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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

  • #2,861
  • Feb 12, 2013 12:53pm Feb 12, 2013 12:53pm
Quoting alij79
Can someone please clear confluence mentioned in Rules of Engagement of ABCD pattern which is as follows:

The market forms the (D) completion point by fulfilling at least a one to one harmonic move of the AB leg coming in at a 127.2% extension of AB. For ratio confluence confirmation a measurement of the BC may be taken and the extension should come in at around a 138.2% to a 161.8%.

I have highlighted the the confluence, can some one explain with example or in simple terms...

Thanks,
Ali
Draw a fib extension between point B and point C.

You are interested in where the 138.2 and 161.8% extensions are in relation to the 127.2% extension of AB (shown as -27.20% on this chart), and the AB=CD completion point.

Take a look at the green lines on this chart
Attached Image (click to enlarge)
Click to Enlarge Name: BC.png Size: 41 KB
  • #2,862
  • Feb 12, 2013 1:09pm Feb 12, 2013 1:09pm
Quoting tropics
So what is the difference between ABCD and AB=CD ? By searching online it seems like they are using it interchangeable and it means the same thing. Thanks.
http://www.youtube.com/watch?v=GrCdDmkJMuY

here´s the Video where Mr. Pip explains exactly that...
  • #2,863
  • Feb 12, 2013 1:13pm Feb 12, 2013 1:13pm
Mr. Pip, a question on price action. I just watched your video and thank you for taking the time to do it. I have also reviewed your posts, charts, rules of engagement, ect but was wondering if there were specific rules regarding price action in your entries?

I can recall that in the chart below you had PA in the area you wanted to go long and as you waited there were two lows with a high in between them. You then place a stop entry at that high for a break higher for your long position entry. Is that how you enter all of your trades or are there other methods of PA Entry that you have?

Once again, thank you very much for your contribution.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (5 Min) 12_28_2012 (1).jpg Size: 136 KB
Chance favors the prepared mind.
  • #2,864
  • Feb 12, 2013 1:24pm Feb 12, 2013 1:24pm
iceman I understood same thing... but the thing is that BC leg's fibonacci extension of 138 or 161 will be drawn oposite to AB legs extension of 127. I am using mt4 platform.

Like in ur example AB leg extension of 127 is drawn correct but when you draw BC leg extension of 138 it will be drawn on downside below fib 0.0 level instead of towards AB leg's extension. can u pls clarify this as it sounds very confusing to me?

thanks.

Quoting iceman777
Hey man, take a look at my chart that I just posted. The AB leg's 127.2% extension, the BC leg's 138.2% extension, and the blue line that is the length of AB is the same length projected from C to a possible D. That is all confluence, to my understanding, where those numbers and price projections line up in an area to make it a more significant area of, in this case, Supply/Resistance or in other cases Demand/Support. Funny part is that it also lines up with a big whole number, 95.00 which gives another added benefit to justify a short even though...
  • #2,865
  • Feb 12, 2013 1:36pm Feb 12, 2013 1:36pm
If i undestood correctly then BC leg 138 is the fib level not extension and it shoud be equal to AB legs 127 extension... rite?

Quoting itinerant
Draw a fib extension between point B and point C.

You are interested in where the 138.2 and 161.8% extensions are in relation to the 127.2% extension of AB (shown as -27.20% on this chart), and the AB=CD completion point.

Take a look at the green lines on this chart
  • #2,866
  • Feb 12, 2013 1:37pm Feb 12, 2013 1:37pm
Quoting alij79
iceman I understood same thing... but the thing is that BC leg's fibonacci extension of 138 or 161 will be drawn oposite to AB legs extension of 127. I am using mt4 platform.

Like in ur example AB leg extension of 127 is drawn correct but when you draw BC leg extension of 138 it will be drawn on downside below fib 0.0 level instead of towards AB leg's extension. can u pls clarify this as it sounds very confusing to me?

thanks.
It sounds like you are only using the toolbar shortcut for fibs on MT4

Take a look at Insert > Objects > Fibonacci > Fibonacci Expansion

Alternatively (and at the risk of confusing you further) a 127.2% expansion is the same as a -27.2% retracement.
  • #2,867
  • Feb 12, 2013 1:43pm Feb 12, 2013 1:43pm
Quoting alij79
If i undestood correctly then BC leg 138 is the fib level not extension and it shoud be equal to AB legs 127 extension... rite?
I think we're in danger of getting a little too involved in semantics... extensions, expansions, projections, retracements.

Whether it is an extension or a retracement should be immediately obvious... if the fib line ends up on the opposite side to everything else, you've drawn it the wrong way!

But yes, ideally the BC projection's of 138.2 and 161.8 should line up somewhere close to the 127.2% AB
  • #2,868
  • Feb 12, 2013 1:53pm Feb 12, 2013 1:53pm
To fill in some background to the BC projections, Scott Carney provides the following information.

C point retracement :: BC projection (which should converge with AB=CD completion)
38.2% AB :: 261.8%
50.0% AB :: 200%
61.8% AB :: 161.8%
70.7% AB :: 141%
78.6% AB :: 127%
88.6% AB :: 113%

You can see that Mr. Pip's figures tie in well with this table
  • #2,869
  • Feb 12, 2013 2:52pm Feb 12, 2013 2:52pm
Quoting CNTrader
GM traders! Here a peak at something I have my eyes on. Nzd/Usd 1hr chart. Enjoy and may everyone make bank today!!
Hey traders I know it was early this morning but here is an update on the Nzd/Usd chart I posted this morning. Looks like some others had their eye on the same thing. Banked 85 pips on the long. Waiting on a double top or second leg formation or other PA behavior from the big boys on a 15m chart to confirm the short. Congrats to all who made bank today
Attached Image (click to enlarge)
Click to Enlarge Name: nu 1 hr.jpg Size: 107 KB
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #2,870
  • Feb 12, 2013 3:07pm Feb 12, 2013 3:07pm
Quoting alij79
iceman I understood same thing... but the thing is that BC leg's fibonacci extension of 138 or 161 will be drawn oposite to AB legs extension of 127. I am using mt4 platform.

Like in ur example AB leg extension of 127 is drawn correct but when you draw BC leg extension of 138 it will be drawn on downside below fib 0.0 level instead of towards AB leg's extension. can u pls clarify this as it sounds very confusing to me?

thanks.
You actually extend in the direction of where D would be. So you are extending upward even though B is to the left of C and is technically pointing downward. In this example you are going long aggressively at C so your projection is upward.

I trade on MT4 and just started using Ninja on a demo. On the Chart I showed, in MT4, the extensions are programmed into the fib retrace tool.

Draw a fib retracement on your chart anywhere. Right click and select Objects list (ctr+B) and highlight Fibo and click Edit. Under the tab "fibo levels" you can add your extensions. Scroll down and click under the level tab and add your #'s - 1.272, 1.382, 1.618, ect. I hope this helps.
Chance favors the prepared mind.
  • #2,871
  • Feb 12, 2013 5:26pm Feb 12, 2013 5:26pm
Quoting CNTrader
Hey traders I know it was early this morning but here is an update on the Nzd/Usd chart I posted this morning. Looks like some others had their eye on the same thing. Banked 85 pips on the long. Waiting on a double top or second leg formation or other PA behavior from the big boys on a 15m chart to confirm the short. Congrats to all who made bank today
Nice trading CN - looks like all your trade ideas panned out. I was looking at your USDCAD long term - looks like she is setting up nicely !!
  • #2,872
  • Feb 12, 2013 8:58pm Feb 12, 2013 8:58pm
Look at stock symbol SLW... Hope i drew my prz right......


Attached Image (click to enlarge)
Click to Enlarge Name: SLW.png Size: 185 KB
  • #2,873
  • Feb 12, 2013 10:58pm Feb 12, 2013 10:58pm
Hey Traders. Just having a little more fun with the Big brother/Little brother scenario here on the Aud/Usd 1hr chart. Can you identify them correctly? Enjoy and may you all have another fantastic day banking pips. Enjoy and good night to all.
Attached Image (click to enlarge)
Click to Enlarge Name: 5 patterns au 1hr.jpg Size: 116 KB
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #2,874
  • Feb 13, 2013 4:46am Feb 13, 2013 4:46am
Quoting CNTrader
Hey Traders. Just having a little more fun with the Big brother/Little brother scenario here on the Aud/Usd 1hr chart. Can you identify them correctly? Enjoy and may you all have another fantastic day banking pips. Enjoy and good night to all.
I have never studied that pattern - in fact I never heard of it before you posted them....but here goes....it looks like the brown color pattern.
  • #2,875
  • Feb 13, 2013 11:03am Feb 13, 2013 11:03am
Hello Traders,

Just dropping in to say hello again and to post todays trades and chart three trades for 65 pips and I did not take the last two beauties no greed.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (233 Tick) 2_13_2013.jpg Size: 120 KB
If you fail to plan, you plan to fail.
  • #2,876
  • Feb 13, 2013 11:19am Feb 13, 2013 11:19am
Quoting Mr. Pip
Hello Traders,

Just dropping in to say hello again and to post todays trades and chart three trades for 65 pips and I did not take the last two beauties no greed.
Hello Mr. Pip,

Congratulations on those trades.

Do I understand correctly that the yellow arrows are your actual trades?

If so, I see your first trade started around about where my second trade did... except I chickened out at the 1.35000 line whereas you seemed to trade right through it.

What significance do you place to round numbers?
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd.jpg Size: 73 KB
  • #2,877
  • Edited 12:01pm Feb 13, 2013 11:44am | Edited 12:01pm
Quoting Mr. Pip
Hello Traders,

Just dropping in to say hello again and to post todays trades and chart three trades for 65 pips and I did not take the last two beauties no greed.
Wonderfull Mr. Pip! I want to ask you one thing. In my image, my ABCD is different from your first ABCD; mine got 127,20-138,20 Area as a target, instead of yours that targets the 138,20-161,80 Area (and was more acurate). Can you explain why you took that ABCD, instead of this one, which is more evident? Thanks a lot!

Edit: I want to specify that I didn't took this trade because price moved too fast. Maybe is for this reason that Mr. Pip discarded it too.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (110 Tick) 13_02_2013.jpg Size: 133 KB
  • #2,878
  • Feb 13, 2013 11:45am Feb 13, 2013 11:45am
Quoting itinerant
Hello Mr. Pip,

Congratulations on those trades.

Do I understand correctly that the yellow arrows are your actual trades?

If so, I see your first trade started around about where my second trade did... except I chickened out at the 1.35000 line whereas you seemed to trade right through it.

What significance do you place to round numbers?
i dont think he places significance on round numbers, just on s/r zones. but ill let him speak
  • #2,879
  • Feb 13, 2013 12:06pm Feb 13, 2013 12:06pm
Quoting itinerant
Hello Mr. Pip,

Congratulations on those trades.

Do I understand correctly that the yellow arrows are your actual trades?

If so, I see your first trade started around about where my second trade did... except I chickened out at the 1.35000 line whereas you seemed to trade right through it.

What significance do you place to round numbers?
I avoid round numbers at all costs. Use s/d zones. But I will fade round numbers by a few pips based on tf.

Usually, market will fade a round number at s/d zone, or over react, like it did today, without changing the set up. Humans are funny creatures and place a lot significance on round numbers, but I do not other than to use that psychological affect in setting my entries.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #2,880
  • Feb 13, 2013 1:00pm Feb 13, 2013 1:00pm
Quoting dibo90
Wonderfull Mr. Pip! I want to ask you one thing. In my image, my ABCD is different from your first ABCD; mine got 127,20-138,20 Area as a target, instead of yours that targets the 138,20-161,80 Area (and was more acurate). Can you explain why you took that ABCD, instead of this one, which is more evident? Thanks a lot!

Edit: I want to specify that I didn't took this trade because price moved too fast. Maybe is for this reason that Mr. Pip discarded it too.
No, he didnt use those impulse waves for the abcd. see chart.
edit: nvm, i see your chart is different slightly ....... the first two bumps arent the same length in my chart.

Attached Image (click to enlarge)
Click to Enlarge Name: abcd.png Size: 186 KB
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