8. Metatrader has this feature as well. It is under shapes in Metatrader. I actually prefer the regional high light tool in Ninjatrader as it can let me mark multiple order flows all at once, which allows me to filter my entries with more precision. However, drawing those boxes or high lighting an area is pointless, if a trader hasn't been taught about important anchor points. Mr. Pip is great at demonstrating how he used from what he learned from Scott Carney for Harmonics and Lance Beggs for price action.
Attached Image (click to enlarge)
Click to Enlarge Name: MYM 06-21 (233 Tick) 2021_05_21 (11_00_04 PM).png Size: 65 KB
Here is a screen chart of a trade that I took earlier tonight my time. My entry is just a normal entry. I get this types of entries a lot more nowadays. However, I had to step away from my computer for a bit and price went against me some. Anyways... My suggestion is to focus on how price moves with in ranges and how price moves from one range to another range. Price doesn't care about rotation candles. Price cares about key areas of supply and demand. Well that is my opinion as a speculator only. May the odds be in your favor.
Luck has no place in trading. Leave that for the poker table.
  • #50,214
  • May 23, 2021 2:34pm May 23, 2021 2:34pm
Quoting Daubert
{quote} Hi Matts, Thank you once again for your reply. It really helps a lot. I think I know most of Mr Pip's strategy and I am now ready to start backtesting. I really like the YM's smoothness, but will have to check when it is active (probably in the US session which will be a problem for me since I'm in South Africa). The GBPUSD seems much better. It is 9 AM here in SA when London opens, which is great. I can trade in the morning if my workload at the workplace allows, but that will only come after I have done a proper job on backtesting and...
Hey Daubert,

I usually use MT4 on an EA Tick chart but my broker has just changed the name of its symbols (EURUSD to EURUSD.a) with the new regulations that has just been introduced to Aus. I changed platforms to my cTrader account using the Tick charts while I waited for my history charts to rebuild on MT4 with the new charts. I have however stayed on the cTrader account because the charts are smooth and easy to use, there is quite a large amount of slippage and the spreads are wider however on cTrader. I will get back to MT4 but I may use the cTrader to establish my trades. I mainly trade EU but will look at UJ and AU if my trading conditions aren't met on EU.


Good luck with your trading plans just be sure with your testing before quitting your day job
As the lights go by so too do the shadows move
  • #50,215
  • May 24, 2021 6:51am May 24, 2021 6:51am
Quoting Pair-me-up
{quote} I use Ninjatrader 8. Metatrader has this feature as well. It is under shapes in Metatrader. I actually prefer the regional high light tool in Ninjatrader as it can let me mark multiple order flows all at once, which allows me to filter my entries with more precision. However, drawing those boxes or high lighting an area is pointless, if a trader hasn't been taught about important anchor points. Mr. Pip is great at demonstrating how he used from what he learned from Scott Carney for Harmonics and Lance Beggs for price action.{image} Here...
Hey Pair-me-up,

This is exactly my problem. I'm still struggling to find and draw these areas. Matts showed me how he does his, but I'm still a little uncertain, especially now that I started backtesting. Price sometimes just shoots right through my levels and they don't find support or resistance in my zones. I think this is an area for me to focus on as it will determine my profitability in the future. I have a long way to go, but at least I started my journey.

On the rotation, I found it quite useful. Whether price respects it or not, it acts as a filter. I have seen more than once that my trade would have gone against me if I had just taken the trade blindly in an area of support or resistance. At least I fully understand the rotation candle part so that is out of the way. Now just to be able to draw these areas of interest.

Happy trading

Kind regards,

Daubert
  • #50,216
  • May 24, 2021 6:55am May 24, 2021 6:55am
Quoting Matts Micro
{quote} Hey Daubert, I usually use MT4 on an EA Tick chart but my broker has just changed the name of its symbols (EURUSD to EURUSD.a) with the new regulations that has just been introduced to Aus. I changed platforms to my cTrader account using the Tick charts while I waited for my history charts to rebuild on MT4 with the new charts. I have however stayed on the cTrader account because the charts are smooth and easy to use, there is quite a large amount of slippage and the spreads are wider however on cTrader. I will get back to MT4 but I may...
Hi Matts,

It is good to hear that I'm not the only one who uses Matatrader. I just need to get the EA then to make use of the tick chart. Yeah, I've been on the Ctrader website as well. For now I will focus on what I have which is Metatrader. I guess anything would do as long as I have historical data to perform backtesting.

I am a long way from quitting my day job. At least 2.5 years, but I started the journey and I guess that counts for something.

Kind regards

Daubert
  • #50,217
  • May 24, 2021 8:36am May 24, 2021 8:36am
Quoting Daubert
{quote} Hi Matts, It is good to hear that I'm not the only one who uses Matatrader. I just need to get the EA then to make use of the tick chart. Yeah, I've been on the Ctrader website as well. For now I will focus on what I have which is Metatrader. I guess anything would do as long as I have historical data to perform backtesting. I am a long way from quitting my day job. At least 2.5 years, but I started the journey and I guess that counts for something. Kind regards Daubert
2 EA's both go on same 1 minute chart.

EA 1) Allow DLL Imports and "OK". Allow the EA to gather data for about 3-4 minutes (it occasionally has errors if you don't).

EA 2) Allow DLL Imports. On the next tab of EA set the amount of Ticks you want to set (eg 233) and "OK"

Go to MT4 "File" -open offline charts and select the 233 tick chart (or how many ticks you selected). You will have to wait for the chart to build but the history will remain when you close the chart. There wont be any history when the platform is closed.

I would give credit for the EA's but I can't remember where I got them from.
Attached File(s)
File Type: ex4 1- TickChart.LogTickData.ex4   5 KB | 269 downloads
File Type: ex4 2-TickChart.PostTickData v1.1.ex4   8 KB | 296 downloads
As the lights go by so too do the shadows move
  • #50,218
  • May 24, 2021 2:19pm May 24, 2021 2:19pm
Quoting Matts Micro
{quote} 2 EA's both go on same 1 minute chart. EA 1) Allow DLL Imports and "OK". Allow the EA to gather data for about 3-4 minutes (it occasionally has errors if you don't). EA 2) Allow DLL Imports. On the next tab of EA set the amount of Ticks you want to set (eg 233) and "OK" Go to MT4 "File" -open offline charts and select the 233 tick chart (or how many ticks you selected). You will have to wait for the chart to build but the history will remain when you close the chart. There wont be any history when the platform is closed. I would give credit...
Ah Matts, what a gem you are. Thank you so much for this. With these tick chart EAs I don't need anything else. You just solved most of my problems.

Thank you once again.

Happy trading and God bless.

By the way, I started backtesting today. At the end of the day I checked my accuracy. At this stage it is sitting at 62%. There is one small adjustment I need to incorporate. That is to adjust my stop to entry. I'm still deciding at which retracement I need to move my stop to entry. 38.6 does nog give room to the trade. 61.8 seems a good number to adjust stop to entry. What I also noticee is that I leave a lot of pips on the table. I need more discipline with this. Still a lot to learn, but I feel much more confident about my future plans. They don't seem farfetched afterall.
  • #50,219
  • May 24, 2021 2:36pm May 24, 2021 2:36pm
Quoting Daubert
{quote} Hey Pair-me-up, This is exactly my problem. I'm still struggling to find and draw these areas. Matts showed me how he does his, but I'm still a little uncertain, especially now that I started backtesting. Price sometimes just shoots right through my levels and they don't find support or resistance in my zones. I think this is an area for me to focus on as it will determine my profitability in the future. I have a long way to go, but at least I started my journey. On the rotation, I found it quite useful. Whether price respects it or not,...
Why do you struggle with finding these areas and drawing them? As for the rotation candle thingy... if they work for you great. But I see them as a lagging indicator, no different than a moving average. I use limit orders where I think price will kiss and then move away in my favor. I have mentioned this before.... look to the left.. Ask yourself.. Why did price stop at that exact point and turn around? Once you really think about that question, you will find what you need. Or you can watch Mr. Pip's video about how he draws them in areas of violence... as he calls it. Good luck.
Luck has no place in trading. Leave that for the poker table.
  • #50,220
  • May 25, 2021 6:49am May 25, 2021 6:49am
Quoting Daubert
{quote} Hi Matts, It is good to hear that I'm not the only one who uses Matatrader. I just need to get the EA then to make use of the tick chart. Yeah, I've been on the Ctrader website as well. For now I will focus on what I have which is Metatrader. I guess anything would do as long as I have historical data to perform backtesting. I am a long way from quitting my day job. At least 2.5 years, but I started the journey and I guess that counts for something. Kind regards Daubert

Daubert , i am 10years in trading and still not profitable , just a note to you. I know about forex in 19 and currently 29 still not profitable. Maybe i am not so good at trading,but remind you that only 1 percent make it to trade for a living. Much lower than any profession.
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