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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

  • #3,121
  • Feb 22, 2013 5:57am Feb 22, 2013 5:57am
Quoting Georji
Hello Foxy, what does "TWEEZER botoom or top" means? thx
Tweezer Candlestick Formation (http://www.babypips.com/school/double-trouble-dual-candlestick-patterns.html) (the second half of that page)
  • #3,122
  • Feb 22, 2013 6:34am Feb 22, 2013 6:34am
[quote=foxybunny;6465899]BroncoCap, unsure when is 8-9AM EST.
Assuming it is near end of London session or after the London session ??




Even using micro-lots for demo, try to see if you can open with at least 2 positions each time.
1 take profit early, 1 take profit later.

Thatīs one thing I never agree with Foxbunny
Opening 2 (or more lots), and closing one earlier..
Gives you a tricky "peace of mind", but works clearly against your bottom line.
Point is when you get hit in the beginning, itīs always with a full load, but when you reach your best TP, you only get there with half a load.
The math is just against you in the long run...
Itīs like surfing , once you took the wave thereīs no turning back.

Having said that, your posts are some of the most valuable to me...
Appreciate your input a lot!
  • #3,123
  • Feb 22, 2013 8:51am Feb 22, 2013 8:51am
Trade currently in progress, target top green line..... stop loss bottom blue line, other green lines resistance it needs to overcome....
edit: stopped out

Attached Image (click to enlarge)
Click to Enlarge Name: trade1.png Size: 161 KB
  • #3,124
  • Feb 22, 2013 8:58am Feb 22, 2013 8:58am
Quoting cuchuflito

Even using micro-lots for demo, try to see if you can open with at least 2 positions each time.
1 take profit early, 1 take profit later.

Thatīs one thing I never agree with Foxbunny
Opening 2 (or more lots), and closing one earlier..
Gives you a tricky "peace of mind", but works clearly against your bottom line.
Point is when you get hit in the beginning, itīs always with a full load, but...
Cucho is right here, scaling in and scaling out is inferior when pattern trading. Grid trading, position trading, it works, but when you have a defined target and stop before placing the initial entry AND when you know the pattern has a net positive expectancy, all-in and all-out maximizes PnL. And it makes statistical analysis much, much easier.

Otherwise Foxy has good ideas that I appreciate, although I am set in my ways and won't be changing anything yet. But that is not to say that others cannot learn from his expertise.

Happy trading all.
  • #3,125
  • Feb 22, 2013 9:07am Feb 22, 2013 9:07am
Quoting 4xf
Hello,

It would be very interesting to have a mathematical demonstration on this point: one target versus 2 targets.

In other words, what should be the probability of reaching 38.2 and 61.8 fibo, and what should be the R: R minimum ratio, so that option 2 targets is more profitable than option 1 single target?

Has anyone relevant elements on the subject?

Thank you!
4xf,
Just go to my journal and use the spreadsheet of 75 trades. There are enough data points for you to do this. It tracks 61.8, 78.6, 38.2BC, 61.8BC levels and in what order (generally speaking).

For example, look at how many trades hit 382BC only to retrace back to original entry at 618AB, those are all BE. I just quickly looked, there are 21 winners (full return to B from 61.8 entry), 30 BE, and 24 losses. The original system has 30 wins and 45 losses. So it may or may not be beneficial to give up those winners to have less losers and more breakeven. There are plenty of "what ifs" you can create with my data--hence my reason for gathering so much.

One of my issues is that scaling out, stops to BE, etc make trade management and data analysis far more complicated. Having a full time job, I need "set it and forget it" style of trading. Ultimately I program EA or scripts to handle my trades, but even those I want as simple as possible.

Anyways, let me get to 100 trades and open my thread to all posters, this is getting removed from Mr. Pip's main teachings. I may do this over the weekend even if I am not at 100, just because of the interest.

Cheers!
  • #3,126
  • Feb 22, 2013 9:08am Feb 22, 2013 9:08am
Quoting BroncoCap
75 Trades for February in the books.

I analyze the trades here (http://www.forexfactory.com/showthread.php?p=6465330#post6465330)but the key take away as related
to Mr. Pip and his teachings is:

>80% of perspective aggressive C that hit 78.6% fail and fully
retrace back to the A level. Only 9 of 54 trades hit 78.6% only
to return to the B level.

There is more in my journal, but it was cool to see that the
rules of engagement presented by Mr. Pip and generally used
by harmonic traders were borne out in forward-looking...
A very very good job Bronco!
I live in Italy and trade only London session, so I can help you with the statistical data of your system during european session
  • #3,127
  • Feb 22, 2013 9:31am Feb 22, 2013 9:31am
Thank you

Quoting itinerant
Tweezer Candlestick Formation (http://www.babypips.com/school/double-trouble-dual-candlestick-patterns.html) (the second half of that page)
  • #3,128
  • Feb 22, 2013 11:19am Feb 22, 2013 11:19am
[quote=cuchuflito;6466935]
Quoting foxybunny
B

Thatīs one thing I never agree with Foxbunny
Opening 2 (or more lots), and closing one earlier..
Gives you a tricky "peace of mind", but works clearly against your bottom line.
Point is when you get hit in the beginning, itīs always with a full load, but when you reach your best TP, you only get there with half a load.
The math is just against you in the long run...
Itīs like surfing , once you took the wave thereīs no turning back.

Having said that, your posts are some of the most valuable to me...
Appreciate...

Quoting BroncoCap
Cucho is right here, scaling in and scaling out is inferior when pattern trading. Grid trading, position trading, it works, but when you have a defined target and stop before placing the initial entry AND when you know the pattern has a net positive expectancy, all-in and all-out maximizes PnL. And it makes statistical analysis much, much easier.

Otherwise Foxy has good ideas that I appreciate, although I am set in my ways and won't be changing anything yet. But that is not to say that others cannot learn from his expertise.

Happy trading...
It is just a consideration based on my own experience that I do better exit half first and half later, versus exit all at my "perceived maximum target".
Other people may have better experiences exiting all trades in one go.

I have traded originally with exit all at a bigger target, and know that my greed has a worse impact on the bottom line when doing that.

Even though this scenario is about pattern trading, it would not be inferior( maybe even superior) to scale out simply because your perceived maximum target may not even be near of being hit, this is an issue of managing money risks versus maximising profit/loss.

I enjoy data analysis and statistical analysis, we just have to be careful when we are trading, we don't confuse trading activities as just a large database and make the data easier just simply for the sake of easier statistical analysis.

It is OK to disagree on this scaling issue, each trader will just find their own way that suits them better, regardless of their bottom line.

Enjoy your weekend traders.
  • #3,129
  • Feb 22, 2013 11:58am Feb 22, 2013 11:58am
Hey traders another no trade day for me. Hope you all had a profitable week.
Cheers.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (233 Tick) 22_02_2013J.jpg Size: 108 KB
Finally out of the shadows.
  • #3,130
  • Feb 22, 2013 12:07pm Feb 22, 2013 12:07pm
Quoting BroncoCap
4xf,
Just go to my journal and use the spreadsheet of 75 trades. There are enough data points for you to do this. It tracks 61.8, 78.6, 38.2BC, 61.8BC levels and in what order (generally speaking).

For example, look at how many trades hit 382BC only to retrace back to original entry at 618AB, those are all BE. I just quickly looked, there are 21 winners (full return to B from 61.8 entry), 30 BE, and 24 losses. The original system has 30 wins and 45 losses. So it may or may not be beneficial to give up those winners to have less losers...
The answer is in your data and your post, please look closer and you will see my friend.
The world you desire can be won. It exists.. it is real.. it is possible..
  • #3,131
  • Feb 22, 2013 12:20pm Feb 22, 2013 12:20pm
[quote=foxybunny;6467759][quote=cuchuflito;6466935]
It is just a consideration based on my own experience that I do better exit half first and half later, versus exit all at my "perceived maximum target".
Other people may have better experiences exiting all trades in one go.


Foxybunny I read from many successfull pros who do just that..scaling out.And they are apparently rich...so if you feel comfortable with that ...

To answer about the math around this like some people were asking:

Basically you are trading 2 Systems at the same time

For example:
one System Takes Profit at 38%
the other one at 68%


In the Long run, one will make more than the other , depending on the System...and all itīs variables.
AND, the better one will drag the other one.

Golden rule of trading: Keep your losses small and winners big..
Scaling out goes against that, cause you make sure , that when you get hit (in the beginning)...you loose full load, and you also make sure that when you hit your TP, you only get there, half loaded.

Robert Miner in his book and teachings, describes a weekly trade on EURUSD using elliot wave and fibos.
He entered the trade in the Hour Chart, 2 lots, got stopped right away, entered again and made a big winner....although he scaled half out in the first 2 days, according to his rules.
The second lot survived for 6 weeks.
I carefully calculated the difference:
He made altogether around 10 R including the Initial loss.
If he would have stayed full loaded all the way, he would have banked 19 R !

Just think what 19 R can do to your equity curve....and how many potential future losses you could absorb with that big fat winner...
OK, here we are talking about ratios of 1 to 2 or 3...the math is the math is the math...

sorry for the Long Story...enjoy the Weekend...
  • #3,132
  • Feb 22, 2013 12:34pm Feb 22, 2013 12:34pm
hi friends ... This thread is very excited to learn with you ... I am newbie in forex trading ... and I saw in the pair EUR / JPY bearish gartley halfway there ... is this potential??


Attached Image (click to enlarge)
Click to Enlarge Name: 2013-02-23_01-27_FBS Trader.jpg Size: 110 KB
  • #3,133
  • Feb 22, 2013 12:44pm Feb 22, 2013 12:44pm
Quoting hamidmsz
hi friends ... This thread is very excited to learn with you ... I am newbie in forex trading ... and I saw in the pair EUR / JPY bearish gartley halfway there ... is this potential??


Attachment
if I'm wrong ... with all due respect ... please help from friends all to justify ..
  • #3,134
  • Feb 22, 2013 12:45pm Feb 22, 2013 12:45pm
Quoting Mr. Scott
The answer is in your data and your post, please look closer and you will see my friend.
Trust me, I know, I want to see if others spend the time to find the answer.

Fact is, it is not whether one 'thinks' it better, or 'feels' better doing this versus that. It is about the numbers, objective, math. Either a method is better or it is not. Now, the criterion which is used to judge one to another can be different depending on the trader. Some may want a higher win % (dangerous), some may want big winners and small losers, some may want low draw downs. But as long as the trader has an objective test, and sufficient data, the answer is right in front of him whether he accepts it or not.

Now, my data set is not 100% accurate for these post-trade analysis due to bid/ask and limit/market fill issues, but I did the math for the lazy guys.

Original system 30 wins (+1.618R), 45 losses (-1R), returns ideally 3.5R. Moving to breakeven returns 10R (assuming no slippage on BE trades, unlikely). So, without accounting for those moves that just touch BE exit and other near misses, moving to BE appears to be the better system. This does not account for scaling out. Someone else can do that math.

In the end, to each's own but, in my humble opinion, you must have something objective to compare. Just because something is easier emotionally, or because others have done it, does not mean it is the best strategy. Only by trading demo/live, forward testing, can the true answers be found.
  • #3,135
  • Feb 22, 2013 1:43pm Feb 22, 2013 1:43pm
Hello Traders.

What do you think about these harmonics ? Would you trade this ?

http://screenshooter.net/0463502/wqqslsh

I'm confused about harmonics, becouse I do not know where to put SL and TP. This is not specified like a patterns.
  • #3,136
  • Feb 22, 2013 1:50pm Feb 22, 2013 1:50pm
Quoting hamidmsz
hi friends ... This thread is very excited to learn with you ... I am newbie in forex trading ... and I saw in the pair EUR / JPY bearish gartley halfway there ... is this potential??


Attachment
Yes, that is a possible bearish gartley. Keep watching to see if price rallies that high. Good eye for someone that is new.
Chance favors the prepared mind.
  • #3,137
  • Feb 22, 2013 2:00pm Feb 22, 2013 2:00pm
[quote=foxybunny;6467759]
Quoting cuchuflito




It is just a consideration based on my own experience that I do better exit half first and half later, versus exit all at my "perceived maximum target".
Other people may have better experiences exiting all trades in one go.

I have traded originally with exit all at a bigger target, and know that my greed has a worse impact on the bottom line when doing that.

Even though this scenario is about pattern trading, it would not be inferior( maybe even superior) to scale out simply because your perceived maximum...
Just to add my 2 cents from experience it is obviously dependent on the system traded. If you exit early with a first half of your position then that first half should at least be a 1:1 R/R. So if your trading produces better than 50% accuracy then you have a statistical probability of profiting because at the same time your stop should be moved to B/E for the rest of the position. The second part of the position is of course where the real money is made.

In a position/swing trade on longer term charts this is a good way to profit but when intra-day trading it typically does not work. In one of my favorite trading books, Mastering the Trade by John Carter, he uses the same technique in his trading as a professional.

So getting back to Ratios & Harmonics, let's keep this thread to exactly how Mr. Pip trades. Our focus should be on setups on all time frames, price action, and learning to execute the trades properly. Naturally we all start to divert and develop a trading plan from our own perceptions. That is why BroncoCap's choice to start his own thread where he can cover what he is specifically doing is fantastic.

Let's continue to keep this thread going in the right direction so we can all learn and keep the positive environment as well.
Chance favors the prepared mind.
  • #3,138
  • Feb 22, 2013 2:30pm Feb 22, 2013 2:30pm
Hi Hamid and welcome to the thread ,, Gartley rules is for AB retraces at least to 61.8% of XA leg,,in this case here it is at 38.2% so NO Gartley

Quoting hamidmsz
hi friends ... This thread is very excited to learn with you ... I am newbie in forex trading ... and I saw in the pair EUR / JPY bearish gartley halfway there ... is this potential??


Attachment
  • #3,139
  • Feb 22, 2013 5:02pm Feb 22, 2013 5:02pm
[quote=BroncoCap;6467916]Trust me, I know, I want to see if others spend the time to find the answer.



Original system 30 wins (+1.618R), 45 losses (-1R), returns ideally 3.5R. Moving to breakeven returns 10R (assuming no slippage on BE trades, unlikely). So, without accounting for those moves that just touch BE exit and other near misses, moving to BE appears to be the better system.

Hi Bronco
great homework!
Expectancy :

0,047
0,133

Both are thin, still a winning edge....if you can keep that consistent ( I canīt!!) you would be doing better than many, including some Funds Managers...
Problem is avoiding mistakes, stop hunting, News...a couple of those here and there can spoil ...a whole month of work..

BUT, you can start carefully polishing edges.....

Thanks for sharing
  • #3,140
  • Feb 22, 2013 5:14pm Feb 22, 2013 5:14pm
[quote=iceman777;6468010]
Quoting foxybunny



Let's continue to keep this thread going in the right direction so we can all learn and keep the positive environment as well.
Agree

the issue is many here already got it....as for pattern recognition and fibos.
The difficult part is the MM," wholesale entry", Position size, trailing and so on...thatīs an art...which Mr. Pip seems to master...

On the other hand, what Bronco and others show, is the core of this gambling Business....crunching numbers....

I think we are pretty much at the point where we can have a good time together, post some pretty charts...but in the end of the day we need to go back and do the math, practice and crunch our numbers and homework...

Gess thatīs why Mr. Pip does not post too often any more, he gave all the help already...

Anyway...enjoy life good People...itīs the most expensive, limited asset....


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