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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

  • #4,181
  • May 20, 2013 1:01pm May 20, 2013 1:01pm
Quoting CNTrader
Ok traders hope you all had a great weekend and you all make a great week!! Here are a few charts for you to have fun with on just a few of the trades I am currently involved with. I have taken the fib levels off to make charts clearer and to encourage those that have the desire to learn and practice to find the patterns on their own charts and see for themselves. If you do it yourself then you will get better at the visualization of the patterns before they complete. See for yourself the patterns and find the confluence, look left see the structure,...
Hey Traders, here is an update:

Target 1 attained on Usd/Cad

Attached Image (click to enlarge)
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Enjoy, have fun, make a great week, do your due diligence, trade your plan and may we all make Bank!!
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #4,182
  • May 20, 2013 1:46pm May 20, 2013 1:46pm
A wonderful day! SLW has formed a large bull bar today, which is exactly what i would expect given the turning point i predicted. I got in very near yesterdays low, $22.80.... I called it just right! I will now hope it will continue going up, who knows .....



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  • #4,183
  • May 20, 2013 2:10pm May 20, 2013 2:10pm
Quoting Starry
A wonderful day! SLW has formed a large bull bar today, which is exactly what i would expect given the turning point i predicted. I got in very near yesterdays low, $22.80.... I called it just right! I will now hope it will continue going up, who knows ..... {image}
Can't get an entry better than that! Let us know how you manage it. Is it an abcd as well or is it a R:R trade?
Finally out of the shadows.
  • #4,184
  • May 20, 2013 2:35pm May 20, 2013 2:35pm
Quoting gaf
{quote} Can't get an entry better than that! Let us know how you manage it. Is it an abcd as well or is it a R:R trade?
its a trend line trade .... and its potential is great in my opinion Ill update you guys ...... Im actually not using a stoploss on this one, my bad ill probably get a lot of bull for that one . Would never do this in forex! I think of it more as an investment Doesnt matter if it goes down, it will go up eventually above my price, unless the company decides it wants to crash or something ..... but the company is a good one so its alright.

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  • #4,185
  • May 20, 2013 4:34pm May 20, 2013 4:34pm
Quoting CNTrader
{quote} Hey Traders, here is an update: Target 1 attained on Usd/Cad {image} Enjoy, have fun, make a great week, do your due diligence, trade your plan and may we all make Bank!!
keep up the good work. thanks
Greatness Is Only Achieved By Working Hard... Depends How Bad You Want It!!
  • #4,186
  • May 20, 2013 4:44pm May 20, 2013 4:44pm
Quoting Starry
{quote} its a trend line trade .... and its potential is great in my opinion Ill update you guys ...... Im actually not using a stoploss on this one, my bad ill probably get a lot of bull for that one . Would never do this in forex! I think of it more as an investment Doesnt matter if it goes down, it will go up eventually above my price, unless the company decides it wants to crash or something ..... but the company is a good one so its alright. {image}
Depends on how you manage your stop. I have a catastrophic stop but I manage my stop as PA forms. Its up to the individual and how experienced you are as a trader. There are a lot of myths surrounding R:R, trading without a stop etc. You have to understand what your hit ratio is, the expectation of the trade, the probability of it going up x before it goes down y the type of market you're in etc. Its not cut and dried like most would have you believe. Do your homework, find what is most profitable and have at it . Keep us posted.
Finally out of the shadows.
  • #4,187
  • May 20, 2013 4:44pm May 20, 2013 4:44pm
Quoting CNTrader
{quote} Hey Traders, here is an update: Target 1 attained on Usd/Cad {image} Enjoy, have fun, make a great week, do your due diligence, trade your plan and may we all make Bank!!
Awesome CN! Thanks for your posts.
Finally out of the shadows.
  • #4,188
  • May 20, 2013 5:30pm May 20, 2013 5:30pm
Hi

Would someone mind checking this Bat Pattern that didnt work out ...............according to my chart analysis
Cheers. J
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Winning isnt everything but coming second sucks (Charlie Brown)
  • #4,189
  • May 20, 2013 6:58pm May 20, 2013 6:58pm
Quoting jjre65
Hi Would someone mind checking this Bat Pattern that didnt work out ...............according to my chart analysis Cheers. J {image}
Again study this it should help. Your Bat in incorrectly drawn.
Attached Image
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #4,190
  • May 20, 2013 7:01pm May 20, 2013 7:01pm
Quoting CNTrader
{quote} Hey Traders, here is an update: Target 1 attained on Usd/Cad {image} Enjoy, have fun, make a great week, do your due diligence, trade your plan and may we all make Bank!!
Target 2 attained stops rolled to break even.

Attached Image (click to enlarge)
Click to Enlarge Name: usdcad 4hr.gif Size: 61 KB


Enjoy, have fun, make a great week, do your due diligence, trade your plan and may we all make Bank!!
Don't follow me! You can and most likely will LOSE all your money!!!!
  • #4,191
  • May 20, 2013 10:32pm May 20, 2013 10:32pm
Quoting CNTrader
{quote} Again study this it should help. Your Bat in incorrectly drawn. {image}
Thanks for your reply CNTrader, but Im not sure how to interpret the numbers on your drawings
Is there a previous post w description?

Cheers J.
Winning isnt everything but coming second sucks (Charlie Brown)
  • #4,192
  • Edited 5:43am May 21, 2013 4:27am | Edited 5:43am
Using Bollinger Bands to identify valid harmonic pattern points.

I'm using the Bollinger Bands to define the waves on the chart. For this, I add the Bollinger Bands indicator on the chart and each time a candle is touching one of the bands, I can determine if this would be a valid point to be used to identify harmonic patterns.

How to do that? if the price is touching the top band, I look at the last time when the price touched the bottom band, and I connect this point to the previous touch of the top band. We cannot connect the most recent touch of the top band to the previous low where price touched the bottom Band, because price has to go back down to the bottom band so that we can say it's a valid high. This means that if the price touches the top band, reverses to the mid line and then touches again the top band, this is always considered to be the same wave, because price did not touch the bottom band in between.

To say in other words, let's say that when the price touches the top band, we have a potential high and when it touches the bottom band, we have a potential low. So each time the price is making a potential high, we can connect the previous low with the previous high to define an up wave or leg. and each time the price is making a potential low, we can connect the previous high to the previous low to define a down wave or leg.

And we do the same when price touches the bottom band.

That's a bit difficult to explain, but the following chart should help.

Bollinger bands waves and a bat pattern:

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You remember the chart from Mr.Pip about the bat pattern occuring on EURUSD H1 around 5th of January? It was a bit confusing, because X was in the middle of a down move.

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Now move the the M15 time frame and draw the waves using Bollinger Bands. You will see that point X was the only possible point to use for the start of the XA leg. No harmonic pattern could be defined if X was at the previous high, much higher, or the next high.

Attached Image (click to enlarge)
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Using Bollinger Bands also helps to predict the likely reversal at point D: if during the CD move of a potential bearish Gartley pattern the price is following the the top of the Bollinger band, for example we have several candle right on the top band and the bands are widening, the pattern is likely to fail and price will go further up at the expected D point, instead of reversing. But if at D the price is touching the top band, but was not following that top band along the CD leg, the pattern is more likely to be successful.

Bat pattern failure could be predicted:

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  • #4,193
  • May 21, 2013 7:00am May 21, 2013 7:00am
Hi Traders,

i am still in GBUS trade. it has been a few days ride and all in all i am happy. PA seems to have penerated support. I am still keeping it simple and focusing on the Lighting bolt (ABCD, AB=CD) type patterns.

if anyone has any insight into other patterns developing i would be greatful for some ideas. currently, i am thinking a gartley bullish is unfolding but there is still a long way down for the pattern to materialise, hence i am think there may be one or two pit stops on the way down (assuming trend does not change).

best wishes,
Chad
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choose a job you love and you will never have to work a day in your life
  • #4,194
  • May 21, 2013 10:18am May 21, 2013 10:18am
Quoting jjre65
{quote} Thanks for your reply CNTrader, but Im not sure how to interpret the numbers on your drawings Is there a previous post w description? Cheers J.
Hey, thanks, thats really useful for my analysis! Im drawing transition areas with blue rectangles (places where it stalls, etc...), so that potential swing definition is really useful

See, local swing highs and lows are always always connected in some deterministic fashion .....

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  • #4,195
  • May 21, 2013 10:52am May 21, 2013 10:52am
Quoting Starry
{quote} Hey, thanks, thats really useful for my analysis! Im drawing transition areas with blue rectangles (places where it stalls, etc...), so that potential swing definition is really useful See, local swing highs and lows are always always connected in some deterministic fashion ..... {image}
Hi Starry,

I'm not sure if you wanted to reply to my post, but instead quoted the post from jjre65. If you replied to jjre65, then you can ignore the following.

What I wanted to erxplain is that when price touches one of the Bollinger bands, it defines a high or low on the chart. There is a delay in the process, because when price is touching the bottom band, for example, we don't know if it will be a low until price reverses and touches the top band. For example, if price touches the bottom band, reverses to the mid line and then touches the bottom band again, as it will occure in a down trend, the first touch is not valid and the second one will be only of price now reverses and touches the top band. If price now touches the top band, then we can mark the potential low as a valid low, ending the down leg.

So when we are reaching point D of a bearish pattern, we expect the price to touch the top band and then reverse. If it does touch the top band, then the point C becomes valid (if it was not already). But we don't know if D is a high, because price could retrace a bit and then touch the top band again and much higher. As I wrote, if during the CD move, price is following the top band until it reaches the PRZ, there is a good chance that the pattern will fail, but if it follows the top band for a while, retraces to the mid line and then touches the top band while reaching the PRZ at the same time, then the pattern has a good chance of being successful.
  • #4,196
  • May 21, 2013 11:42am May 21, 2013 11:42am
Quoting dvarrin
{quote} Hi Starry, I'm not sure if you wanted to reply to my post, but instead quoted the post from jjre65. If you replied to jjre65, then you can ignore the following. What I wanted to erxplain is that when price touches one of the Bollinger bands, it defines a high or low on the chart. There is a delay in the process, because when price is touching the bottom band, for example, we don't know if it will be a low until price reverses and touches the top band. For example, if price touches the bottom band, reverses to the mid line and then touches...
Hey dvarrin,
Yes i meant to reply to you. I'm only using your definition of potential high/low, and for me the potential swing is not invalidated, but that is because i am practicing using trendish lines. For example, in my chart the white line was the first potential swing before it reversed to the middle line, so in order to define my trend lines, i use the blue boxes defined after the white line. So bollinger bands are a good way of defining when to draw those blue boxes.

So im using it for a different purpose, but i wouldnt have noticed it otherwise, so i thank you!
  • #4,197
  • May 21, 2013 3:20pm May 21, 2013 3:20pm
Sorry guys my laptop wast in working condition today. So couldn't update anything today.. I am still in Usd/Chf Sell today it didn't come my way lets see tomorrow
Greatness Is Only Achieved By Working Hard... Depends How Bad You Want It!!
  • #4,198
  • May 21, 2013 3:54pm May 21, 2013 3:54pm
Quoting Starry
{quote} Hey dvarrin, Yes i meant to reply to you. I'm only using your definition of potential high/low, and for me the potential swing is not invalidated, but that is because i am practicing using trendish lines. For example, in my chart the white line was the first potential swing before it reversed to the middle line, so in order to define my trend lines, i use the blue boxes defined after the white line. So bollinger bands are a good way of defining when to draw those blue boxes. So im using it for a different purpose, but i wouldnt have noticed...
Oh ok ;-) I'm happy I could help you in some way ;-)
  • #4,199
  • May 21, 2013 7:30pm May 21, 2013 7:30pm
Quoting dvarrin
{quote} Oh ok ;-) I'm happy I could help you in some way ;-)
What parameters do you use for the Bollinger bands?
  • #4,200
  • May 22, 2013 1:02am May 22, 2013 1:02am
Quoting moneybagz
{quote} What parameters do you use for the Bollinger bands?
I use default: 20 for period and 2 for deviation.
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