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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

  • #3,781
  • Apr 15, 2013 11:27am Apr 15, 2013 11:27am
Quoting CNTrader
Hey Traders hope this finds you all doing well. As I say this is one of my fav patterns as it opens the door to many others and banking some nice pips. Takes Discipline and the understanding of PA to trade it well. With that said all 3 targets were attained over night and here is a new Bearish shark Pattern developed that i am now involved with. Trade your plan. Have fun, stay disciplined and may we all make bank!! {image}
Ok since its quiet in here I'll post a couple of charts on the GBP/JPY that I got my eye on. The areas in orange are on my radar for potential action taking on my part. Enjoy, have fun, tarde your plan and again may we all make bank. Thats it for me this afternoon. Everyone make a fantastic day!!
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Don't follow me! You can and most likely will LOSE all your money!!!!
  • #3,782
  • Apr 15, 2013 11:30am Apr 15, 2013 11:30am
Hello Traders,

Great reads and great trades as well. I am happy to not only see some action again but also some excitement. I am not planning on going away and hopefully this will be our home for a long time to come. I just want to make sure we are all on the same page.

We including myself are here to learn not to have things done for us. I challenge you to post trades taken good or bad like intinerant did above. This is beautiful great trade and easy to follow that was going through the trader's mind. This help me and other address the issues and build efficiency. Good luck to all and letts get things going there is much to do.

We have not covered other patterns because you need to master these first.

The shark pattern has been mentioned. I am not familiar with this pattern but I believe there is a PDF on Scott Carney's website free to down load. Remember to extensively test any pattern you wish to trade. back and forward test.
If you fail to plan, you plan to fail.
  • #3,783
  • Apr 15, 2013 11:32am Apr 15, 2013 11:32am
Quoting CNTrader
Ok since its quiet in here I'll post a couple of charts on the GBP/JPY that I got my eye on. The areas in orange are on my radar for potential action taking on my part. Enjoy, have fun, tarde your plan and again may we all make bank. Thats it for me this afternoon. Everyone make a fantastic day!! {image} {image}
Thank you for your contribution and posts. I hope they work out for you.
If you fail to plan, you plan to fail.
  • #3,784
  • Apr 15, 2013 11:35am Apr 15, 2013 11:35am
Quoting Mr. Pip
Hello Traders, Great reads and great trades as well. I am happy to not only see some action again but also some excitement. I am not planning on going away and hopefully this will be our home for a long time to come. I just want to make sure we are all on the same page. We including myself are here to learn not to have things done for us. I challenge you to post trades taken good or bad like intinerant did above. This is beautiful great trade and easy to follow that was going through the trader's mind. This help me and other address the issues and...
Was waiting for you to mention it before I posted. If anyone wants the PDF as I have gotten many requests for the info on the Shark here is the link. I did not pass out PDF as I have given my word that I would not disseminate the info but instead direct people to Scott's site. Here is the link. Hope you don't mind Mr Pip although I doubt just was waiting for your lead. Again great job with the thread!!

http://www.harmonictrader.com/phplist/?p=subscribe&id=4
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #3,785
  • Edited 12:18pm Apr 15, 2013 12:03pm | Edited 12:18pm
Maybe some more could be said about types of weaknesses in order flow. I havent practiced or heard much about this at all. For example, Ive been monitoring SLW, and it has finally gone into a PRZ where I would consider buying. However, Im not sure about the order flow component. Opinions about order flow?



Possible Reason for Trade

Structure
Demand Zone and Harmonic AB = CD
Price Action
pin bar, and a big gap into structure (acceleration toward demand zone?). On the other hand, the gap seems way to big and will probably act as significant resistance.

Order Flow
I dont see any weakness. What sort of weakness would I be looking for? Is the pin bar a weakness? I see less than a 38.2 retracement for the AB = CD, which isnt totally good for a bullish movement, but it did accelerate and gap.

I will wait because it hink its still rather bearish but idk.
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  • #3,786
  • Apr 15, 2013 12:12pm Apr 15, 2013 12:12pm
HI MR. PIPS THNX for the thread can you correct the pattern I make thnx!!
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Is oky to put the stoploss Mr.Pips 10 pips below the 138.20 for better risk ratio?
IS my pattern correct PLS correct thnx

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same question above is oky below 138.20 ?
Is my pattern corect thnx


FOR EDUCATIONAL PURPOSE ONLY !!!!
  • #3,787
  • Apr 15, 2013 12:48pm Apr 15, 2013 12:48pm
MOre questions MR. PIPS = ) PLs correct my pattern if there wrong


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where will I put my entry? on this small range BOX?


OR


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Bigger range BOX??
thnx in advance mr pips

For Education purpose ONLY!!!!!
  • #3,788
  • Apr 15, 2013 1:01pm Apr 15, 2013 1:01pm
Quoting Starry
Maybe some more could be said about types of weaknesses in order flow. I havent practiced or heard much about this at all. For example, Ive been monitoring SLW, and it has finally gone into a PRZ where I would consider buying. However, Im not sure about the order flow component. Opinions about order flow? Possible Reason for Trade Structure Demand Zone and Harmonic AB = CD Price Action pin bar, and a big gap into structure (acceleration toward demand zone?). On the other hand, the gap seems way to big and will probably act as significant resistance....
Hey Starry,

Weakness is tricky and I still struggle with it as it may not be about one simple fact. If you look at the chart we see absolutely no commitment on the bulls at all. We are at a possible demand zone so we may get a bounce but price shows acceleration into the zone. Even the pin bar shows no commitment by the bulls. It has a tail on the top and has a bearish close. You have a couple of gaps meaning the bears are selling at whatever price they can and buyers have gone on vacation for now. If they think its an awesome selling opportunity then it will take some convincing to get them to buy. There isn't enough confluence for me to think long at this point. If you look to the left you see a previous support that cracked and could now be resistance so that is dangerous to buy into. Gaps can act as S/R as well so we would be buying into that as well.

We may get a crazy bounce and I'm cool with that. Price hasn't shown it wants to go up yet so I would let this one go for now. If we get a bull spike up followed by a retrace that coincides with the demand zone we could then see if there is enough reason to enter. But for now the case is solely for the bears.

This would be a different story if it lined up with the 61-78 zone (I'm looking for a less deep retracement) support abcd completion with the second leg having lots of buying interest. If the last leg was choppy and less impulsive this may be a different story. Those signs would help us build a case for weakness.

Does this help any? Cheers.
Finally out of the shadows.
  • #3,789
  • Apr 15, 2013 1:03pm Apr 15, 2013 1:03pm
Thanks for posting the shark pdf, ironically, I found it by using google. I registered at Scotts website last week but they gave me the harmonic trader pdf to download instead of the shark. For the shark pattern, the ratios might seem a bit confusing. They were a bit confusing for me until I figured it out. I thought I would explain it to help out others. You take the trade at Point C. The shark pattern usually leads into other patterns as well.

Point B = 1.13 - 1.618 retracement of XA,
Point C = 0.886 - 1.13 retracement of 0X, AND a 1.618 - 2.24 retracement of AB
  • #3,790
  • Apr 15, 2013 1:19pm Apr 15, 2013 1:19pm
Quoting gaf
Hey Starry, Weakness is tricky and I still struggle with it as it may not be about one simple fact. If you look at the chart we see absolutely no commitment on the bulls at all. We are at a possible demand zone so we may get a bounce but price shows acceleration into the zone. Even the pin bar shows no commitment by the bulls. It has a tail on the top and has a bearish close. You have a couple of gaps meaning the bears are selling at whatever price they can and buyers have gone on vacation for now. If they think its an awesome selling opportunity...
Thanks that does help alot! Very well written.
I was thinking a gap might mean that the bears found it hard to push price down so bulls might be able to start gaining control. Ive been influenced by watching forex gap up slightly at the completion point of an abcd, and then go down. But in this case the gap is so huge I think its better definitely to wait.

I can imagine it stalling with a couple more pin bars, or a crazy bounce up, if it is truly a turnaround point.
  • #3,791
  • Apr 15, 2013 1:25pm Apr 15, 2013 1:25pm
Took this trade this morning. I now see that there was a gartley forming and when that failed the price action blasted through my entry. Had a limit set at the AB=CD and 127% EXT, but was stopped out at 10pips almost immediately. Entry was also near the 88.6, so I figured there would be less risk if it blasts through since I would only need a small stop above the 100% retrace of XA.

I should have waited for price action to be rejected at fib before entry. I have trouble with that since when I wait for the rejection, I get a late entry.

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  • #3,792
  • Apr 15, 2013 1:31pm Apr 15, 2013 1:31pm
Looking at this trade forming now on EUR/USD

AB=CD with 70.7% Retrace of AB.

Looking to enter at AB=CD and 127% EXT of AB.

Stop 10pip below the 141% extension of AB

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  • #3,793
  • Apr 15, 2013 4:42pm Apr 15, 2013 4:42pm
Mr.Pip and other traders, here is a failed trade I took earlier today, could you take a look and see if I missed something. FYI, I wasn’t at my trading desk to take the initial aggressive c short (pink lines).
I took an aggressive c short trade, the green box, for a potential abcd completion.

My reasoning for entering:
Retracement between 78.6% and 61.8%, some structure (cyan lines) and bearish order flow.

Initially, as I had expected price went down, however price reversed at around the 61.8% retracement (orange lines) of the previous swing (indicating a possible bullish abcd). Price continued upwards and I got stopped out.

(The pink lines indicate a completed ABCD)

Hindsight observations:
The second chart shows from a bigger swing, that price continued up and reversed between
78.6% and 61.8% retracement. The yellow line shows resistance. FYI, I took an aggressive c short trade here, reached my target point for a good 70 pips.

However I am more interested in my failed trade, is it just one of those trades that don’t work out? Or should I have anticipated the fact that price reached an exhaustion point after the completion of the abcd (pink lines) and that price had to retrace higher, instead of another bearish abcd (green lines)?.
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"The only thing I’m addicted to right now is winning."
  • #3,794
  • Apr 15, 2013 5:15pm Apr 15, 2013 5:15pm
Quoting Good2Cu
Mr.Pip and other traders, here is a failed trade I took earlier today, could you take a look and see if I missed something. FYI, I wasn’t at my trading desk to take the initial aggressive c short (pink lines). I took an aggressive c short trade, the green box, for a potential abcd completion. My reasoning for entering: Retracement between 78.6% and 61.8%, some structure (cyan lines) and bearish order flow. Initially, as I had expected price went down, however price reversed at around the 61.8% retracement (orange lines) of the previous...
Hey Good2Cu,
My thoughts are:

1) The initial retrace to 50% that then did not make it back to the low, but subsequently went to 61.8% to me represents a higher low = possible start to bullish PA. As such, your trade would be counter-trend and 61.8% would be the target per Mr. Pip's general rules.

2) I like to take both sides of the trade. Assuming good risk-reward, it is probable that one of the two ABCDs would hit your target and thereby stopping out the other. 50% win rate is just fine if you are trading at least 2:1 reward:risk.

3) Based on your magenta/pink lines, you had an AB=CD or ABCD move that completed and a potential PRZ. This too lends to a bullish (preliminary) PA bias.

I was actually stacking long positions during your first orange wave, but allowed a 50+ net pip move go against me. One step forward, 18 steps back. But you gotta pay to play and stick with it. But there sure were some nice ABCDs in both your charts!

Good luck, I hope my suggestions help and are in line with other's thoughts.

Edit: Just looked more closely at your chart, 95 tick chart threw me off. I was trading the second orange move, breakout of your structure (cyan lines + 61.8%), up to 1.31. I started with a short bias given the larger time frame, but those higher lows I mentioned gave me reason to suspect a long move. Market move right to Friday's close before rolling over (more "structure" of a different kind!).

Bronco
  • #3,795
  • Apr 15, 2013 5:37pm Apr 15, 2013 5:37pm
Quoting gaf
Hey Starry, Weakness is tricky and I still struggle with it as it may not be about one simple fact. If you look at the chart we see absolutely no commitment on the bulls at all. We are at a possible demand zone so we may get a bounce but price shows acceleration into the zone. Even the pin bar shows no commitment by the bulls. It has a tail on the top and has a bearish close. You have a couple of gaps meaning the bears are selling at whatever price they can and buyers have gone on vacation for now. If they think its an awesome selling opportunity...
Great job! Thanks!
If you fail to plan, you plan to fail.
  • #3,796
  • Apr 15, 2013 5:39pm Apr 15, 2013 5:39pm
Quoting BroncoCap
Hey Good2Cu, My thoughts are: 1) The initial retrace to 50% that then did not make it back to the low, but subsequently went to 61.8% to me represents a higher low = possible start to bullish PA. As such, your trade would be counter-trend and 61.8% would be the target per Mr. Pip's general rules. 2) I like to take both sides of the trade. Assuming good risk-reward, it is probable that one of the two ABCDs would hit your target and thereby stopping out the other. 50% win rate is just fine if you are trading at least 2:1 reward:risk. 3) Based...
Hi BroncoCap, thanks for your insight!
I did have in the back of my mind that the abcd (pink lines) had recently completed and that price may still retrace to the upside. For some reason, the fact that today’s price action (up to the point when I took my failed trade) indicated bearish strength got me in to the trade. I guess I was just too fixated on that, which caused me to not see the whole picture clearly and ignore the prz of the abcd and HL.

Edit: Now that I think about it, it was a pretty simple and dumb mistake on my part. The most important thing is to learn from it and avoid repeating it in the future.
"The only thing I’m addicted to right now is winning."
  • #3,797
  • Apr 15, 2013 5:41pm Apr 15, 2013 5:41pm
Quoting shadodwel
Thanks for posting the shark pdf, ironically, I found it by using google. I registered at Scotts website last week but they gave me the harmonic trader pdf to download instead of the shark. For the shark pattern, the ratios might seem a bit confusing. They were a bit confusing for me until I figured it out. I thought I would explain it to help out others. You take the trade at Point C. The shark pattern usually leads into other patterns as well. Point B = 1.13 - 1.618 retracement of XA, Point C = 0.886 - 1.13 retracement of 0X, AND a 1.618 - 2.24...
Those correction points seem quite large to me. As with any pattern make it your own. Optimize the prz if it can be based on what we know about confluence. Test this and see if the patterns remains profitable.
If you fail to plan, you plan to fail.
  • #3,798
  • Apr 15, 2013 5:44pm Apr 15, 2013 5:44pm
Quoting nick Ben
Took this trade this morning. I now see that there was a gartley forming and when that failed the price action blasted through my entry. Had a limit set at the AB=CD and 127% EXT, but was stopped out at 10pips almost immediately. Entry was also near the 88.6, so I figured there would be less risk if it blasts through since I would only need a small stop above the 100% retrace of XA. I should have waited for price action to be rejected at fib before entry. I have trouble with that since when I wait for the rejection, I get a late entry. {image}...
Yes from an order flow and price action stand point you can see that you had a very shallow correction and a significant increase in momentum entering the completion point all should have kept you from entering the trade.
If you fail to plan, you plan to fail.
  • #3,799
  • Apr 15, 2013 6:09pm Apr 15, 2013 6:09pm
Quoting Good2Cu
Mr.Pip and other traders, here is a failed trade I took earlier today, could you take a look and see if I missed something. FYI, I wasn’t at my trading desk to take the initial aggressive c short (pink lines). I took an aggressive c short trade, the green box, for a potential abcd completion. My reasoning for entering: Retracement between 78.6% and 61.8%, some structure (cyan lines) and bearish order flow. Initially, as I had expected price went down, however price reversed at around the 61.8% retracement (orange lines) of the previous...
The trade might have not worked out and your entry was excellent but the rules are designed to protect your soldiers from getting killed you should have been at break even as initially you had a smaller ABCD reversal. I assume you were going for the bigger move down but trading is about controlling risk. Effective trade management is critical.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (133 Tick) 4_15_2013.jpg Size: 169 KB
If you fail to plan, you plan to fail.
  • #3,800
  • Apr 15, 2013 6:34pm Apr 15, 2013 6:34pm
Quoting Forexbuster
HI MR. PIPS THNX for the thread can you correct the pattern I make thnx!! {image} Is oky to put the stoploss Mr.Pips 10 pips below the 138.20 for better risk ratio? IS my pattern correct PLS correct thnx {image} same question above is oky below 138.20 ? Is my pattern corect thnx FOR EDUCATIONAL PURPOSE ONLY !!!!
I want you to think about this. Me giving you the answer will not help you. Follow others' lead look at how they are presenting thier potential trades I need to know what is going through your mind here is the first chart you posted. On the others you tell me what you are seeing anf thinking. We will go from there.
Attached Image (click to enlarge)
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If you fail to plan, you plan to fail.
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