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Ratios & Harmonics: a Different Way to Trade

  • #1,221
  • Edited 8:04am Jan 12, 2013 7:49am | Edited 8:04am
hi bud...

totally agree about the ratio, pattern and confluence. we have to make an interpretation on it. they're only number , percentage and market movement modelling .... what does it mean in reality ? what does the CD leg mean ?

Assuming no friday yet... look at thursday closing.... she closed above 2012 closing with full bullish candle. the data is already available before friday closing.... buddy...

that means there is demand to close above 2012 closing.......shortly that's impulse wave. Wikipedia said : Impulse (physics), in mechanics, something that changes the momentum of an object; the integral of a force with respect to time


see the past.. once there is impulse...it means risk taker already IN . mostly..they're followed by follower till risk taker come again in other direction ..........

ratio will kill us if we forget the past...

there is no exact in harmonic...there is harmony.... just watch the evolution of harmonic buddy.... from gartley to crab ...


just imho




Quoting Mr. Pip
Let's agree the ratios are just ratios and is the reason to seek out confluence zone adds this as strength to the ratios. The pattern had the confluence I seek and occured in proper form and place. As you can see from the price action around the completion point the market repsected the pattern by an extended period of price consolidation. This was not a case where price blew completely through the PRZ. Sure it's easy now to see the daily closed above the ideal demand zone but that is information that is not available at the time of entry. We also...
not euphoria follower
  • #1,222
  • Jan 12, 2013 9:27am Jan 12, 2013 9:27am
Mr. Pip,

I know you have plans for different videos for us ...though felt to add a suggestion for one more video in the future that might be helpful to many of us.

Regarding the aggressive C trade....you make it clear that it is important to not go against order flow. A video showing examples of pull backs to 61.8 that were much more risky because they were not in harmony with order flow would be great. Or examples of what appears to be aggressive C trades that are actually risky trades. Not sure this is easy for you to point out to us...but if it is, this would help us train our eyes to rule out risky trades that may look like good aggressive C trades.

Thanks again for all of your support and commitment to help us on this thread,

Ed
  • #1,223
  • Jan 12, 2013 11:36am Jan 12, 2013 11:36am
Quoting iqyu5an
hi bud...

totally agree about the ratio, pattern and confluence. we have to make an interpretation on it. they're only number , percentage and market movement modelling .... what does it mean in reality ? what does the CD leg mean ?

Assuming no friday yet... look at thursday closing.... she closed above 2012 closing with full bullish candle. the data is already available before friday closing.... buddy...

that means there is demand to close above 2012 closing.......shortly that's impulse wave. Wikipedia said : [b][i]Impulse (physics),...
Hey my friend I took this trade on Thursday prior to market close but regardless of this, considering a yearly close when there has been many closes even higher to take a trade on a 4H or even 1H time frame seems a bit much and irrelevant to me. This is something I don't even remotely consider. I believe this for me at least falls into the over analyzing or even over complicating a simple process. If we keep looking we can always find a reason to not enter a trade but that is not the business we are in.

These patterns no matter where you take them are pretty accurate. I will simply write this one off as one of those 20-30% that fail. We may both be right and wrong on this one.
If you fail to plan, you plan to fail.
  • #1,224
  • Jan 12, 2013 11:51am Jan 12, 2013 11:51am
Firstly congratulations Mr Pip on an excellent thread. Holy Grail for me is to do something I enjoy doing and earn money in the process. Happy to say with the help of your thread the first part is just about there, just need to work on the second part.

I wanted to ask where one pattern ends and the next begins. I've attached chart of the Aus/Usd 4Hr TF original pattern seemed to form a Gartley, but when D reached higher than the original X I stepped back and noticed an AB=CD form, though the B-C leg seems very deep according to your original pattern rules.

Just wanted to ask your 2 cents worth. Also my BE and TE may not be accurate as I'm not certain of the rules just yet, still reading through the ever growing thread.

yours,

Redpip61
Attached Image (click to enlarge)
Click to Enlarge Name: AusUsd110113.JPG Size: 336 KB
  • #1,225
  • Jan 12, 2013 12:05pm Jan 12, 2013 12:05pm
Quoting Ed777
Mr. Pip,

I know you have plans for different videos for us ...though felt to add a suggestion for one more video in the future that might be helpful to many of us.

Regarding the aggressive C trade....you make it clear that it is important to not go against order flow. A video showing examples of pull backs to 61.8 that were much more risky because they were not in harmony with order flow would be great. Or examples of what appears to be aggressive C trades that are actually risky trades. Not sure this is easy for you to point out to us...but...
Sounds like a plan I will work on one but in the mean time here is the same chart from the video GBPJPY 5M with examples of orderflow and aggressive entries. I think it does a nice job and will help you until I can make the video. Let me know if this is clear enough so I don't make a video that is not needed. Thanks for your question.
Attached Image (click to enlarge)
Click to Enlarge Name: $GBPJPY (5 Min) 1_11_2013.jpg Size: 135 KB
If you fail to plan, you plan to fail.
  • #1,226
  • Jan 12, 2013 12:25pm Jan 12, 2013 12:25pm
Quoting redpip61
Firstly congratulations Mr Pip on an excellent thread. Holy Grail for me is to do something I enjoy doing and earn money in the process. Happy to say with the help of your thread the first part is just about there, just need to work on the second part.

I wanted to ask where one pattern ends and the next begins. I've attached chart of the Aus/Usd 4Hr TF original pattern seemed to form a Gartley, but when D reached higher than the original X I stepped back and noticed an AB=CD form, though the B-C leg seems very deep according to your original...
Great questions, patterns are not always exact and depending on strength and volume driving price, it sometimes moves further then we would like. This I am in this trade we will see on Money how things look my stop was not taken out but it came close. Also, when the pattern is not symetrical things like this can occur as well.

The Gartley which we will get into on Monday has an ABCD pattern in it. In fact all of the advance patterns have some version of an ABCD or an AB=CD.
If you fail to plan, you plan to fail.
  • #1,227
  • Jan 12, 2013 12:53pm Jan 12, 2013 12:53pm
Quoting Mr. Pip
Great questions, patterns are not always exact and depending on strength and volume driving price, it sometimes moves further then we would like. This I am in this trade we will see on Money how things look my stop was not taken out but it came close. Also, when the pattern is not symetrical things like this can occur as well.

The Gartley which we will get into on Monday has an ABCD pattern in it. In fact all of the advance patterns have some version of an ABCD or an AB=CD.
Thanks for your rapid response, much appreciated,

And now having read your previous chart of the GBP/JPY and discription about order flow, the Aus/Usd break above of the X at point D might suggest that the order flow on the Aus/Usd has changed to the upside (if it wasn't this direction already), so would this put the trade down from D under pressure?

Therefore, from your experience, would you say it would come down to the 38.2% (BE/TP or lower) before turning up?

Thanks again.
  • #1,228
  • Jan 12, 2013 12:55pm Jan 12, 2013 12:55pm
The Learning Process--

I do not wish to circumvent Mr. Pip and his great knowledge, but in this thread I am seeing a little too much reliance on that knowledge and less self-discovery than is needed. I would like to offer my two cents, thoughts, on what it takes to ultimately be successful in the market, no matter what strategy, technique, security, and/or timeframe is being traded.

1.) The past is the past--you must hone your craft in the present. It is easy to scroll back a chart and determine which patterns were successful and which where not, but you can only know what you, yourself, would have traded in the present. There is a huge difference between staring at the 'blank right edge' than just scrolling left and right. So, fire up the demo, trade in real time and see what trade you *actually* take not what you *would have* taken. Those are two different beasts.

2.) Nothing beats experience--the failed 'bat trade' of last week epitomizes this fact. Where some forum members took full stop losses, Mr. Pip exited 'gracefully' as he called it. I do not know if this graceful exit was purely objective based on rules or he just *knew* to exit, but I would suggest that some of Mr. Pip's success is built on an intuitive feel of the market based on experience. That is to say, he uses the ratios, the levels, the patterns, but also has a feel based on price action and market experience, and that feel helps him avoid full loses (and also a few full gains). So, while he may trade 90%, 95%, even 99% objectively (aka rule-based), I posit that there is some component of experience and subjectivity in his trading. AND, this is not a bad thing, but it comes with experience trading in *real-time*!

3.) Rules, statistics, and R:R--There is a mathematical relationship between R:R and win% giving the long term expectancy of a system/trader. These values require a sufficient # of trades along with reproducible behavior. I suggest all traders attempt to quantify their historical trades with respect to these measures and see the true expectancy of their abilities. BUT, it requires an objective methodology and enough trades to keep outliers from biasing the results. Read up on expectancy, risk:reward, and know your values. Deviations from your historical values suggest either a change in market conditions or a change in trading abilities/psychology.

Why am I saying this? Because I think this thread, and all similar "trading systems" threads, experience too much Monday Morning Quarterbacking, i.e. praising or cursing trades/outcomes after the fact (a postieri) whereas the only way to prove a system is trading in the present, whether it be live or in demo (a priori). So I will close by saying, watch the videos, look at the posted charts, but do not think that you can mimic the results. Fire up your trading platform, draw Fibs, and trade. Given enough time, you will have sufficient experience to match Mr. Pip's intuitive grasp of the markets, along with enough trades to accurately know if you truly are capable of positive expectancy trading.

I will close by providing my chart of Friday's trading (in demo, but in real-time).

EURUSD 1min
http://i.imgur.com/NDe2q.gif

As you can see, I was actively drawing ABCD patterns as they formed and traded 'Aggressive C' trades.

Trade 1 (orange): Immediate failure, entered C zone and ripped higher. Full loss.
Trade 2 (pink): Different style trade as major swing low (point A) was probably atypical, but I am testing at this stage. Failed. Full loss.
Trade 3 (yellow): **Missed Trade** was focused on pink ABCD and missed this. Currently would be in profit, but not to target. Would've hit Mr. Pip's 61.8% TP.
Trade 4 (blue): Trade still in progress, neared stop loss, but held per my current rule set, now in profit. Would've hit 61.8% TP.
Trade 5 (aqua): Trade in progress, only entered 61.8%, not 78.6%, so slightly different risk:reward than system dictates = something to note

Grey and Red zones are currently in play depending on market action.

Now, it does not matter if a given trade hits stop or target. I am attempting to gather data on how ABCD's form. I am not predicting which will win and which will lose. I do not care. This is the process of learning the craft, gathering data, getting a *feel* for the market. Most importantly--This cannot be done by scrolling back, it must be done in real-time. Just like I missed the yellow trade, had I just been scrolling around, I most certainly would say "oh yes, good trade, I would take that"--BUT I DIDN'T!

So, I hope this provides some insight and motivation to really get trading, observing, and active in real time. By the way, if you cannot trade in realtime, see about a market replay system. Mr. Pip uses NinjaTrader which offers that functionality. I have written my own replay software, but it is a hack and not really sharable. Get engaged, get active, learn, experience, prosper. Good luck all. Off for some sports and beer, enjoy your weekend!
  • #1,229
  • Jan 12, 2013 1:08pm Jan 12, 2013 1:08pm
Quoting redpip61
Thanks for your rapid response, much appreciated,

And now having read your previous chart of the GBP/JPY and discription about order flow, the Aus/Usd break above of the X at point D might suggest that the order flow on the Aus/Usd has changed to the upside (if it wasn't this direction already), so would this put the trade down from D under pressure?

Therefore, from your experience, would you say it would come down to the 38.2% (BE/TP or lower) before turning up?

Thanks again.
It is a possibility this is why we get to BE at the 38 and profit at 61
If you fail to plan, you plan to fail.
  • #1,230
  • Jan 12, 2013 1:11pm Jan 12, 2013 1:11pm
Mr pip,

Are there certain reversal patterns that you look for in the PRZ before entering? Or do you just enter?
For example, heres GBJPY on the 1 minute timeframe. It spiked down and had long wicks up, then it went up and had one bar which had a long wick down before continuing up.

After all, it has to reverse the previous down momentum before going up, so some reversal pattern should show up.

Attached Image (click to enlarge)
Click to Enlarge Name: gbjpy_1minute_reversal.jpg Size: 155 KB
  • #1,231
  • Jan 12, 2013 2:00pm Jan 12, 2013 2:00pm
Well said broncocap! Much is shared here but self reliance should be the ultimate goal for continued success.

This type of trading provides clear roe and r/r rules, which is fundamental. I've learned much from this group and Mr. Pip of course.

Thanks and have a great weekend.
"I don't always trade markets, but when I do, I prefer harmonics."
  • #1,232
  • Jan 12, 2013 2:52pm Jan 12, 2013 2:52pm
Hi Mr Pip,

Thanks for labelled diagram of GBPJPY 5 Min regarding order flow and going against order flow. It was very helpful and is much clearer

As i study more and continue to take live and demo trades on the smaller time frame....I continue to be amazed with the profound geometry of it all.......as the patterns within patterns within patterns begin to jump out at you I feel in awe every time the length of AB actually equalls CD or the level of accuracy of the golden mean with forex market. I live in the remote mountains and love nature and i now feel like nature is showing up in the charts Sorry if this is sounding to cosmic....but i just continue to me amazed and surprised with it all.....and pleased to have finally let go of all my attachments to indicators

Thanks again for everything,

Ed
  • #1,233
  • Edited 7:58pm Jan 12, 2013 7:46pm | Edited 7:58pm
hi bud..

here am not looking right and wrong... that's not the matter. to be honest.


my point is... even the ratio tell us to do something.... we have to be carefull. the ratio and the confluence is based on how we draw X,A,B,C and D in certain time frame. we have to see the real data and real situation...that's the pure candle . simply by closing all harmonic and find s/r naked. then combining/overlapping it by our harmonic tools. even we got prz.... only jump after there is clear and real rejection around real s/r in "the current time" . it will be helpfull and will help us in filtering the noise...

to be honest...... in my past...... i did what u did.......jump when "the ratio" and other data tell us to do something and forget to interpret what CD means.

that's the reason why i wrote this my friend.

all and all ... u did great !!!!!! teach the harmonic with very simple way.........



Quoting Mr. Pip
Hey my friend I took this trade on Thursday prior to market close but regardless of this, considering a yearly close when there has been many closes even higher to take a trade on a 4H or even 1H time frame seems a bit much and irrelevant to me. This is something I don't even remotely consider. I believe this for me at least falls into the over analyzing or even over complicating a simple process. If we keep looking we can always find a reason to not enter a trade but that is not the business we are in.

These patterns no matter where you take...
not euphoria follower
  • #1,234
  • Jan 13, 2013 7:03am Jan 13, 2013 7:03am
Quoting mduke04
EURUSD M5, Aggressive C Buy

Order Flow up as per main swing. Pull back to 38.2, which shows strong uptrend indication.

Entered slightly above 78.6 retrace of AB swing. Target is 127.2 AB expansion.
nice call.
now ab=cd complete
http://www.forexfactory.com/attachme...3&d=1357935652
  • #1,235
  • Jan 13, 2013 9:38am Jan 13, 2013 9:38am
2 x ABCD - This must work.
Attached Image (click to enlarge)
Click to Enlarge Name: ucad.png Size: 40 KB
  • #1,236
  • Jan 13, 2013 10:44am Jan 13, 2013 10:44am
Ut-oh, looks like our cover is blown -- (http://www.dailyfx.com/forex/education/trading_tips/post_of_the_day/2013/01/11/Learn_Forex_Trading_the_ABCD_Pattern.html)

Is it the beginning or the end? Time will tell. Most likely, traders will try identifying ABCD, some will succeed, some will fail. More interesting is the ForexFactory commentary on the article. Wild

(http://www.forexfactory.com/news.php?do=news&id=404658)

Anyways, enjoy the read, I am certainly pressing on with ABCD. Good luck to all those who do!
  • #1,237
  • Jan 13, 2013 12:20pm Jan 13, 2013 12:20pm
Thank you for those readings and I must agree with you about your previous post of the Learning Process. I think that when one masters the pattern identifications, with their respective fibo ratios and rules of engagement, the next step should be to see the big picture of that area of confluence. In the first posts and during the whole thread Mr. Pip has been talking about it: double top/bottoms, support/ressistance, price action, trend flow, fibo ratio confluence, etc. So, it should be as you say. Let's open up our demo accounts and start gaining experience, it's the only way to go.

Quoting BroncoCap
Ut-oh, looks like our cover is blown -- http://www.dailyfx.com/forex/education/trading_tips/post_of_the_day/2013/01/11/Learn_Forex_Trading_the_ABCD_Pattern.html

Is it the beginning or the end? Time will tell. Most likely, traders will try identifying ABCD, some will succeed, some will fail. More interesting is the ForexFactory commentary on the article. Wild

http://www.forexfactory.com/news.php?do=news&id=404658

Anyways, enjoy the read, I am certainly pressing on with ABCD. Good luck to all those who do!
Best time to plant a tree was 20 years ago, second best is now
  • #1,238
  • Jan 13, 2013 12:24pm Jan 13, 2013 12:24pm
Mr. Pip,

Thank you so much for that last video about Swing ID. It all becomes so clear now! Sometimes we don't pay attention to those concepts of "high and bottom relevant to the current price", and "previous leg", "correction", etc... I mean, they've been there the whole time but we are in a very sueño profundo.
Best time to plant a tree was 20 years ago, second best is now
  • #1,239
  • Jan 13, 2013 7:25pm Jan 13, 2013 7:25pm
Quoting mduke04
EURUSD M5, Aggressive C Buy

Order Flow up as per main swing. Pull back to 38.2, which shows strong uptrend indication.

Entered slightly above 78.6 retrace of AB swing. Target is 127.2 AB expansion.
Update: TP hit.

Next potential trade is on H4, previously mentioned here > (http://www.forexfactory.com/showthread.php?p=6358468#post6358468)
Attached Image (click to enlarge)
Click to Enlarge Name: eurusdm15_abcd.gif Size: 17 KB
"I don't always trade markets, but when I do, I prefer harmonics."
  • #1,240
  • Jan 13, 2013 7:45pm Jan 13, 2013 7:45pm
Quoting BroncoCap
The Learning Process--

I do not wish to circumvent Mr. Pip and his great knowledge, but in this thread I am seeing a little too much reliance on that knowledge and less self-discovery than is needed. I would like to offer my two cents, thoughts, on what it takes to ultimately be successful in the market, no matter what strategy, technique, security, and/or timeframe is being traded.

1.) The past is the past--you must hone your craft in the present. It is easy to scroll back a chart and determine which patterns were successful and which...

Couldn't aggree with you more. The only way to make it is to get in there and take whats your. Get dirty, get in the game. I can teach you what I know but if yo can't apply it you wasted your time and time is something you can't get back. Looking forward to some really great trades and posts.
If you fail to plan, you plan to fail.
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