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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

  • #3,141
  • Edited 7:14pm Feb 22, 2013 7:00pm | Edited 7:14pm
In my quest to utilize all data available, i have started creating some rules on how close fibs need to be to form a cluster (1/3 of lowest ATR 14, round down or 1 pip) , how to form PRZs from clusters, how to bias which PRZ to pick in case theres multiple nearby ones, and im beginning to try to decipher price action patterns using the rsi.... For example, heres SLW daily ...
Once a PRZ is chosen, everything is erased, except the PRZ and supporting demand/supply zone and one retracement and wick lines (blue lines), and i make sure price projections as price approaches PRZ fall within the prz, and that price action supports PRZ (still need to make all this more objective). This is the approach i am evolving.... I also use plenty of APPs, instead of a 1:1 impulse, i create fib ratios of less than a length of 1.

SLW PRZ determination
Attached Image (click to enlarge)
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SLW final PRZ

Its really pretty, prz right in middle of 61.8 - 78.6 zone! basically i just try to leave minimal information that can define the PRZ (just a zone of a retracement and a 1:1 impulse for example), knowing that all of the other swings that are less important also support it...
Attached Image (click to enlarge)
Click to Enlarge Name: final_slw_prz.png Size: 174 KB


Still need to work on exact entry, take profit, and break even techniques, but determining the PRZ(s) from all relevant swings is the most important first step...

have a good weekend traders!
  • #3,142
  • Feb 22, 2013 8:30pm Feb 22, 2013 8:30pm
Analyzing the audusd 60 minute trade entry point from the past....

Defining AUDUSD 60m PRZ
Attached Image (click to enlarge)
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Final AUDUSD 60m PRZ
Attached Image (click to enlarge)
Click to Enlarge Name: audusd_final_prz.png Size: 167 KB
  • #3,143
  • Feb 22, 2013 8:51pm Feb 22, 2013 8:51pm
Thank you for sharing.
I have been interested in this method for a long time and am happy to see that you are willing to share.
Great stuff!
Thank you!
  • #3,144
  • Feb 23, 2013 6:27am Feb 23, 2013 6:27am
Hello Traders.

Yesterday was a nice ABCD Pattern on GBP/JPY, M5 chart with nice confluence. What do you think ? Would you take this trade ? Target hit.

Attached Image (click to enlarge)
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Attached Image (click to enlarge)
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  • #3,145
  • Feb 23, 2013 12:01pm Feb 23, 2013 12:01pm
Hmm, this perspective makes it less confusing.

We build confluence from
1) Dominant Fib Clusters
2) Main Fib Clusters
3) Zones (61.8-78.6 retracement zone, etc...)
4) And some other stuff.....

Main fib clusters utilize the main swing and perhaps the main swing of that main swing, while dominant fib clusters use the dominant swing.

The distance between fib clusters must be at most (Minimum ATR 14/ 3.0 * 1.1), rounded down, or 1 pip if it is less than 1.

AUDUSD 60M Main Fib Clusters
ATR/3.0*1.1 = 4 pips

Main Swings that are used
Attached Image (click to enlarge)
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Completed Main Fib Clusters, 4 pips or less apart
Attached Image (click to enlarge)
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Once we have main fib clusters, we can treat them as elements for any sort of confluence we desire!

AUDUSD 60M Dominant Structure and Main Zones
Ignoring dominant clusters, we simply play with 1:1 impulses and see which ones fit in with the main fib clusters. In addition, i take the 50 - 61 zone of the impulse and draw that, because it seems relevant to the main fib cluster...

Attached Image (click to enlarge)
Click to Enlarge Name: local_structure.png Size: 187 KB


AUDUSD Final PRZ
Then, find a final prz which is the confluence of everything, and just draw the relevant elements. Draw as small or as large a PRZ as desired, based on which elements you use for confluence...

Attached Image (click to enlarge)
Click to Enlarge Name: final_construction.png Size: 180 KB


Then, rules for patterns that you want to trade that emerge from this general confluence procedure can be layed down ... This leaves plenty of room for improvising, from which rules can be made... the main fib clusters make it less subjective, because the large structures are clear to see, and a PRZ should include at least one main fib cluster unless you ignore the larger structure, which as mr pip has pointed out is perfectly fine, all you need is main and dominant swings....
  • #3,146
  • Feb 23, 2013 12:20pm Feb 23, 2013 12:20pm
Another example from the past. yes, i like this way of thinking about it.... it will be the foundation of my harmonic dance lol

1) Create main fib clusters, in this case none existed.
2) Create dominant fib clusters, in this case from two retracements, the 50 and 61.8 lines overlapped exactly (according to the numberes), so they became a fib cluster line, while the 38.2 became a fib cluster zone, and since trading started at 6:00, this zone had already been pierced and became a tomato structure zone (it morphed )
3) Create zones from the two lower lines. Draw 1:1 impulse lines, and draw a fib extension. Price lands exactly in it and stalls. Will you trade this type of confluence? Thats up to your you....

main fibs
Attached Image (click to enlarge)
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dominant fibs
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finished PRZ
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  • #3,147
  • Feb 23, 2013 1:23pm Feb 23, 2013 1:23pm
Quoting Sakujun
Hello Traders.

Yesterday was a nice ABCD Pattern on GBP/JPY, M5 chart with nice confluence. What do you think ? Would you take this trade ? Target hit.

Attachment

Attachment
Nice! If id seen it , i would have taken it. Heres what i have ..... looks like an ab = cd with a nested abcd....

Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy.png Size: 171 KB
  • #3,148
  • Feb 24, 2013 3:28am Feb 24, 2013 3:28am
Hello, traders.
I read all thread and have some questions to Mr. Pip.

1. Do you use Stop Loss 10 pips below/above A or less in 5min charts or? because 10 pips in 1H is ok, but in 5 minutes, the risk would be bigger than reward.

2. How to get more confirmation about Aggressive C trade, that the success probability would be greater? I think about divergence, like one of confirmation signal. Maybe you know more?

3. Maybe there is techniques, that we will know if trade will go until TP2 or only until TP1?

4. In the beginning thread, you said about score system. It is interesting, which things do you see in that score system?

Thanks for your answers and thread.

IenDzi.
  • #3,149
  • Edited 7:45am Feb 24, 2013 5:01am | Edited 7:45am
Quoting IenDzi
Hello, traders.
I read all thread and have some questions to Mr. Pip.

1. Do you use Stop Loss 10 pips below/above A or less in 5min charts or? because 10 pips in 1H is ok, but in 5 minutes, the risk would be bigger than reward.

2. How to get more confirmation about Aggressive C trade, that the success probability would be greater? I think about divergence, like one of confirmation signal. Maybe you know more?

3. Maybe there is techniques, that we will know if trade will go until TP2 or only until TP1?

4. In the beginning thread,...
I am not Mr.Pip but I can help answer some of your questions.
1: Mr.Pip's post 727: "The rules I posted are for the 1H timeframe and if you are looking to trading this pattern on a smaller timeframe you would have to make the proper correction to this rule."

2: Mr.Pip does not use any divergence indicator. Instead you should look at price action prior to entering the PRZ as well as price action in the PRZ and determine whether price will change direction. In addition, if your aggressive c trade is with order flow then the probability is bigger of a successful trade.

3: As far as I know there is no technique that lets you predict whether the trade goes to TP1 or TP2, if there was then we would all be millionaires by now . In order to have the best odds of having your trade go all the way to TP2 make sure you trade with order flow.

4: I'm not familiar with the score system.

I hope this helped. Good luck trading!
"The only thing I’m addicted to right now is winning."
  • #3,150
  • Feb 24, 2013 5:26am Feb 24, 2013 5:26am
Quoting IenDzi
Hello, traders.
I read all thread and have some questions to Mr. Pip.

1. Do you use Stop Loss 10 pips below/above A or less in 5min charts or? because 10 pips in 1H is ok, but in 5 minutes, the risk would be bigger than reward.

2. How to get more confirmation about Aggressive C trade, that the success probability would be greater? I think about divergence, like one of confirmation signal. Maybe you know more?

3. Maybe there is techniques, that we will know if trade will go until TP2 or only until TP1?

4. In the beginning thread, you said...
Hi IenDzi,
Mr. Pip has already answered these questions:
1) You are right, 10 pips SL in 1H TimeFrame, so you may adjust it depending on TF
2) He doesn't use at all indicators, only Price Action. You can check his last video where he explains Price Action (DCASTFX on YouTube)
3) The only technique you can use is Statistics. I can tell you that the price has a high probability to reach TP2, when it reaches TP1. For this reason Mr. Pip put SL at Breakeven when price reaches TP1, and take profit only at TP2.
4) I don't know the answer, maybe others can help you
  • #3,151
  • Feb 24, 2013 8:07am Feb 24, 2013 8:07am
Hello.
Do someone know why Mr.Pip do not write post for a few days ? Will he introduce more patterns and upload more screenshots from his trades to better understand system and Price Action ? I'm awaiting for more examples. I really like the way Mr.Pip teach us.
  • #3,152
  • Feb 24, 2013 8:35am Feb 24, 2013 8:35am
Quoting Sakujun
Hello.
Do someone know why Mr.Pip do not write post for a few days ? Will he introduce more patterns and upload more screenshots from his trades to better understand system and Price Action ? I'm awaiting for more examples. I really like the way Mr.Pip teach us.
hes probably just busy doing other things, ive seen him drop by the thread a couple of times ....
  • #3,153
  • Edited 2:34pm Feb 24, 2013 12:48pm | Edited 2:34pm
Heres an ideal to objectify price action by using momentum support/resistance correlated to price support/resistance, so that you are no longer afraid of trading 'into' strength (but it might not be strength anymore, only perceived price resistance strength, while the momentum strength has already turned around) ....

the blue lines on the rsi are momentum support levels and the green line segments are the price support areas . The yellow arrow is an arrow that correlates the current price support, with the price support that corresponds to the momentum area that rsi is reacting around now.

i know mr pip said to not introduce indicators, but i dont really think this is introducing an indicator, its really just price action .... but i wont comment about it anymore if it doesnt belong in this thread..

wont say much about it cause i just thought of it, i was doing a tick simulator and noticed how helpful this would be, then i took a look at the chfjpy chart that was posted....

Attached Image (click to enlarge)
Click to Enlarge Name: objectify_price_action.png Size: 178 KB


edit: there, that looks better. yellow = supported by, red = broken, this correlates the impulses....

Attached Image (click to enlarge)
Click to Enlarge Name: chfjpy_1.png Size: 192 KB
  • #3,154
  • Edited 6:06pm Feb 24, 2013 4:32pm | Edited 6:06pm
depending on how price reacts around the upper green box, and the upper red line, prices could actually go down to 26 or so, and spike or gap down into the lowest green box, and close into the box that contains the lowest green box....

since there are still massive short silver positions, this is perhaps likely. or if it doesnt stall and spike to red line, it will probably just go to upper green box

Attached Image (click to enlarge)
Click to Enlarge Name: slw_new.png Size: 179 KB
  • #3,155
  • Feb 24, 2013 9:10pm Feb 24, 2013 9:10pm
Hi Mr.Pip and All !

How you do for the stop loss? When you take position? Above D is a good stop loss you think?

And what happen if there is a news that disturb the market?
  • #3,156
  • Feb 25, 2013 3:30am Feb 25, 2013 3:30am
Quoting Administrato
Hi Mr.Pip and All !

How you do for the stop loss? When you take position? Above D is a good stop loss you think?

And what happen if there is a news that disturb the market?
Stoploss are placed 10 pips above 1.618 extension if you trade the ABCD pattern. Mr Pip does not take into consideration the news.
  • #3,157
  • Feb 25, 2013 3:35am Feb 25, 2013 3:35am
Hi All, I'm my down under, you guessed it, Australia and usually I try to trade during the London hours after im done with my day job. If anyone is interest in forming a group chat on Skype, so we can discuss trades according to Mr Pips rule, more brains are better than one, just message me. In the chat we can stick purely to Mr.Pips rule. I do have other methods but we will keep to this one method to keep it simple and everyone is on the same page. Cheers.
  • #3,158
  • Feb 25, 2013 6:27am Feb 25, 2013 6:27am
hi liemo,, that sounds good to me
Quoting liemo
Hi All, I'm my down under, you guessed it, Australia and usually I try to trade during the London hours after im done with my day job. If anyone is interest in forming a group chat on Skype, so we can discuss trades according to Mr Pips rule, more brains are better than one, just message me. In the chat we can stick purely to Mr.Pips rule. I do have other methods but we will keep to this one method to keep it simple and everyone is on the same page. Cheers.
  • #3,159
  • Feb 25, 2013 6:35am Feb 25, 2013 6:35am
Quoting liemo
Hi All, I'm my down under, you guessed it, Australia and usually I try to trade during the London hours after im done with my day job. If anyone is interest in forming a group chat on Skype, so we can discuss trades according to Mr Pips rule, more brains are better than one, just message me. In the chat we can stick purely to Mr.Pips rule. I do have other methods but we will keep to this one method to keep it simple and everyone is on the same page. Cheers.
hey liemo I'm interested as well I've been trading harmonics since this thread started so some group support would be fantastic where do we go from here??
  • #3,160
  • Feb 25, 2013 6:47am Feb 25, 2013 6:47am
Quoting liemo
Hi All, I'm my down under, you guessed it, Australia and usually I try to trade during the London hours after im done with my day job. If anyone is interest in forming a group chat on Skype, so we can discuss trades according to Mr Pips rule, more brains are better than one, just message me. In the chat we can stick purely to Mr.Pips rule. I do have other methods but we will keep to this one method to keep it simple and everyone is on the same page. Cheers.
We have some interest in getting a chatroom going. If you can private message me your nick on skype I can add you to the chatroom. The more the merrier. Mr Pip. we understand you can get busy with your trading and personal committments but it will be great if you can join and make the occasional guest appearance to provide some tips
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