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"Ratios & Harmonics: a Different Way to Trade." Summary 37 replies

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Attachments: Ratios & Harmonics: a Different Way to Trade
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Ratios & Harmonics: a Different Way to Trade

Quoting Mr. Pip
Great job! Thanks!
It is my honor. You have taught me so much but I still have so much to learn. Cheers.
Finally out of the shadows.
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...
Thanks for working through Good2Cu's charts, as I was mulling over the same area on the charts. This helped me understand how to read order flow better.
Hello traders,

contributing my chart for the sake of contribution..... AUD M5

I'm currently looking to enter in the AB=CD PRZ

happy trading to all

cheers
Gary
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Quoting mm3934
Hello traders, contributing my chart for the sake of contribution..... AUD M5 I'm currently looking to enter in the AB=CD PRZ happy trading to all cheers Gary {image}
Update: I ended up taking a short in the PRZ @ 1.03352.
I was wary of pa and played a tight discretional stop. Had a chance to be out @ -5, hesitated and ended up -11.5. which is ok.

Cheers
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Quoting Mr. Pip
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. {image}
Mr. Pip, thank you for the reply! I forgot to mention that the failed trade was a break even trade, and not a losing trade. As you pointed out on your chart, I moved my stop loss to break even once price breached the 38.20%.
"The only thing I’m addicted to right now is winning."
Morning Mr. pip,
I’m taking this this trade, I am selling at confluence level with price action confirmed and retest the high again. I want to ask that when the price move down in my direction and form HH, HL, LH, LL and reach 38.2.
after that, it formed NSH, then I choose to close the trade, I wish to know that how would you manage for this trade, do you just move to breakeven or close when form NSH ? thanks ! please help to answer my question, I will appreciate
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Mr pip and others, I have a question about price action. From my experience, the way multiple price bars form near the PRZ is different each time. So a pin bar might mean something different based on the bars. What do you guys think of the price bars forming here at the 61.8 zone? I didn't trading this because it just doesnt look rigiht because it looks like a breakout formation which could go either way.

Here i have harmonic structure, demand zone, and a possible aggressive 61.8(with modified tp)

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Quoting Starry
Mr pip and others, I have a question about price action. From my experience, the way multiple price bars form near the PRZ is different each time. So a pin bar might mean something different based on the bars. What do you guys think of the price bars forming here at the 61.8 zone? I didn't trading this because it just doesnt look rigiht because it looks like a breakout formation which could go either way. Here i have harmonic structure, demand zone, and a possible aggressive 61.8(with modified tp) {image}
Starry,
The one thing that sticks out to me is the initial AB wave. It looks forced as the A point is not a major high/low, in my humble opinion. There is obviously more to the up wave off the chart on the left. The EUR moved nearly straight from 1.304 to 1.315. Trying to put minor swings within that large move may prove difficult and increase your risk. This is where I went wrong with my ABCD studies as I was doing very much the same.

Now, the retracement in progress from the 1.315 high to the 1.311 low could provide opportunity.

As I am now including as much information as I can, while still keeping it simple, HA!, I find that I try to force myself into the market when I should just wait. As I wrote in my journal yesterday--"Be superficial, look for the sexiest setups in the prettiest markets". I too focus on the EURUSD for liquidity and spread, but I also miss very, very moves in other markets. USDJPY is on fire right now, the commodity guys USDCAD and AUDUSD also have nice moves.

On the same page, patience burned me today. I had the right target for my EURUSD short, but bailed for a few + pips due to PA. Right, wrong, who knows, but I need patience.

Anyways, I did not answer your question, but hopefully provided some welcome insight.

Bronco

PS. Market did hit 61.8% retrace on current down swing, about 5 pips in profit now.
Quoting Starry
Mr pip and others, I have a question about price action. From my experience, the way multiple price bars form near the PRZ is different each time. So a pin bar might mean something different based on the bars. What do you guys think of the price bars forming here at the 61.8 zone? I didn't trading this because it just doesnt look rigiht because it looks like a breakout formation which could go either way. Here i have harmonic structure, demand zone, and a possible aggressive 61.8(with modified tp) {image}
(1) E/U Main Trend for the Day is Up.

(2) You marked a nice Demand Zone and Price Action is within this zone.
As long as Price Action is within this Demand Zone is an aggressive entry, and then goes above this zone it is a good sign with a conservative entry.

(3) There is a 61.8% retracement down.

These are 3 things that lined up nicely to take a Long when you are at the computer and you recognised this ABC-pattern, must Enter( with a SL).
Whether it hits SL or TP does not matter, it is a Must Take Long entry.


Starry, what other criteria are you waiting for before Entry ??
Quoting foxybunny
(1) E/U Main Trend for the Day is Up. (2) You marked a nice Demand Zone and Price Action is within this zone. As long as Price Action is within this Demand Zone is an aggressive entry, and then goes above this zone it is a good sign with a conservative entry. (3) There is a 61.8% retracement down. These are 3 things that lined up nicely to take a Long when you are at the computer and you recognised this ABC-pattern, must Enter( with a SL). Whether it hits SL or TP does not matter, it is a Must Take Long entry. Starry, what other criteria are...
Hmm, well im trying to develop my skills separately and combine them for entry.

So I had the 61.8 and demand, but for me price action and order flow is a little tricky, so I was trying to incorporate those, specifically price action. Price action is really tricky because the way I seem to be approaching it is based on experience, not rule based.

In this case, I guessed orderflow was changing and the structure near the 61.8 looked like a triangle structure so it could break out either way. I've never seen this before so I decided to pass.

I consider the mini structure and the bars at and approaching the trading zone to be part of price action, or at least this is what im experimenting with.

I suspect this view of price action isnt a very developed or useful skill for me yet, but ill figure it out.

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Quoting BroncoCap
Starry, The one thing that sticks out to me is the initial AB wave. It looks forced as the A point is not a major high/low, in my humble opinion. There is obviously more to the up wave off the chart on the left. The EUR moved nearly straight from 1.304 to 1.315. Trying to put minor swings within that large move may prove difficult and increase your risk. This is where I went wrong with my ABCD studies as I was doing very much the same. Now, the retracement in progress from the 1.315 high to the 1.311 low could provide opportunity. As I am now including...
Hey !

Yeah, I was afraid orderflow was breaking down, so i was like hmmm....

What was your entry reasons for the short today , if i may ask? I didnt find any harmonics for that, though i suspected it might go down then.
I don't trade daily time frame, but look at this. Absolutely beautiful, amazing. A perfect butterfly. I probably wouldn't have traded it since there isn't any structure up there. Well, back in 2009 there was.
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Quoting Good2Cu
Mr. Pip, thank you for the reply! I forgot to mention that the failed trade was a break even trade, and not a losing trade. As you pointed out on your chart, I moved my stop loss to break even once price breached the 38.20%.
If you fail to plan, you plan to fail.
My internet is in an out so I will try to answer some of these questions bare with me.
If you fail to plan, you plan to fail.
Quoting mm3934
Update: I ended up taking a short in the PRZ @ 1.03352. I was wary of pa and played a tight discretional stop. Had a chance to be out @ -5, hesitated and ended up -11.5. which is ok. Cheers {image}
Tell me your case for entry. Seems to me like price was accelerating into your PRZ?
If you fail to plan, you plan to fail.
Quoting Starry
Hey ! Yeah, I was afraid orderflow was breaking down, so i was like hmmm.... What was your entry reasons for the short today , if i may ask? I didnt find any harmonics for that, though i suspected it might go down then.
Starry,
I was playing the short side based on 1min chart price action. Price hit 1.3145ish then started a series of short term lower highs/lower lows. I was playing a move back to yesterday's high at ~1.3115. The PA was very choppy but eventually moved lower to that level where it exploded up. I was a little late to the move and was impatient.

One thing I have been keen on in recent studies are breakouts like what you drew in your chart. Markets get themselves in a position where they MUST move, so I have waited to see the direction, then join in. If I am wrong, exit and reverse. Most likely one of the directions will move sufficient to cover the loss plus some.

I really feel that it takes all the tools in the toolbox to succeed. One pattern is great, but coupled with PA, structure, higher time frames, etc., etc. may be key. The idea is not to get mechanistic about it. Listen to the market and your gut (aka experience), know your risk, have a plan, participate. That is where I am, struggling, but inching forward.

Good luck!
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I miss this one waiting for the price to go the range of 128 to 138

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I should have enter on The D part of the pattern


EDucational purpose only
Quoting ky_tan91
Morning Mr. pip, I’m taking this this trade, I am selling at confluence level with price action confirmed and retest the high again. I want to ask that when the price move down in my direction and form HH, HL, LH, LL and reach 38.2. after that, it formed NSH, then I choose to close the trade, I wish to know that how would you manage for this trade, do you just move to breakeven or close when form NSH ? thanks ! please help to answer my question, I will appreciate {image}{image}
Good guestion, I use the same process to manage my trade as I do to enter. I look at structure, orderflow, and price action.

Let's simplify the terminology a bit. Structure is composed of NSH (New Structure High), LH (Lower High), NSL (New Structure Low), and HL (Higher Low). A LL is nothing more than a NSL.

At first you are trading a huge pattern that is more relevant to the larger more extended swings. This is what considering the context is all about. As you can notice the legs of your pattern had many corrective swings within them but you used the main highs and lows to identify them. Your process should have been the same for the management of your trade. It is unreasonable to expect otherwise. Price will not move in a straight line to your profit target but considering the context of the swings and demensions of your pattern could of kept you analyzing the proper points.

Your assestment of the NSH that took you out of the trade was nothing more than smaller corrective swings inside a larger more important swing as far as context is concerned. I am presenting a chart that expains this further. The view is zoomed in so you can see what I mean.

Lets first look at the smaller swings as they were you guide to exiting your trade. These are not in the context of your pattern as your pattern was identified buy the longer term order flow. These swings can be used to help you determine if this correction is short term or longer term or if the expectation of the longer term orderflow will hold which is the one you are interested in. The blue text shows this short term structure identification. The green lines help highlight the weakness setting in in the short term order flow and a break down of buying strength.

Structure analysis helps you identify where the market wants to go and order flow analysis tells you for how long this should continue.

As you can see the yellow arrows are the proper swings you need to analyze that are in context with your pattern. You got to breakeven on a strong correction that produced a deep HL. Technically a higher low indicates an expectation of a NSH but in this case the deep pullback tells you that bullish order flow entering at this level should be weak and it is likely to achieve a LH and relative speaking a shallow correction which you also got. Price also respectect light structure pointed out by the green horizontal line. The smaller swings although showed NSH also showed a rappidly weaking bullish order flow and some confluence of the 61.8 and bearish momentum increasing.

NOTE: A helpful hint, when we see price respecting light structure like this indicates weakness on the driving force.

It is okay to use short term order flow to asses the expectation of the longer term order flow but you should consider the context of your trade to the orderflow. Failing to do this will hurt your trade management and ultimately your pocket.

I hope I answered your question If I didn't please let me know how else I can help.
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If you fail to plan, you plan to fail.
Quoting Starry
Mr pip and others, I have a question about price action. From my experience, the way multiple price bars form near the PRZ is different each time. So a pin bar might mean something different based on the bars. What do you guys think of the price bars forming here at the 61.8 zone? I didn't trading this because it just doesnt look rigiht because it looks like a breakout formation which could go either way. Here i have harmonic structure, demand zone, and a possible aggressive 61.8(with modified tp) {image}
Why did you choose that point to start your Fib from? What criteria are you using?
If you fail to plan, you plan to fail.
Quoting BroncoCap
Starry, The one thing that sticks out to me is the initial AB wave. It looks forced as the A point is not a major high/low, in my humble opinion. There is obviously more to the up wave off the chart on the left. The EUR moved nearly straight from 1.304 to 1.315. Trying to put minor swings within that large move may prove difficult and increase your risk. This is where I went wrong with my ABCD studies as I was doing very much the same. Now, the retracement in progress from the 1.315 high to the 1.311 low could provide opportunity. As I am now including...

If you fail to plan, you plan to fail.
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