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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

  • #4,201
  • May 22, 2013 5:42am May 22, 2013 5:42am
USD/JPY
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  • #4,202
  • May 22, 2013 5:50am May 22, 2013 5:50am
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 another update on Sundays charts trade set ups:

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Target 1 attained on the Gbp/Chf and stops taken out just now at Break even. Not surprising based on comments from Jordan. I will look to se price behavior at the Bat pattern.

Also Targets 1 and 2 hit on Usd/Cad with remaining taken out at Break even.

Enjoy, have fun, make a great day, 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!!!!
  • #4,203
  • May 22, 2013 7:40am May 22, 2013 7:40am
Hey guys!

I'm finally back to harmonic patterns after trying a lot of other things.

I am reading the Harmonic Trading vol1 and vol 2 now from Scot M Carney and I have to say that I'm really impressed about the content. I think I am finally getting a better overview on harmonic patterns.

Quick question, just to see if Im on the right track.

Is this a correct AB=CD pattern?

Bounced of the C 1.618 with a nice 1.618 BC projection. This is what they call a "perfect AB=CD" pattern right?

Thanks!
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  • #4,204
  • May 22, 2013 5:40pm May 22, 2013 5:40pm
Quoting kaboemm
Hey guys! I'm finally back to harmonic patterns after trying a lot of other things. I am reading the Harmonic Trading vol1 and vol 2 now from Scot M Carney and I have to say that I'm really impressed about the content. I think I am finally getting a better overview on harmonic patterns. Quick question, just to see if Im on the right track. Is this a correct AB=CD pattern? Bounced of the C 1.618 with a nice 1.618 BC projection. This is what they call a "perfect AB=CD" pattern right? Thanks! {image}

Hey Kaboemm,

Nice chart. My ninja trader won't give me more than 3 days data for some reason. We can see what happened today but there were warning signs that this pattern may fail. The first was that the second leg only retraced to the 50 and not deep into the 61 - 78% like we like to see according to Mr. Pips rules. This does not mean we can't trade it, it just means that we should expect more strength in the second leg and that it may reach to higher extension levels. The second warning comes from the huge bull spike up for the second leg. We then note that the retrace is small which is also a warning that the bulls are angry.

Now we get a starry special with an abcd completion within a larger abcd completion with deeper pullbacks on the last abcd indicating that the bears are trying to fight back. If we enter on the weakness at the completion point we are selling into possible support from the may 16th high. It may break but it doesn't give us much room if we enter on the shooting star. Even if we did we immediately know that a HL is coming from the weakness shown by the bears (hammer bar). So we can protect at a small loss, get taken for our full loss or in your case take some profit off at the break of the hammer high and drop to BE.

There was an alternate abcd possibility off the first spike in the second leg as seen in the chart which also lines up with a 161% projection of that line. I would not have traded this on PA due to all the roadblocks and bullishness into the zone.

Many people trade the patterns on limit and that is cool if you know what you're looking for and can manage the trade so don't be discouraged. Hope this helps a bit. Cheers.
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Finally out of the shadows.
  • #4,205
  • May 22, 2013 6:17pm May 22, 2013 6:17pm
Quoting ewgcorp
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,...
Awesome EW! You'll be raking in the pips now.
Finally out of the shadows.
  • #4,206
  • Edited May 23, 2013 2:05am May 22, 2013 11:18pm | Edited May 23, 2013 2:05am
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Took a short at the gartley earlier today then it turned into a butterfly lol. Waited for some more confirmation and saw this topping pattern develop then put in a second entry. Added a little EW analysis too but I am by nooooo means a eliotician hahaha just a possible guess. would be very nice if its in a wave 3 as far as targets go. Would like some input from CNTrader or Mr pip. Or anyone else with an opinion pleeeaaaase. As CNTrader always says trade like an assasin and make bank hahaha. Thanks in advance for any input

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  • #4,207
  • May 23, 2013 5:47am May 23, 2013 5:47am
Morning all, Hope everyone is doing well this week. Here is a trade I caught at the beginning of the week, and Thanks CNTrader, I made a few pips off your USDCAD
CADJPY

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Always Learning
  • #4,208
  • May 23, 2013 7:49am May 23, 2013 7:49am
Quoting moneybagz
{image}Took a short at the gartley earlier today then it turned into a butterfly lol. Waited for some more confirmation and saw this topping pattern develop then put in a second entry. Added a little EW analysis too but I am by nooooo means a eliotician hahaha just a possible guess. would be very nice if its in a wave 3 as far as targets go. Would like some input from CNTrader or Mr pip. Or anyone else with an opinion pleeeaaaase. As CNTrader always says trade like an assasin and make bank hahaha. Thanks in advance for any input 1199011
Very nice Moneybagz and it looks as though price action following you possible wave counts too. Rolling stops from the butterfly pattern as well

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!!!!
  • #4,209
  • May 23, 2013 7:52am May 23, 2013 7:52am
Quoting JayTrader
Morning all, Hope everyone is doing well this week. Here is a trade I caught at the beginning of the week, and Thanks CNTrader, I made a few pips off your USDCAD CADJPY {image}
Your welcome JayTrader. Glad you made bank! Im in that Cad/Jpy with you rolling stops. Well done my friend.


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!!!!
  • #4,210
  • May 23, 2013 10:52am May 23, 2013 10:52am
Quoting gaf
{quote} Hey Kaboemm, Nice chart. My ninja trader won't give me more than 3 days data for some reason. We can see what happened today but there were warning signs that this pattern may fail. The first was that the second leg only retraced to the 50 and not deep into the 61 - 78% like we like to see according to Mr. Pips rules. This does not mean we can't trade it, it just means that we should expect more strength in the second leg and that it may reach to higher extension levels. The second warning comes from the huge bull spike up for the second...
Hey Gaf,


Thank you so much for your time and your great explanation!

I see indeed that the C point didn't touched the 0.618% exactly. So that clears already a thing for me up: price has to HIT the fib line to become a certain valid pattern instead of only be in the area of the fib line. The way you described the PA behaviour around the PRZ and a bit before also make sense a lot. However, I think I didn't came to the part where M. Scott explains about the strenght and weakenesses of a pattern yet, nor entering or managing a trade. At this moment I just finished reading the Gartley pattern. I also didn't see the second ABCD pattern inside the big ABCD pattern when I was watching my charts.

Another question. There is one thing that creates a lot of chaos in my head, that is because I don't know what pairs and timeframes to trade as a beginner. I know that these patterns occur on every TF and every pair, but I have to watch so much that it sometimes confuses me. What would be the best thing to start with? One pair and 3 timeframes, 5 pairs and only 1 timeframe or something else ?

Last thing: I was watching the daily GU and it seems like, if the C point stays like that and the price is going higher, that we may have a beautifull bat pattern incoming. Right? The B point retraced exactly on the XA 50%, and the 2.0% BC projection converged exactly with the 0.886% retracement of the XA leg. It also converged exactly with a big round number 1.62. Is this anaylsis correct or am I doing it completly wrong?

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PS. Mr Scott says that a perfect bat pattern requires a Alternate 1.27% AB=CD pattern. I just dont understand how to draw it.

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Thanks!
  • #4,211
  • May 23, 2013 11:48am May 23, 2013 11:48am
Quoting kaboemm
{quote} Hey Gaf, Thank you so much for your time and your great explanation! I see indeed that the C point didn't touched the 0.618% exactly. So that clears already a thing for me up: price has to HIT the fib line to become a certain valid pattern instead of only be in the area of the fib line. The way you described the PA behaviour around the PRZ and a bit before also make sense a lot. However, I think I didn't came to the part where M. Scott explains about the strenght and weakenesses of a pattern yet, nor entering or managing a trade. At this...
Hey Kaboemm,

I am not a complex pattern trader at all. I only trade the abcd pattern, and ratios with confluence @ structure as Mr. Pip does. I'm afraid I can't help you with your questions as I haven't studied the patterns at all. Maybe CNtrader can give you a heads up.

Whatever you decide I would start to get as much chart time as you can. Practice scrolling through the charts and identifying patterns as they form from past data. This will give you confidence as the patterns won't be hindsite.

Sorry I couldn't help more. My trading style is completely different from what Mr. Scott does and I don't want to confuse you. Cheers.
Finally out of the shadows.
  • #4,212
  • May 23, 2013 12:02pm May 23, 2013 12:02pm
Quoting kaboemm
{quote} Hey Gaf, Thank you so much for your time and your great explanation! I see indeed that the C point didn't touched the 0.618% exactly. So that clears already a thing for me up: price has to HIT the fib line to become a certain valid pattern instead of only be in the area of the fib line. The way you described the PA behaviour around the PRZ and a bit before also make sense a lot. However, I think I didn't came to the part where M. Scott explains about the strenght and weakenesses of a pattern yet, nor entering or managing a trade. At this...

If in fact that is Mr Scotts true definition of a perfect Bat then I will have to happily agree to disagree. But what do I know I only have 2 vouches hahaha. Anyway i wont get into a pissing match with anyone unless provoked hahaha but that's all I'll say on the matter. I suggest you study this for more clarity of a true bat pattern. Then learn to take a confluence of factors into consideration when making the commitment to enter and exit the trade. The only perfect Bat is the one that banks you pips lol.

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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!!!!
  • #4,213
  • May 23, 2013 12:15pm May 23, 2013 12:15pm
hello,

I have been learning harmonics for the last several months and have been reading this forum so I figured it would be best to talk it out because what im reading here is really not comprehending too well.... I'm still a little confused about the C and D points. The ability to find the x-a leg is no problem for me but then everything else becomes fairly subjective. Does the individual trader need to specify what constitutes a "fractal" to him or her? Additionally, I have seen charts from "professionals" who use harmonics but some of the x-a points are started right in the middle of the swing? What am I missing here?

Lastly, how does the trader define symmetry in the most effective manner? ie.---when does the pattern become invalidated because price has "flatlined"?
  • #4,214
  • May 23, 2013 12:47pm May 23, 2013 12:47pm
to add to my previous post: since the market is nothing more than an auction, why do traders feel it necessary to create rules such as if "x" security closes above the 78.6% fib on the "x" timeframe or tick chart than it invalidates that pattern? IMO, the market really does not care if that timeframe candle violated the retracement level it only cares that it violated that PRICE level. (the 5, 15 minute or tick candle confirmation only appears good in hindsight)
  • #4,215
  • May 23, 2013 1:43pm May 23, 2013 1:43pm
Quoting 61.8fib
hello, I have been learning harmonics for the last several months and have been reading this forum so I figured it would be best to talk it out because what im reading here is really not comprehending too well.... I'm still a little confused about the C and D points. The ability to find the x-a leg is no problem for me but then everything else becomes fairly subjective. Does the individual trader need to specify what constitutes a "fractal" to him or her? Additionally, I have seen charts from "professionals" who use harmonics but some of the...
Hey 61!

If you are having trouble validating your C and D points in real time you may want to study price action, orderflow, structure etc. This is what really validates a pattern before it happens. Saying that if price closes below a fib on a certain time frame negates a pattern is just used as a guide line for starting out. This keeps you from buying or selling against orderflow when you are beginning your studies. There is a whole world of information available to us if we can read momentum, low and highs, S/R etc. I find this information way more important than using only a pattern.

You may have seen some charts where you have a long run and then a small abcd completion, or a bat or some other pattern in the middle of a leg. The patterns are wonderful tools particularly if you have an expectation of where price is going next. Say we are in a bull spike, we start correcting and a bullish gartley forms. We were already thinking long so the completion of the pattern is a good opportunity to catch a continuation. But say that pattern completes and there is 5 levels of resistance waiting for us to buy into then maybe we may pass the trade.

I'm not a complex pattern trader but I'll trade an abcd @ 32, 50, 61 or 78 retrace as long as the fibs line up with structure or are confluent with other projections or retracements. However at the D point I want to see multiple factors especially if we are less than a C 61 retracement. The stronger the bulls are the more I want to see price slowing down, retracements getting bigger etc before I'll take the trade. Does this help a bit?
Finally out of the shadows.
  • #4,216
  • May 23, 2013 2:27pm May 23, 2013 2:27pm
Quoting gaf
{quote} Hey 61! If you are having trouble validating your C and D points in real time you may want to study price action, orderflow, structure etc. This is what really validates a pattern before it happens.
could you please explain what I need to study in regards to price action, orderflow etc.....doesn't harmonics inherently evaluate these issues? If you could be more specific in regards to this comment, that would be greatly appreciated.

Thanks for the response!
  • #4,217
  • Edited May 24, 2013 1:55pm May 23, 2013 2:49pm | Edited May 24, 2013 1:55pm
SLW gapped down after the 6% increase, and since then it has been gapping up for 3 or so days. Now it is at the top of the first large candle up, it will be interesting to see where it goes from here
edit: updated analysis chart, so its been what 4 days?



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  • #4,218
  • May 23, 2013 2:58pm May 23, 2013 2:58pm
Quoting 61.8fib
{quote} could you please explain what I need to study in regards to price action, orderflow etc.....doesn't harmonics inherently evaluate these issues? If you could be more specific in regards to this comment, that would be greatly appreciated. Thanks for the response!
Start with all of Mr. Pip's posts. This thread has covered most of these items. I can't do them justice in 1-2 paragraphs. This will take months so take your time. Many of us have been working on this for years. Cheers.
Finally out of the shadows.
  • #4,219
  • May 23, 2013 3:27pm May 23, 2013 3:27pm
Quoting 61.8fib
{quote} could you please explain what I need to study in regards to price action, orderflow etc.....doesn't harmonics inherently evaluate these issues? If you could be more specific in regards to this comment, that would be greatly appreciated. Thanks for the response!
Go to post 3567, here I have posted a summary of Mr.Pip's posts and charts. Also check out, and study, Mr.pip's videos. As Gaf has mentioned above, most of the important aspects you need have already been covered.
"The only thing I’m addicted to right now is winning."
  • #4,220
  • May 23, 2013 4:14pm May 23, 2013 4:14pm
Quoting Starry
SLW gapped down after the 6% increase, and since then it has been gapping up for 3 or so days. Now it is at the top of the first large candle up, it will be interesting to see where it goes from here {image}

Oops, edit that. This is what it should be. Nice and consistent. Draw flow lines, relate midpoint flow line of swing to end point flow line via fib circle, intersect end point flow lines with line, draw take profit zone. Its at $30.73, and this makes much more sense, i would expect it not to turn around at the light structure in the first picture, but somewhere in the middle!

a consistent formula will give me consistent results
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