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Ratios & Harmonics: a Different Way to Trade

  • #3,681
  • Apr 5, 2013 10:43am Apr 5, 2013 10:43am
Hey fellow traders,

At the beginning of embarking on the harmonic journey I was strictly looking for patterns. They are powerful and do work well but only in context. I was struggling and after talking personally with Mr. Pip himself and his close students I understand the patterns aren't very meaningful. It is the Price Action in terms of structure (series of Higher Highs LH LL HL's, New structure high/New structure lows) in conjunction with other confluence such as key resistance/support levels that is by far the most important. Its the true market that a trader is trading regardless of patterns of any kind as they are simply a reflection of what structure has and most likely will form. I was surprised to see how the most basic aspects of technical analysis reign supreme. PA is King!

I urge others who aren't looking at the market this way to join me in learning how this works so we can respect and trade this system to the best we can. The excercises Mr pip posted on youtube are the best. To those who have been able to achieve this good job lets learn from each other. Lets start posting some charts with just confluence without the harmonic patterns to better work on the essential skills.

Have a good weekend guys
  • #3,682
  • Apr 5, 2013 11:45am Apr 5, 2013 11:45am
Quoting buyorsell
Thanks for clarification i just started to learn those. So it would be a valid aggressive C if price does not touch 78.6 but closes between 61.8 and 78.6?
Don't confuse Gartley ratios with aggressive C entry, because whether it touches 78.6 or not on both counts it is a valid aggressive C. but in any case always make sure to consider price action and harmonics and most of all look left and analyse structure for Support/Resistance and only then decide on the strength of the aggressive C, or any entry to that matter
  • #3,683
  • Apr 5, 2013 1:06pm Apr 5, 2013 1:06pm
Thank you Mr. Pip and the rest of your fine students for the material you post here. I started reading this post a month ago, purchased the recommended books, and have been applying my knowledge and experience in a my demo account. The material posted here is very understandable, applicable and everyone here seems very approachable. I joined Forexfactory because of this thread. I appreciate your effort and time spent here. No truer words were spoken: "When the student is ready, the teacher appears". I am ready coach. All of a sudden this is making sense to me. I have a lot more to learn and apply. Thank you again.
  • #3,684
  • Edited 3:19pm Apr 5, 2013 1:41pm | Edited 3:19pm
Hi friends,
Maybe someone of you will give a few thoughts to my questions.

I'm posting two charts of AUD/USD 15min.

First chart is a ABCD trade which i took from point D and as soon it touched 38.2 retraced i moved it to BE+5 and in a couple of minutes i will probably be stopped out.
Edit: Stoped out and after two pips it shot up, tough luck

The two question about this trade i would ask are:
1) would you have taken this trade, because the last bars before D were very bearish and could easily penetrated PRZ as they went very fast? And would you have managed it more aggresively with tighter SL?
2) As per Mr.Pip rules is it sufficient for point D to touch 127.2 or does it need to close beyond it?

Second pic is the same chart, but with a half of Gartley as I think. At point C it retraced almost to 78.6 didn't hit by a pip or two, which would have invalidated the gartley.
Question regarding this one is: how much can it retrace? 61.8+ a couple of pips? halfway from 61.8 to 78.6? Or how much?

Thank you for your answers.
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  • #3,685
  • Apr 5, 2013 3:56pm Apr 5, 2013 3:56pm
Quoting prekeivis
Hi friends, Maybe someone of you will give a few thoughts to my questions. I'm posting two charts of AUD/USD 15min. First chart is a ABCD trade which i took from point D and as soon it touched 38.2 retraced i moved it to BE+5 and in a couple of minutes i will probably be stopped out. Edit: Stoped out and after two pips it shot up, tough luck The two question about this trade i would ask are: 1) would you have taken this trade, because the last bars before D were very bearish and could easily penetrated PRZ as they went very fast? And would you have...
Hi,, 1; yes i would've taken this trade and 2; yes it is sufficient for point D to touch the 127.2 level as per Mr Pip RoE.

as for the gartley it is ok for the BC leg to touch the 78.6 level as long as it doesn't close beyond, and it should close between 61.8 & 78.6
  • #3,686
  • Apr 5, 2013 4:43pm Apr 5, 2013 4:43pm
Quoting prekeivis
Hi friends, Maybe someone of you will give a few thoughts to my questions. I'm posting two charts of AUD/USD 15min. First chart is a ABCD trade which i took from point D and as soon it touched 38.2 retraced i moved it to BE+5 and in a couple of minutes i will probably be stopped out. Edit: Stoped out and after two pips it shot up, tough luck The two question about this trade i would ask are: 1) would you have taken this trade, because the last bars before D were very bearish and could easily penetrated PRZ as they went very fast? And would you have...
It's always easy to see why not to take a failed trade after the fact but I will offer my oppinion.
I prefer to take D trades at or past the 138. Just my preference. Also if you draw a harmonic it ends close to the 138 so that would of been my requirement to consider a trade. So i would not have entered.
Now if I were going to enter were you did I would have dialed down to the M5 and entered on the M5 price action at about 1.0363. Then if you moved to BE not BE+5 you'd still be in the trade or taken profit when it rejected at resistance.
Gartley question already answered.
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Barry
  • #3,687
  • Apr 5, 2013 5:03pm Apr 5, 2013 5:03pm
Thank you for answers, a lot to be learned
  • #3,688
  • Apr 5, 2013 5:04pm Apr 5, 2013 5:04pm
Quoting Bary
It's always easy to see why not to take a failed trade after the fact but I will offer my oppinion. I prefer to take D trades at or past the 138. Just my preference. Also if you draw a harmonic it ends close to the 138 so that would of been my requirement to consider a trade. So i would not have entered. Now if I were going to enter were you did I would have dialed down to the M5 and entered on the M5 price action at about 1.0363. Then if you moved to BE not BE+5 you'd still be in the trade or taken profit when it rejected at resistance. Gartley...
Excellent work Barry!
If you fail to plan, you plan to fail.
  • #3,689
  • Apr 5, 2013 5:11pm Apr 5, 2013 5:11pm
Mr. Pip sorry to bothe ryou but I would like your personal opinion on this .

this is my first pattern trade after reading the PDF files posted by Good2Cu (many thanks Sir.)

was this luck or did i get it right?
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  • #3,690
  • Apr 5, 2013 5:50pm Apr 5, 2013 5:50pm
Hello everyone, I hope everyone is trading well. Mr. Pip took the harmonic system and defined it for himself. The ratios he decided to validate the harmonic patterns aren't the only correct ones; the ratios he chose work best for him. These patterns are valid at other fib levels too. I think it would be a good idea for everyone to learn what truly validates and invalidates the pattern, and decide what works best for oneself while keeping that information in mind.
  • #3,691
  • Apr 5, 2013 6:02pm Apr 5, 2013 6:02pm
Quoting shadodwel
Hello everyone, I hope everyone is trading well. Mr. Pip took the harmonic system and defined it for himself. The ratios he decided to validate the harmonic patterns aren't the only correct ones; the ratios he chose work best for him. These patterns are valid at other fib levels too. I think it would be a good idea for everyone to learn what truly validates and invalidates the pattern, and decide what works best for oneself while keeping that information in mind.
Well said.
If you fail to plan, you plan to fail.
  • #3,692
  • Apr 5, 2013 6:08pm Apr 5, 2013 6:08pm
Quoting DurduSM
Mr. Pip sorry to bothe ryou but I would like your personal opinion on this . this is my first pattern trade after reading the PDF files posted by Good2Cu (many thanks Sir.) was this luck or did i get it right? {image}
I will help you answer those questions but first tell me why you considered those trading opportunities. In detail from ratios and anything else that would validate your decision.

I want to see your thought process. I will then give you my opinion and address any weakness I may spot. Looking forward to your post!
If you fail to plan, you plan to fail.
  • #3,693
  • Apr 6, 2013 2:33am Apr 6, 2013 2:33am
Quoting Mr. Pip
I will help you answer those questions but first tell me why you considered those trading opportunities. In detail from ratios and anything else that would validate your decision. I want to see your thought process. I will then give you my opinion and address any weakness I may spot. Looking forward to your post!

Whel Sir this was my thought process.

AB closed at 78.6 of XA so i took a buy with break eaven when it went above 38.2 of AB and TP at 61.8 of AB.
BC closed between 61.8 and 78.6 of AB so i enered short with break eaven after 38.2 of XA and TP between 78.6 and 88 of XA.
and when price closed between 78.6 and 88 of XA i went long with break eaven at 38.2 of AD and tp between 50 and 61.8 of AD.

stops where at about 5 pips from the las high on the short trade and last low on the 2 long trades.

thank you Sir for considering my question.
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  • #3,694
  • Apr 6, 2013 4:18am Apr 6, 2013 4:18am
Quoting DurduSM
Whel Sir this was my thought process. AB closed at 78.6 of XA so i took a buy with break eaven when it went above 38.2 of AB and TP at 61.8 of AB. BC closed between 61.8 and 78.6 of AB so i enered short with break eaven after 38.2 of XA and TP between 78.6 and 88 of XA. and when price closed between 78.6 and 88 of XA i went long with break eaven at 38.2 of AD and tp between 50 and 61.8 of AD. stops where at about 5 pips from the las high on the short trade and last low on the 2 long trades. thank you Sir for considering my question. {image}

Firstly I would like to say well done on the winning trades. As for the first trade, there is no such thing as an aggressive B trade (At that point in time you could be looking at a potential ABCD or AB=CD). Secondly, you should not just jump into a trade blindly if price has a retracement between 61.8 and 78.6 of the previous swing. In my opinion, it is even more important to take in consideration: price action, direction of order flow, LH/ LL/ HH/ HL, structure, support and resistance and this all adds to your case of confluence. The more confluence you have, the bigger the probability the trade will go where you expect it to go. Taking your first trade as an example from your chart: price has made HH and HL (this could suggest price wanting to go higher), based on your chart order flow is also on the bullish side this tells me that most aggressive c trades with order flow have a higher percentage of succeeding. Do you see how I am slowly trying to build a case? I suggest you review some of Mr.Pip’s posts/charts and videos were he is trying to build his case looking for confluence and therefore giving him a good reason to enter a given trade.
"The only thing I’m addicted to right now is winning."
  • #3,695
  • Apr 6, 2013 9:58am Apr 6, 2013 9:58am
Quoting DurduSM
Whel Sir this was my thought process. AB closed at 78.6 of XA so i took a buy with break eaven when it went above 38.2 of AB and TP at 61.8 of AB. BC closed between 61.8 and 78.6 of AB so i enered short with break eaven after 38.2 of XA and TP between 78.6 and 88 of XA. and when price closed between 78.6 and 88 of XA i went long with break eaven at 38.2 of AD and tp between 50 and 61.8 of AD. stops where at about 5 pips from the las high on the short trade and last low on the 2 long trades. thank you Sir for considering my question. {image}
Hello and thank you for the way you re-presented your trade. This is ideal because it helps me understand what you were thinking at the time of entry.


Now we do not trade on luck thats for gamblers and traders that are not empowered. So lets try to remove that from our vocabulary.


About your entries, did you have any other factors that helped you build your case for entry? Did you just enter on ratios along? What other factors if any did you consider that helped you in your decision making process? Ratios and patterns alone do not offer enough reason to enter a specific setup. We have to build the case, find the facts that will offer extra wieght to you entry.

There are other factors you could have considered that gave you the confluence we would like to see when validating a trade setup. I will let you take a stab at it and then I will present my chart.

I would like for all to present complete chart as this helps you think before you act. This will help you grow as an analyst and a trader. I could sit here present my chart and be done with it but this does not help you bescause it did not force you to think and apply what you may already know. I may also help both you and I address some self destructive tendencies that may be preventing you from growth.

Looking forward to your post.

:nerd:
If you fail to plan, you plan to fail.
  • #3,696
  • Apr 6, 2013 10:11am Apr 6, 2013 10:11am
Quoting Good2Cu
Firstly I would like to say well done on the winning trades. As for the first trade, there is no such thing as an aggressive B trade (At that point in time you could be looking at a potential ABCD or AB=CD). Secondly, you should not just jump into a trade blindly if price has a retracement between 61.8 and 78.6 of the previous swing. In my opinion, it is even more important to take in consideration: price action, direction of order flow, LH/ LL/ HH/ HL, structure, support and resistance and this all adds to your case of confluence. The more confluence...
Great post and great focus on price and structure they are extremely important factors in our trading. I am a believer that trading opportunites occur in areas of confluence and that's something we need to find. Technically there may not be a specific setup called an aggressive B but that does not mean there is not a high probability trading opportunity present. We also at the time may not be sure if B is really B yet it could be C of an ABCD or something else that will be confirmed later as more price prints. This means we must keep an open mind and look at every swing as a potential trading opportunity. If the reasons are present that you would place you in that trade, trade it.

I really enjoyed your post and thought process. Its refreshing to see this kind of contribution!!! Keep it up!

If you fail to plan, you plan to fail.
  • #3,697
  • Apr 6, 2013 10:38am Apr 6, 2013 10:38am
I also would like to take the opportunity to mention that there are traders here with different levels of knowledge and trade other patterns that I do not trade. This is a home for traders that trade harmonics and all are welcomed.

My rules are my rules and I have made these patterns my own as you should do as well. The traders that post other patterns diffent from mine have made them their own as well. It does not make them invalid or wrong. I am sure they have tested those specifice rules set and have validated a positive expectancy.

Lets value their insight and experience they are definately welcomed in my house.

To the newer traders that are learning harmonics and want to adapt my rules, focus on those and only the patterns that have been presented and you have become comfortable with. As time progresses and your skill set improves you will make the patterns your own by making changes to the rules to fit your style and comfort.

I am not here to change you or your style and my way is one of many. I am simply trying to help traders that do like ratios and harmonics and have been struggling with this style a method that works for me. You may not have the result you would like or are not consistent and I can hopefully help.

Newbies are also very welcomed as we start from scratch and have built a foundation for you to grow from. Lets be nice to each other and value everyones insight its important to me and should be to you as well.
If you fail to plan, you plan to fail.
  • #3,698
  • Apr 6, 2013 11:44am Apr 6, 2013 11:44am
Quoting Mr. Pip
I also would like to take the opportunity to mention that there are traders here with different levels of knowledge and trade other patterns that I do not trade. This is a home for traders that trade harmonics and all are welcomed. My rules are my rules and I have made these patterns my own as you should do as well. The traders that post other patterns diffent from mine have made them their own as well. It does not make them invalid or wrong. I am sure they have tested those specifice rules set and have validated a positive expectancy. Lets value...
Mr PIP just wanted to say publicly that I appreciate your PM and this statement you have posted. It clears things up and I wouldn't have been able to say it any better. As I have responded to your PM thank you and I will be happy to contribute here as time allows. I also wanted to say thank you to everyone else who has shown support with their PM's as well. Thank you and may we all make BANK no matter what trades we decide to take. Even if they are opposite of each others we may both be right.
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #3,699
  • Apr 6, 2013 12:36pm Apr 6, 2013 12:36pm
Hello traders, done a bit of market harmonic analysis for the recent EURUSD move on 60 min chart, any thoughts? its easy to analyse market after-all but i think if we do more analysis and back testing it would be much much easier to spot right setups on a live chart. Good weekend all
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  • #3,700
  • Apr 6, 2013 12:54pm Apr 6, 2013 12:54pm
Quoting buyorsell
Hello traders, done a bit of market harmonic analysis for the recent EURUSD move on 60 min chart, any thoughts? its easy to analyse market after-all but i think if we do more analysis and back testing it would be much much easier to spot right setups on a live chart. Good weekend all {image}
I agree with you the more you analyze the better and quicker you will start to spot these patterns but lets not forget to find confluence as this adds value to the pattern being evaluated.
If you fail to plan, you plan to fail.
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