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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

  • #2,341
  • Jan 29, 2013 12:40am Jan 29, 2013 12:40am
Might be an AB=CD formation EJ M15...Aggressive trade buy on C
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Dangdut is a music of my country
  • #2,342
  • Edited 1:12am Jan 29, 2013 1:00am | Edited 1:12am
I am showing the Main Swings only on EUR/USD M15 from 22-Jan-13 till 25-Jan-13.

I am NOT showing or using Tick Charts as don't have easy access to them on the MT4 platform.

I don't want to show or use Dominant Swing, which are basically just Retracement Swings to me.

My Main Swings are basically based on that present day's Highest High and Lowest Low to determine, and it must be during the busy active sessions.

If I cannot see CLEARLY and EASILY for today's Main Swing, then I will use Yesterday's High or Low to combine with Today's Low or High.

Sometimes there may be more than 1 Main Swing per day based on my definitions above.

Also there are many overlapped swings that I am NOT showing, and sometimes I will miss them.

From these charts, I prefer to trade basic AB=CD patterns, where entering on C-point is preferred.

Don't do as well on those Gartley or Butterfly patterns reversals when entering is on D-point.

From these charts, you can see how I would simplify reading just the Main Swings.


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  • #2,343
  • Jan 29, 2013 1:04am Jan 29, 2013 1:04am
I am showing the Main Swings only on EUR/USD M15 for 28-Jan-13.

There are 2 Main Swings identified for this day.

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  • #2,344
  • Jan 29, 2013 2:22am Jan 29, 2013 2:22am
[quote=BroncoCap;6399629]Dibo,
One suggestion. All my testing and as already stated in this thread (I will have to get the post), taking partial profits usually reduces total profit.

Mostly true unless you consider the whole thing as 2 trading systems, one that takes profit early, small R/R, and one that letīs profits run, better R/R.
In the end , the better one will have to drag the other.
Although many pros use it...it is considered a widely common retailer mistake to take profits early...

Hey, these days stop hunting is so efficient, due to Big Boys specialized, with the best software, capital and robots, thatīs why it is far from easy...even with the best Trailing method ...
  • #2,345
  • Jan 29, 2013 4:15am Jan 29, 2013 4:15am
Quoting Mr. Pip
That is correct this is not an ABCD it is an AB=CB. I took the trade based on ratios and harmonics indicating a possible PRZ since it is not an ABCD and I am against order flow I trade the CD to the 61.8 correction. Does this answer your question? this is a way to identify possible market tops and bottoms.
Yes the answer is okey. Thanks !
Hmm... a way to determine tops and bottoms(If we trade pure harmonics then yes, we are against the crowd, even if its risky)
In this case yes ! Because it is confirming also around number 1.3500 and other s/r levels and your ratio projection determine also this area.
  • #2,346
  • Jan 29, 2013 4:22am Jan 29, 2013 4:22am
Quoting Mr. Pip
Too early to tell but looks like it may continue lower if it can get past this support area.
Thanks for your response Mr. Pip. I'm a bit confused with how you are drawing these swings. I have a number of questions on what you have taught I hope you are able to answer when you have time:

1) When you are drawing harmonic swing on a chart, to validate this swing does the prior swing need to be at least a 38.2% retracement i.e the main swing. From the attached chart, we can see that point A did not retracement 38.2% of the previous swing, therefore should the swing start at X? (or am I getting my harmonic swings and main swings all jumbled up).

2) I dont understand why you did not draw a fib from B-A to determine the 1.27 ext for a possible ABCD long trade. Im seeing PA piercing through 78.6 (at point C) retracement and closed below this level which should validate this pattern. Instead, you have started the swing from where I drew the CD leg.

3) In your very first video, you've used AB=CD retracement levels to determine your PRZ to be 138.2-161.8. If you already have established this zone, I'm not seeing how you have incorporated the importance of this zone into your trading plan for the Gartley and ABCD pattern as you are using 127.2 level for your entry level instead of your entry level being in this zone. Am I missing the point or jumping the gun?

Hope my questions make sense. Appreciate your time.
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  • #2,347
  • Jan 29, 2013 6:52am Jan 29, 2013 6:52am
Mr Pip, how many currency pairs do you analyse for any trading opportunity at any giving time?,, i find it can get over whelming viewing different pairs at different charts and time frames,, worried that while you're analysing one chart that you might be missing on a good entry on another etc,, etc,,
i spent most of my time today analysing Eur/Jpy on 15,,5,, and 1 mn time frames comparing them and how ratios/ harmonies and patterns develops on all ( for example while an ABCD could be in progress on the 15mn a gartley could be developping on the 5mn at the same time and so on).

So bottom line, am i missing on a better approach in analysing any pair,, or am i going about it the right way? because it does feel to me sometimes that i might be over anaylsing and confusing myself,, and have less time trading the market.

your reply is really appreciated, thanks
  • #2,348
  • Jan 29, 2013 6:54am Jan 29, 2013 6:54am
Quoting iqyu5an
did we have C point already ( yesterday's high ) and ready to break B point ( yesterday's low ) of our potential bullish harmonic ?

339x-340x is on eyed... could be lower... to friday's low or friday's open line. there will be some B points of old bearish harmonic down there

mr. time will tell us the truth
=

http://www.forexfactory.com/attachme...7&d=1359463517

=

Quoting iqyu5an
this is example how indentifying pattern/harmonic/ whatever we call ( not mine but belongs to specific site that decribing : identification,trade, scaling the trade in prz and trade manegement. optimum target...price character in prz.. what happened when price come to the prz etc etc is also described briefly there.
http://a.yfrog.com/img738/2608/wfd.gif

we can trade in two way direction..

one that i can share ( cos it's happening in euro usd at the moment ). once we're in prz.. ( assuming we got bearish harmonic ) she will go...
not euphoria follower
  • #2,349
  • Jan 29, 2013 7:25am Jan 29, 2013 7:25am
Quoting foxybunny
When you set a constant of $10 as a stop loss, this would mean you have changed your lot size more often like nano-lot, micro-lot.
Changing to different lot-size may be a hassle unless you start at the lowest lot-size currently.

Stop Loss is preferable set based on the timeframe of the chart you are trading, and the pattern, so this mean a CONSTANT $10 SL will not be adequate.

The way you are talking sounds more like you are thinking of programming trading than just discretionary trading.

Preferable is you set a SL range like $5-$35 as example...
Hi Foxybunny,
thanks for the reply, I'll explain you what I mean with this MM.

Firstly, 10$ was just an example, you can take a different value depending on your initial capital (20$, 50$, 100$, ... , it is up to you). Why I think about a constant $ SL? I take notes of my trades, so in this case I take notes of patterns only and these are the results independently of the time frame: last 20 trades, 12 wins ( the price reaches 0.618) so 60% wins, 4 loss (20%) and 4 B/E (reaches only 0.382) (20%). The problem is that 2 of the patterns where I loost $ were in higher Time Frame, 4H and 1H, and this means that the stop loss was deeper and I lost the equivalent of (for example) what I earned with 3 patterns in TF 3M.
For this reason I thought of giving the same weight to the patterns, regardless of the size, because if I don't, the % of good trades (60%) becomes useless and doesn't tell me the truth (yes I can a have a 60% of wining trades, moreover a good r/r ratio, but I can still be below my initial capital, because of the different size of the patterns).
Another solution can be to trade only patterns of a given TF, like 15M or lower, and for now that's what I'm doing, but also here we can have different sizes. This is just my opinion, it may be wrong.

You are right, it's impossible to enter always at 0%, but wheter I think it's normal.
However I've trading for 2 years (I'm still a novice), and now I'm in real: however exit at 0.382 does not give me an accetable risk/reward ratio.

It's evident that when my capital is more, the constant $ value will change. I was wrong in the first post, I meant that the $ value was constant against the Time Frame, and when the Equity grows up it will change. The SL can be a percentage of the trading capital, I agree with you.

Sorry for my English if it's bad, I hope I have explained my thoughts.

Regards
  • #2,350
  • Jan 29, 2013 7:57am Jan 29, 2013 7:57am
Quoting dibo90
Hi Foxybunny,
thanks for the reply, I'll explain you what I mean with this MM.

Firstly, 10$ was just an example, you can take a different value depending on your initial capital (20$, 50$, 100$, ... , it is up to you). Why I think about a constant $ SL? I take notes of my trades, so in this case I take notes of patterns only and these are the results independently of the time frame: last 20 trades, 12 wins ( the price reaches 0.618) so 60% wins, 4 loss (20%) and 4 B/E (reaches only 0.382) (20%). The problem is that 2 of the patterns where I...
Money and Trade Management is a bit of my speciality (if only I could find a system to apply it to regularly!).

Some additional thoughts. Dib, I agree with you that a constant max loss which gets sized based on the distance to the stop is the correct way to go, otherwise, you will have losers swamping winners even with favorable R:R. See my post here (http://www.forexfactory.com/showthread.php?p=6363987#post6363987) where I size the position based on stop. Had I just traded 1 microlot for instance, the results would have been very different.

Also, remember that R:R is not the only variable when it comes to expectancy (how much you can expect to win or lose per $ risked). Win% is also very important. You can have a system that wins 10X more than it loses and be okay with a 14% win rate, but you can also have a system that wins only 1/2 what it loses that is profitable with a 75% win rate. You had 16 of 20 trades hit 38.2% giving a win rate of 75%. Depending on your stop, that could be a profitable system. Too many people focus only on R:R and forget about win%. By the way, I will get into the nitty gritty of this in my journal very soon (as soon as I have sufficient trades to introduce the topic).

I would suggest you keep tracking trades and decide how to trade low TF vs high TF patterns. Based on your historical performance you may find that you take profit at 38.2% for TF > 1hr and take profit at 61.8% for TF < 1hr. That is completely acceptable.

Good luck!
  • #2,351
  • Jan 29, 2013 8:13am Jan 29, 2013 8:13am
Hey guys!

New to this forum and thread. Been trading for like 1 year now and tried out a lot of systems and strategies. Started my journey with gartleys but didnt get it at all. After a year I'm a bit more familiar with the different terms etc.

I'm not even 25% done reading this thread but I was curious If this is a legit bat pattern?
(It's on the EUR/USD 5min chart)

Thanks in forward for the answer

- Kaboemm
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  • #2,352
  • Jan 29, 2013 8:53am Jan 29, 2013 8:53am
Quoting kaboemm
Hey guys!

New to this forum and thread. Been trading for like 1 year now and tried out a lot of systems and strategies. Started my journey with gartleys but didnt get it at all. After a year I'm a bit more familiar with the different terms etc.

I'm not even 25% done reading this thread but I was curious If this is a legit bat pattern?
(It's on the EUR/USD 5min chart)

Thanks in forward for the answer

- Kaboemm
Bearish crab, perhaps?
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  • #2,353
  • Jan 29, 2013 8:57am Jan 29, 2013 8:57am
Quoting BroncoCap
Money and Trade Management is a bit of my speciality (if only I could find a system to apply it to regularly!).

Some additional thoughts. Dib, I agree with you that a constant max loss which gets sized based on the distance to the stop is the correct way to go, otherwise, you will have losers swamping winners even with favorable R:R. See my post here (http://www.forexfactory.com/showthread.php?p=6363987#post6363987) where I size the position based on stop. Had I just traded 1 microlot for instance, the results would have been very...
Thanks again Bronco, I've missed your post. I completely agree with you. I'll keep tracking trades and then we will see.
Regards
  • #2,354
  • Jan 29, 2013 9:01am Jan 29, 2013 9:01am
Quoting itinerant
Bearish crab, perhaps?
Yess it's a Crab per Mr. Pip rules, I'm also looking at this, but there is no other structure. The resistence is about at 138,20 level and now it's a support
  • #2,355
  • Jan 29, 2013 9:01am Jan 29, 2013 9:01am
Quoting itinerant
Bearish crab, perhaps?
it looks more like a Crab
  • #2,356
  • Jan 29, 2013 9:10am Jan 29, 2013 9:10am
Quoting kaboemm
Hey guys!

New to this forum and thread. Been trading for like 1 year now and tried out a lot of systems and strategies. Started my journey with gartleys but didnt get it at all. After a year I'm a bit more familiar with the different terms etc.

I'm not even 25% done reading this thread but I was curious If this is a legit bat pattern?
(It's on the EUR/USD 5min chart)

Thanks in forward for the answer

- Kaboemm
That would be a gartley, not bat.
Barry
  • #2,357
  • Jan 29, 2013 9:14am Jan 29, 2013 9:14am
Mr Pip

Appreciate any feedback you may have. My 55 tick on EurUSD is pretty close to your 233 tick. I took an AB=CD and felt confident about this trade because of structure at that level. I was very suprised when I stopped out on this trade and price action really took off. Can you give any insight as to something I did not see or is this just one of trades that happen and you just accept and move on.

Thanks,

Ed
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  • #2,358
  • Jan 29, 2013 9:43am Jan 29, 2013 9:43am
Quoting Ed777
Mr Pip

Appreciate any feedback you may have. My 55 tick on EurUSD is pretty close to your 233 tick. I took an AB=CD and felt confident about this trade because of structure at that level. I was very suprised when I stopped out on this trade and price action really took off. Can you give any insight as to something I did not see or is this just one of trades that happen and you just accept and move on.

Thanks,

Ed
Ed,
Just looks like "one of those trades", although, I do see that the top of the first wave (1.34425) was subsequently tested 4 times and was very supportive giving the bulls a major edge. Also, think about what it means when it broke out the top. Rest assured there were plenty of buy stop orders from breakout traders in that zone leading to the move higher.

One variable I am tracking is how far do failed moves go in the opposite direction and does "stop and reverse" trades provide sufficient win% or R/R to be tradeable?

Get back on the horse, good luck!
  • #2,359
  • Jan 29, 2013 9:49am Jan 29, 2013 9:49am
Quoting Ed777
Mr Pip

Appreciate any feedback you may have. My 55 tick on EurUSD is pretty close to your 233 tick. I took an AB=CD and felt confident about this trade because of structure at that level. I was very suprised when I stopped out on this trade and price action really took off. Can you give any insight as to something I did not see or is this just one of trades that happen and you just accept and move on.

Thanks,

Ed
I took the same trade. It was a valid entry. Failed gartley, happens sometimes.
Barry
  • #2,360
  • Jan 29, 2013 9:50am Jan 29, 2013 9:50am
Quoting Ed777
Mr Pip

Appreciate any feedback you may have. My 55 tick on EurUSD is pretty close to your 233 tick. I took an AB=CD and felt confident about this trade because of structure at that level. I was very suprised when I stopped out on this trade and price action really took off. Can you give any insight as to something I did not see or is this just one of trades that happen and you just accept and move on.

Thanks,

Ed
In this case, it went to the completion of a larger abcd. However, you m ightve thought it would go to the completion of a larger abcd way earlier, and not gotten on any of the trades (like i did yesterday). so maybe its just one of those trades.
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