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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

  • #4,581
  • Aug 16, 2013 3:09pm Aug 16, 2013 3:09pm
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First swing was recorded with trendline.

Price retraced back up to 61% fib and went back down, but failed to complete a 100% move of the swing so no 1:1 Ab=CD.

Therefore, something must have went wrong. Bears lost power and were overwhelmed by the bulls. Indicates orderflow change.


Now expecting a 1:1 move of the bullish retrace up to confirm bullish power.

Bulls couldn't complete 1:1 move. Indicates they now lost power to the bears and order flow has changes to downside again.

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  • #4,582
  • Aug 16, 2013 3:13pm Aug 16, 2013 3:13pm
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Since orderflow has changed to downside, we can assume it is going to complete a 1:1 retrace (AB=CD) of the first bearish move.


And it does!
  • #4,583
  • Edited 3:30pm Aug 16, 2013 3:14pm | Edited 3:30pm
And in each case we should have moved stops aggressively to BE once price hit 38%. No money was lost on the failed 1:1 movements/patterns.
  • #4,584
  • Aug 16, 2013 3:22pm Aug 16, 2013 3:22pm
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Price then makes a new structure high, indicating possible change of orderflow to the upside.

retrace to 61% fib zone.

PA indicating reversal. Would take long position for ABCD aggressive c buy.


ABCD completed.
  • #4,585
  • Aug 16, 2013 3:27pm Aug 16, 2013 3:27pm
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Would take short position once PA showed signs of stalling/reversal near the 100 expan level, near where profit was taken.

Stop would be placed 2 pips above 161 Expan, as Mr Pips has previously said.



Price continues downwards as a completed ABCD pattern reversal.


The last main swing high was also around the 161 expan level, which would mean added confluence to take the trade. It is obviously a supply zone.
  • #4,586
  • Aug 16, 2013 3:28pm Aug 16, 2013 3:28pm
Is there anything wrong with my thought process?

What am I doing wrong/right?
  • #4,587
  • Aug 16, 2013 3:48pm Aug 16, 2013 3:48pm
Quoting Axlz
Is there anything wrong with my thought process? What am I doing wrong/right?

read my signature.
you can find your answers.step back.stop trading and look and analyze why you are failing.
It could simply be Harmonics are not your answer.Plenty of traders make money without trading harmonics.I don't trade them but I am aware of them.
How much time you spend on forex education?
May I suggest a great thread?



http://www.forexfactory.com/showthread.php?t=428204
Supply and demand Swing Trading Journal by Alfonso Moreno

Books that helped me.
"Bird watching in lion country"
"REMINISCENCES OF A STOCK OPERATOR" (everyone should read this)
"Trading in the Zone"
"Super Trader" Van Tharp (everything by him)

You finish these 4 books if you finish them then you will find lot of your answers.
In trading, you have to be defensive and aggressive at the same time
  • #4,588
  • Aug 16, 2013 4:04pm Aug 16, 2013 4:04pm
Quoting Axlz
I work so hard to be successful at trading, yet I fail so much more than others. I spend more hours a day than 99.9% of traders practicing, and I still get no where. I understand the harmonic component of these trades. One move is usually followed by a retrace to the 38% fib at least, then another exact move in the same direction takes place (AB=CD). 1:1 moves. These are usually what I trade. But a lot of the time, order flow will change without me knowing. What the hell am I supposed to do? There is nothing I can do to learn this. It just seems...
how do you practice? what do you do with your time?

if you practice correctly and focus on the right thing (the right thing for you, not for anyone else), then your brain will slowly piece it together and you will stop believing it is random.

For me, the correct thing was:
(1) doing the 30 minute price action training. get a tick chart or 5 minute chart, and try to predict what the general direction of the current swing. Say "up" or "down", and hit the right key to see what color the bar is. Your goal is to say "up" when the swing is going up without any significant retracement, and to say "down" when the swing is about to change or make a significant (> 38.2) retracement. You will also learn when the market is about to pause (all of this unconsciously). All you have to do is see if the next bar is up or down, and this provides feedback. Do it at a steady pace.

(2) Develop tools which highlight the geometry of the market and use them

(3) Realize that a history of success is necessary for confidence, this is why i am currently trading the daily timeframe instead of ticks, i will move down soonish enough. I am however training myself on tick charts and smaller timeframes.

So, practicing number 1 is a useful use of your time. Do that!
  • #4,589
  • Aug 16, 2013 4:31pm Aug 16, 2013 4:31pm
Quoting Starry
{quote} how do you practice? what do you do with your time? if you practice correctly and focus on the right thing (the right thing for you, not for anyone else), then your brain will slowly piece it together and you will stop believing it is random. For me, the correct thing was: (1) doing the 30 minute price action training. get a tick chart or 5 minute chart, and try to predict what the general direction of the current swing. Say "up" or "down", and hit the right key to see what color the bar is. Your goal is to say "up" when the swing...

I agree one must search to find the answers that way whatever one finds naturally gravitates type of personality he/she has.
I just find it weird how traders expect to become profitable,proficient without serious work.
I seriously believe in Newton's action=reaction law
In trading, you have to be defensive and aggressive at the same time
  • #4,590
  • Aug 16, 2013 4:49pm Aug 16, 2013 4:49pm
Quoting Axlz
Is there anything wrong with my thought process? What am I doing wrong/right?
Yes there is, you need to work on your thoughts and psychology aspects rather than focusing mainly on technical, technical is the easiest part, no matter what you will learn it, but in the PRZ zone, where we have to take action, psychology will matter most, if you cant hold up in the wind, then a slight breeze will tumble your world

A friend of mine, a successful trader, has only basic price action fundamentals, trade off mobile at work since she is not allowed to bring her laptop , she has Japanese candlestick and stochastic, that's it, she does not come and participate here but she is a very successful trader, you tell ,,, why? her attitude is rather different than us, she is calm and patience to the death , she does not tumble when a position go against her, but try as possible to manage it well, she makes 200 to 400 pips weekly from her iPhone

What I do is try as much as possible to copy her psychology behaviors, its impossible but I try as much as possible to mimic what she is doing while trading, she says that trading is easy, she has fun while trading

Humbleness and Patience is the key if you fail in this part pls do not accept to succeed in Forex

Good Luck
I Have Learned to Take Some Losses to Make Profits
  • #4,591
  • Aug 16, 2013 4:55pm Aug 16, 2013 4:55pm
Quoting Axlz
Is there anything wrong with my thought process? What am I doing wrong/right?

basically you need to have fun with trading so that you can learn and gravitate towards what makes sense to you
  • #4,592
  • Aug 16, 2013 5:13pm Aug 16, 2013 5:13pm
Quoting horuxito
{quote} Hey Mr. Pip, is nice to see you around. You've mentioned some interesting things here. People jump from one trading system to another precisely because they don't practice and don't take the time to learn the basics. And the first thing we should learn is psychology with all the components to avoid: fear, greed, arrogance and revenge; and the things to embrace: practice and persistance, positive attitude, stick to one strategy and keeping things simple. No matter what our strategy is we will always see the same things acting together: -...
I just been reading and read this nice post which caught my attention about changing strategy

First thing first, I have started learning Forex since Mid October 2012, in November found Trading Made Simple thread by late Elefranz, RIP, from that month until now been practicing one strategy based on Price Action and TDI indicator and am not going to give it up, no way, just to follow the rule of you must stay with the system you choose and never change it

I'm studying harmonic as well which I very much like and it helps you understand the wave and harmony of the market which can be added to trading arsenal that can help me in my strategy

So just would like to thank everyone that stands behind this thread and that helped and still helping growing it up day in day out
I Have Learned to Take Some Losses to Make Profits
  • #4,593
  • Aug 16, 2013 5:27pm Aug 16, 2013 5:27pm
mmmmm.... the market literally expands itself until it can go no further and then it relaxes. it breathes in and out and sometimes it just reverses suddenly , making it look like the orderflow has suddenly changed.


But it hasnt.. Price will always tell you before hand what you need to know.

The past can tell you where the current swing is most likely to end.

And when it ends, it will most likely be in a harmonic pattern. But its not the patterns which caused the swing to end.They simply emerge. Rather, it is geometric completion that causes the transition.

Or what others on this thread call 'swing weakness' or 'short term order-flow weakness.' Well, swing weakness price action occurs at geometric completion points.

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  • #4,594
  • Aug 16, 2013 5:54pm Aug 16, 2013 5:54pm
Quoting Davit
{quote} I agree one must search to find the answers that way whatever one finds naturally gravitates type of personality he/she has. I just find it weird how traders expect to become profitable,proficient without serious work. I seriously believe in Newton's action=reaction law
Do you realise you just revealed the holy grail?

I've been reading that Alfonso gentleman's thread and how he calculates supply/demand zones.

You have just helped me discover the missing piece of my puzzle for harmonics.


I've been applying his principles over the past couple of hours and it is literally what I was looking for.


I'm not sure whether this is coincidence, god, or the law of attraction you speak of, but wow...

Past areas where I wasn't sure how order flow changed, no are obvious.



Thank you my friend. I hope karma serves you well.


EDIT: And by the way, to everyone who was questioning how I practice, I spend at the very least 15 hours a day in front of the charts. I am extremely young, but I know this is what I want to do in life and I will not quit. No matter how many times I fail. Death is the only thing that will stop me from becoming one of the best traders.
  • #4,595
  • Aug 17, 2013 12:04am Aug 17, 2013 12:04am
Quoting TheScorpS
{quote} I just been reading and read this nice post which caught my attention about changing strategy First thing first, I have started learning Forex since Mid October 2012, in November found Trading Made Simple thread by late Elefranz, RIP, from that month until now been practicing one strategy based on Price Action and TDI indicator and am not going to give it up, no way, just to follow the rule of you must stay with the system you choose and never change it I'm studying harmonic as well which I very much like and it helps you understand the...
Thanks TS, it's nice that post caught someone's attention.

Is great you use the word strategy.

Whatever strategy you end up using at the end it has to be yours and yours only. "System" is a bad word, that's why professionals don't use it, they prefer to say strategy, method or style. Systems fail eventually and so one needs to understand how the market works first.

We need to ask ourselves: what is the structure of the markets? And though supply and demand play a great deal on all this, trust me, that's not the answer.

If I ask you what is the price of the EURUSD you are going to reply, ah yeah, is 1.3325. That's true, but is true as to for this moment only. You see, the market is that, a combination of X and Y axis, and you begin to understand all when you are capable of even getting rid of them. Like Einstein would say: is simple but not easy. Don't believe me? Go check how Munehisa Homma became a millionaire in the 1700's trading rice in Japan.

Back in the days, floor traders in the pit used to calculate the pivots every day, that should tell us something. They brought to the Chicago or Wall Street floor literally their mortgages to trade with very little information and they did well. What happens is that we have forgotten the basics, or what is worst, we never ask ourselves about them. Computers have helped us dramatically but they've also caused people to trade with a lot of colorfull indicators that only tell you how great an opportunity was an hour ago, and we don't even care what price is actually doing (if forming, bouncing, testing or breaking).

I think fibonacci ratios are implicit, they are there, and we should be able to measure them and recognize them, but there are a lot of things also, nothing has to be traded by itself but after we have analyzed and build our case. Mr. Pip said a lot of powerful words at the beginning of this thread, but the core of everything relies on these three: structure (with the S/R levels), confluence, and price action.
Best time to plant a tree was 20 years ago, second best is now
  • #4,596
  • Aug 17, 2013 3:03pm Aug 17, 2013 3:03pm
Quoting horuxito
{quote} Thanks TS, it's nice that post caught someone's attention. Is great you use the word strategy. Whatever strategy you end up using at the end it has to be yours and yours only. "System" is a bad word, that's why professionals don't use it, they prefer to say strategy, method or style. Systems fail eventually and so one needs to understand how the market works first. We need to ask ourselves: what is the structure of the markets? And though supply and demand play a great deal on all this, trust me, that's not the answer. If I ask you what...
At the risk of sounding arrogant, which I'm not trying to be, I'm going to correct you here.

You said supply and demand is not the most important thing. Actually, it is the ONLY important thing.


Actually, supply and demand is the ONLY thing that matters in the markets.

Supply and demand IS the market. This can't even be disputed.
  • #4,597
  • Aug 17, 2013 3:11pm Aug 17, 2013 3:11pm
Quoting Axlz
{quote} At the risk of sounding arrogant, which I'm not trying to be, I'm going to correct you here. You said supply and demand is not the most important thing. Actually, it is the ONLY important thing. Actually, supply and demand is the ONLY thing that matters in the markets. Supply and demand IS the market. This can't even be disputed.
Don't worry, you didn't sound arrogant. In fact, I know what you mean.

But I feel the need to ask again: What is the structure of the market?

Btw, I said in my previous post that supply/demand play a great deal, but that is not the answer to the question.
Best time to plant a tree was 20 years ago, second best is now
  • #4,598
  • Aug 17, 2013 3:13pm Aug 17, 2013 3:13pm
Quoting horuxito
{quote} Don't worry, you didn't sound arrogant. In fact, I know what you mean. But I feel the need to ask again: What is the structure of the market?
I'm not sure I understand you. Care to elaborate?
  • #4,599
  • Aug 17, 2013 3:17pm Aug 17, 2013 3:17pm
Last night I was watching this movie "The Truman Show" and a sentence caught my attention: "We accept the reality of the world with which we are presented".

Each person’s reality is simply their perspective. There is an objective reality and then there’s the 'truth' that has been shaped by human experience and emotion. Truth is often intentionally or unintentionally obscured by individuals pursuing outcomes different that those of harsh reality. There is always more to life than we know.

Truman accepts his odd existence. As Cristof points out, “We accept the reality of the world with which we are presented.” Truman does not question why his wife holds products up and describes them as if she was in a television commercial. He doesn't wonder why everything happens at the same time every day; he hasn't known it to be anything else.
Best time to plant a tree was 20 years ago, second best is now
  • #4,600
  • Aug 17, 2013 3:21pm Aug 17, 2013 3:21pm
Quoting horuxito
Last night I was watching this movie "The Truman Show" and a sentence caught my attention: "We accept the reality of the world with which we are presented". Each person’s reality is simply their perspective. There is an objective reality and then there’s the 'truth' that has been shaped by human experience and emotion. Truth is often intentionally or unintentionally obscured by individuals pursuing outcomes different that those of harsh reality. There is always more to life than we know. Truman accepts his odd existence. As Cristof points out,...
What you've said is very profound, no doubt, but I'm not sure how this relates to trading.
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