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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

  • #1,341
  • Jan 14, 2013 8:59pm Jan 14, 2013 8:59pm
Quoting BroncoCap
It is counter-trend, so be aggressive with your position (if that is your inclination). Moving to break-even at 38.2% and exit at 61.8% would be Mr. Pip's suggestion (I would surmise).

Happy trading!
If you fail to plan, you plan to fail.
  • #1,342
  • Jan 14, 2013 9:19pm Jan 14, 2013 9:19pm
Quoting Starry
heres an example where it breaks a prz zone, then pierces the 88.6 line (change of orderflow), then it retests the broken prz zone and then goes up.

edit: woops i think the prz is wrong. it didnt quite retrace to 0.382 so it would be a longer bc projection, or just use an equivalent AB = CD. oh well

Attachment
Build that case find confluence. Price will guide you.
Attached Image (click to enlarge)
Click to Enlarge Name: $GBPJPY (5 Min) 1_14_2013.jpg Size: 87 KB
If you fail to plan, you plan to fail.
  • #1,343
  • Jan 14, 2013 9:21pm Jan 14, 2013 9:21pm
Greetings Mr. Pip,

Excellent thread. Any plans on adding the Cypher and Shark patterns to your most handy "Advance Pattern Reference Guide" anytime in the near future? That would about cover Carney's legitimate patterns, wouldn't it?

Thx,

Moviemkr
  • #1,344
  • Jan 14, 2013 9:22pm Jan 14, 2013 9:22pm
Quoting LuisPrinc
Hey Mr. Pip !
I think I absorbed a lot of information. But today I also later found out my weakness in recognizing the main swing that I will show you on the chart below.
Anyway Thanks for doing this really Dreaming of my dream job right now for the rest of my life !

Your yellow line is the main swing. Keep at it and your dream will come true!
If you fail to plan, you plan to fail.
  • #1,345
  • Jan 14, 2013 9:23pm Jan 14, 2013 9:23pm
Quoting Starry
For the pink area, its interesting to note that the price reversed in the PRZ zone at the exact completion of the smaller AB = CD pattern.

Correct me if im wrong, but can't we tighten the PRZ zone by figuring out where smaller AB = CD patterns complete in the PRZ, or even slightly outside?
This is called confluence and it's our greatest weapon.
If you fail to plan, you plan to fail.
  • #1,346
  • Jan 14, 2013 9:26pm Jan 14, 2013 9:26pm
Quoting Mr. Pip
Excellent, which money management formula did you use?
Currently just running 1% of account balance (as established on Sunday/Monday).

My stop is always 1 pip above/below the A point, therefore I can exactly calculate the loss prior to entering the trade (save any slippage). The formula is simple = (1-.618AB)+(1-.786AB)+1pip is the max loss. If you do the formula, you will see that stop is .596AB+1.

After figuring that, I can quickly determine how many units to trade based on 1% value.

Also, you can calculate possible reward as it is .618AB+.786AB (assuming both fill). That gives 1.404AB potential reward. All things equal, that nets 2.35:1 reward to risk, a wonderful value! Even if the 78.6% does not fill, the risk reward is 1:1, not great, but any win% over 50% will prove profitable over the long run. And that is my goal, 50% wins. 60-70% would be ridiculous, but I do not want to be too optimistic at this point.

I still am collecting data to see if the 78.6% is necessary, also seeing if I should stick to point B as my target or focus on an expansion to 1.27. 1.618 expansion would be great, but I think the win% would drop (unless I implemented moving the stop--which is just more variables to track).

Feel free to ask questions, I have the money management and systems development down pat--I just need to build consistency and NOT jump systems, I am horrible at that.

Cheers!
  • #1,347
  • Jan 14, 2013 9:30pm Jan 14, 2013 9:30pm
Quoting BroncoCap
Hi Starry,
A couple thoughts. First remember that point C in an ABCD is not technically a PRZ in the true sense. PRZ's as I understand them come from completed harmonic patterns. That is to say, PRZ's are more reactive zones due to a confluence of harmonic levels. Point C on the other hand is a predictive zone. I am predicting based on the AB-leg that price may turn near C, but if you look at many of my trades, they will penetrate well past 78.6% and near 100.0%. My trade zone between 61.8% to stop at 100.0% is very wide, not really a tradable...
Agressive C are also very powerful trades but it's like all the others build that case find the conluence and more oftern then not you will come out on top. The PRZ cannot get much tighter. The answer is CONFLUENCE trust me
If you fail to plan, you plan to fail.
  • #1,348
  • Jan 14, 2013 9:34pm Jan 14, 2013 9:34pm
Quoting Starry
Thanks! Im starting soon

I was looking at the D prz zone, the expect completion point of the smaller ABCD, which happened to be in the larger C range you predicted. So maybe that would be a more ideal place to enter than the wider zone that you predicted the C would lie in.

But yeah i agree with the idea that C is more predictive, while PRZ are usually convergences of several fib numbers. Hey, how about convergence of fib and PRZ zones?

edit :like this! With a .886 retracement, the BC projection to use is 1.13 (chapter 4 of harmonic...
Ah, Starry, yes I see what you are saying. And yes, our feeds are notably different. I pulled up EURJPY from Sunday+Monday and they were notably off. Anyways.

I am very keen on nested ABCD's as they provide me the opportunity to have two trades running in opposite direction where 1 is guaranteed to win and one is guaranteed to lose (roughly, still playing with possibilities). But given my winner is 2.35X larger than my loser, I can bank 1.3X my risk basically riskfree. I will try to find examples, but the key is to accurately determine if the win-lose possibility is the only one. There could also be low percentage chance of lose-lose (sucky) or win-win (hellz yeah!).

More to come, but good thinking. But I also think you may still be a bit focused on the perfect entry and exit. Let the harmonics work, just get in and see what happens (ONLY if you are using proper risk management and position sizing). I like to call it "PAY TO PLAY!"
  • #1,349
  • Jan 14, 2013 9:37pm Jan 14, 2013 9:37pm
Quoting mduke04
I wouldn't enter it. If there had been a greater pull back against the preceeding swing, I would probably consider it. Momentum on that TF is up.
This statement is subjective. Define your rules and trade your plan. If this happens then I do this. It's the conditional thought process that will keep emotions out of your trading. Lets work on this.
If you fail to plan, you plan to fail.
  • #1,350
  • Jan 14, 2013 9:38pm Jan 14, 2013 9:38pm
Quoting Rexz
One again Mr. Pip, an amazing video! Now just to become a great trader like you lol
Welcome, we will all get there.
If you fail to plan, you plan to fail.
  • #1,351
  • Jan 14, 2013 9:40pm Jan 14, 2013 9:40pm
I am in this.price found resistance at the 78.6 retracement signifying a potential ABCD pattern but my take profit is at 38.2
Attached Image (click to enlarge)
Click to Enlarge Name: Untitled.png Size: 149 KB
  • #1,352
  • Jan 14, 2013 9:40pm Jan 14, 2013 9:40pm
Quoting Davit
Hi Mr PIP
Here is what I have going.NZ 1hr chart
My rational for shorts are confluence of Price did not violate 786 and got mini double tops and serious resistance ahead at 8450.Even after Ben's speech today Price did not break 786 which confirmed my reasons for shorting.
Yeah I never care about the news price respects ratios and harmonics more.

Tell me about all those orders. That looks scary.
If you fail to plan, you plan to fail.
  • #1,353
  • Jan 14, 2013 9:45pm Jan 14, 2013 9:45pm
Quoting Davit
Mr Pip
If you covered this I apologize but I wanted to post this since I think its important.
This is from LP book which you have copy of.Part 2 page 44


About 40 percent of the time, the AB=CD pattern will be perfectly symmetrical,
meaning AB equals CD. The other 60 percent of the time variations
of the pattern will be present. What this means is that after the AB leg
has formed and the retracement leg, BC, has completed, the CD leg will
be different from the AB leg. The two legs may or may not be perfectly
symmetrical.
Some of the ways the...
Confluence at the PRZ. We use AB for projection and what is expected but it is the confluence that price will repect a lot more than 60%
If you fail to plan, you plan to fail.
  • #1,354
  • Jan 14, 2013 9:46pm Jan 14, 2013 9:46pm
Quoting Mr. Pip
Yeah I never care about the news price respects ratios and harmonics more.

Tell me about all those orders. That looks scary.
Hi bro
I place my orders in small halves.I devide 2 lots into 4 mini lots and stack them up for better price ratio.Advantage is if your 1st pilot order gets fried then your loss will me minimal since entire order was not placed.I am in profit already but waiting for big pips.
Regards
In trading, you have to be defensive and aggressive at the same time
  • #1,355
  • Jan 14, 2013 9:46pm Jan 14, 2013 9:46pm
Just for kicks I drew up some expansions and every winner went to 1.27 of the BC-leg. A bit harder to classify R:R because the 1.27 target would fluctuate with the BC-leg distance. One thought would be to assume BC = 78.6% of AB, then I could calculate new R:R. Let me see (scratch paper secretary!).

So the reward bumps from 1.404AB to 1.832AB if the 78.6% is filled, and is 0.832AB if only 61.8% is filled (0.618AB prior). Reward to Risk becomes 3.07:1 for both fills and 1.40:1 for only 61.8% fills.

This has potential, but R:R is not the only variable. Win% is the second leg of systems analysis. If win% does not dramatically change (and it was the same for either system today), then yes, shooting for 1.27 extension is wise and profitable.

Net-net = more testing and collecting trades!

I am about to remove all my fibs from today and be ready for a new tomorrow.

Cheers guys and sorry if I ramble on. Hope somebody finds some jewels in my brain dumps.
  • #1,356
  • Jan 14, 2013 9:50pm Jan 14, 2013 9:50pm
Quoting Moviemkr
Greetings Mr. Pip,

Excellent thread. Any plans on adding the Cypher and Shark patterns to your most handy "Advance Pattern Reference Guide" anytime in the near future? That would about cover Carney's legitimate patterns, wouldn't it?

Thx,

Moviemkr
Cypher yes I trade it and have the rules already. I do not trade the shark. You have to draw the line somewhere. One you get comfortable you will find that the more patterns you have the more complicate yourself. All you need is to master a couple and you are golden. I trade mainly ABCD, Gartley and Bats. I let most crabs and butterflys pass by. There has to be major confluence for me to take one of them.
If you fail to plan, you plan to fail.
  • #1,357
  • Jan 14, 2013 9:53pm Jan 14, 2013 9:53pm
Quoting BroncoCap
Currently just running 1% of account balance (as established on Sunday/Monday).

My stop is always 1 pip above/below the A point, therefore I can exactly calculate the loss prior to entering the trade (save any slippage). The formula is simple = (1-.618AB)+(1-.786AB)+1pip is the max loss. If you do the formula, you will see that stop is .596AB+1.

After figuring that, I can quickly determine how many units to trade based on 1% value.

Also, you can calculate possible reward as it is .618AB+.786AB (assuming both fill). That gives 1.404AB...
90% of the time when price breaks a high or low it will hit the 1.27 this is a great take profit if you at with orderflow.
If you fail to plan, you plan to fail.
  • #1,358
  • Jan 14, 2013 9:58pm Jan 14, 2013 9:58pm
just closed all my NZ shorts +40pipsCredit goes to MR.PIP for opening my eyes to C leg trading.
In trading, you have to be defensive and aggressive at the same time
  • #1,359
  • Jan 14, 2013 9:59pm Jan 14, 2013 9:59pm
Quoting omonla
I am in this.price found resistance at the 78.6 retracement signifying a potential ABCD pattern but my take profit is at 38.2Attachment
Why are you cutting your gains short? move stop to BE at the 38.2. now you have options price may continue down. You also have the option to close your trade half way between entry and the 38.2 if price reverses there. This also is not favorable from a RR stand point. As you can see price continued and is on it's way to the 61.8
If you fail to plan, you plan to fail.
  • #1,360
  • Jan 14, 2013 10:01pm Jan 14, 2013 10:01pm
Quoting Davit
Hi bro
I place my orders in small halves.I devide 2 lots into 4 mini lots and stack them up for better price ratio.Advantage is if your 1st pilot order gets fried then your loss will me minimal since entire order was not placed.I am in profit already but waiting for big pips.
Regards
Okay you scared me for a minute.
If you fail to plan, you plan to fail.
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