Horuxito's Journal

The focus of my trades will be Fibonacci Ratios and Harmonics, and for that reason I highly recommend to read this thread:

Ratios & Harmonics: a Different Way to Trade

Is the best thread on the subject. My good friend Mr. Pip has made of this strategy his own. We are not concerned about finding crabs, bats, butterflies or whatever but instead be awared of price action, order flow, harmonic projections, structure and confluence.

I am familiar with literally every possible indicator: MACD, CCI, RSI, Moving Averages, LSMA, Bollingers, Envelopes, Ichimoku, Stochs, Volumes, ZigZag, Fractals, just to name a few, with their different usages: trend, countertrend, crosses, momentum, OBOS, regular and hidden divergence, etc, etc, etc. In fact, I consider myself pretty good recognizing entries, exhaustions, etc.

However, one of these days after struggling with counter trend entries and using stupid martingale strategies, while reading Mr. Pip's thread I read one of his posts that opened my eyes:

"Ok, what the hell" I said. "Let's remove the indis". And one by one I started to take them out of my charts: 100 EMA gone, envelopes gone, CCI gone, RSI gone (this was my clean version of my charts LOL).

I currently use only 1 indicator: daily pivots, just to know at what S/R area price is currently trading and check if I have confluence with my entries. It also helps me to get an instant idea of order flow: if price has been trading below the pivots during the last couple of days I know the market is bearish, just to give an example. I don't use regular pivots. Since I trade ratios I also want to have Fibonacci Pivots. (The Pivot Point is the same but the S/R levels play with the fibo ratios).

This is not an indicator per se but I also like to know the Average Daily Range of the last 10 days. If the ADR(10) is 90 pips and today's range is 95, then I can activate my counter trend strategies with more confidence.

The rest is just pure objects: fibonacci retracements and extensions, rectangles and trendlines. Nothing more. Sometimes I'll also use the triangle tool but just to make my patterns look evident.

I'm also a coder so I have coded most of the things I use. I like the way things look in Mr. Pip's Ninjatrader platform, so I made my MT4 rectangles had borders as well, and get colored fibonacci levels.

My edge

I don't trade regular time frames. I prefer to eliminate time from the equation as much as I can. There are 2 choices:

Volatility charts. These will focus in price alone. If price goes up or down n pips then I'll get a new bar.
Volume charts. These will focus on busy trading activity. If there is a lot of activity going on then I'll get many bars.

In both cases, time is not a factor. I can get only 1 range bar in 2 hours if price is not moving, or get 20 in just 1 hours if there is high volatility. The same with volume tick charts.

I use a combination of both. IMO range bars help to identify swings more easily while tick charts help to identify price action once price has arrived to the areas of interest.

You all are welcome to participate in this thread.

Best regards

The week couldn't start better for me. Monday and tuesday both winners. This provides confidence when you are starting a new strategy.

I'm currently going thru all the pages of Mr. Pip's thread but am also practicing in the simulator.

Monday 131216:

EURUSD 6-pips range bars: Bearish orderflow had been identified and a nice supply area to short this pair. AB=CD taken from a 50% retracement and a exhausted extension to the 161.8%. Other traders identified a Gartley completion here.



It rapidly reacted to that PRZ (price reversal zone), the target was the blue rectangle: +32 pips



GBPUSD 6-pips range bars: Gartley completion with bearish orderflow.



Price reacted quickly as well: +34 pips to the blue box.



This picture shows how the EURUSD was preparing the bearish orderflow. In the uptrend bears could do very little to bring price lower but as soon as price reached 1.3810 the bear candles started to get bigger, with some change in structure:

Tuesday 131217

I woke up late. Anyway I could capture one nice trade in the GBPUSD:



40 green pips at the end

I was expecting the EURUSD to get lower to go long but it went up without me. This might be the initial plan for tomorrow:

Hi Horuxio,

Nice to see your journal. Could you mark your entry, exits and SL on your next charts please. It will be helpful.

Thank you!

Removing Time from the Equation

There is this great and enigmatic trader here in FF named CrucialPoint who once asked the crowd: "What would it happen if you removed time from the X Axis?"

Well, to be honest I don't know what he was trying to say, but the concept ringed some bells in my mind. I began my research and found out that there are 3 types of charts:

1. Time based charts: 1 min, 2 min, 5 min, 8 min, 15 min, 2 hours, 8 hours, 1 day, 1 week, etc. You get 1 new bar after the determined period of time.

2. Volume based charts. These are more commonly known as tick charts: 100 tick chart, 233 tick chart, etc. They represent the number of transactions between buyers and sellers. When the activity is slow there will be few bars and a lot when there are a great number of transactions.

3. Volatility based charts. There are some types of these charts. The more popular 2 are the constant range bar charts and the renko charts. The trader defines when/where he or she wants a new bar: every 3 pips, 6 pips, 12 pips, etc. These are great because during choppy session activity you will get only 1 bar every 2 to 4 hours, while you can get 20 bars in one single hour if there is high volatility.

I use a combination of the 3. They all have their purpose.

- 1 Hour (or 4H) chart. I am contradicting myself here I know but the reason why I use this chart is because I want to observe in a quick glance what the previous days printed in the markets. If you see 1 huge 1 hour bar that means that day there was an important news event. You can also see what is the strength of the bears and bulls while the hours pass by. So yeah, I don't quit the stuff completely. Is like the footprints of the market participants in a quick view. Note: I don't trade this chart, I just want to see it. Plus, and honestly the true reason I still use it, is because you need one normal time frame to load your volume and volatility charts!

- 6 pips Range Bars Chart. I have experimented with 3 pips, 4 pips, 8 pips and they all have their beauties, however 6 pips stays in the middle of both scalp and swing worlds. I can see very easily the swings while I can still see the knots between the supply and demand at different levels. The time equivalent when there is normal volatility would be something between 10 to 15 minutes, however, time is not the factor here, you just care about price, it can take 2 minutes to get a new bar or you can wait 30 minutes. It's not important.

- 233 Tick Chart. I will be honest here. As harmonic traders we want to trade levels. Once we have a pattern completion we want to jump asap. However, I've learned from Mr. Pip, that price action plays a great deal in your trigger decisions. These are like 5 min charts, and you can read what's happening between buyers and sellers when price has arrived to the areas of interest (price reversal zones).

To summarize. I have the 1H chart but I don't trade it. I make my plan in the 6 pips range bars chart, and I pull the trigger using the 233 tick chart.



There are a number of range bars indicators out there. I've tried some. But my favorite is the one from Ovo. I like it for many reasons: it records volume (each bar has 6 ingredients but not all the indicators record them: time, open, high, low, close and volume), is very fast, objects don't get displaced when you trace your rectangles, trendlines, fibos, etc (NOTE: you have to establish a local variable for this, just click on Tools, then Local Variables and simply Add a new one named "notrim_e"). And the most important feature is that you can use it in any time frame, not only the M1 chart like the majority of indicators, plus, you can attach many range bar charts (3 pips, 6 pips and also the 233 tick charts, etc) TO THE SAME chart feeder, which is very cool.

The same Ovo site provides you with the Tick Charts as well.

Before I forget. If you have 5 digits, which is the most common, you need to write 60 if you want 6 pips. With 1000 bars you will get 6 or 7 days running very fast. This is recommended if you are in live trading. But you can put more bars if you want to analyze your charts back in time after trading hours or during the weekend.

Steps:

1. Attach the RangeBar_e indicator to the H1 chart (well, this is the one I use, it can be any).
2. In the indicator variables put 60 for Bar Height, 1000 for bars and put for example 2 for offline window tf (make sure you don't put 1, 5, 15, 60 or any other that you use in the regular time frames)
3. Attach the TickChart_e indi in the same H1 chart and repeat the process, only that yere you will write 233 in Volume
4. Click File, Open Offline, and Search of EURUSD M2 (if you wrote 2 for offline window tf) and EURUSD M6 (if you wrote 6 in the 233 tick chart)



Make sure you also download the script Backtester Helper. This is gold. You can simulate your offline charts with this. Demo trade is one thing and it can take you years to get there... the real key to succeed in this business is to simulate. You can simulate 3 months of trading in 1 week. I will talk more about this in another post.

I am awake in the European session and just watching some areas in both EU and GU.

EU is in a 100 pips range between 1.37 and 1.38, I can't honestly say what's happening. If I analyzed the daily charts there is still room to the upside for price getting to 1.42.



GU seems more clear about a bearish orderflow.



I am a little biased about going short in both pairs, but only if I get a nice retracement. AB=CD's would engage me in these trades with 61.8% - 78.6% retracements of current orderflows.

Hi, Horuxito. Can you add RangeBar_e, TickChart_e indicators and Backtester Helper script in your thread? I couldn't find those in forexfactory.

I put the link in the previous post but you can also search in google. Just write "range bars ovo".

Pivots and Average Daily Range

I like pivots. They provide a quick reference of current order flow.

In brief: If price is trading below the center pivot and that pivot is getting lower and lower I know price is in a downtrend, in which case both the center pivot line and the first resistance pivots are going to act as such, resistance, denying price to go higher than that. At the same time the support pivots will be reached and violated, because price is making new lows.

When price is consolidating it will be dancing within the center pivot and will bounce off both the support and resistance areas.

Pivot Point = ( Previous High + Previous Low + Previous Close ) /3

Traditionaly we have these Support (S) and Resistance (R) Levels:

R1 = (2 * Pivot Point) - Previous Low
S1 = (2 * Pivot Point) - Previous High
R2 = (Pivot Point - S1) + R1
S2 = Pivot Point - (R1 - Su1)
R3 = (Pivot Point - S2) + R2
S3 = Pivot Point - (R2 - S2)

I use Fibonacci Pivots. They are better in my opinion but I also use them with a personal twist adding the average daily range factor.

The Center Pivot Line or Balance Point is the typical Yesterday's (High+Low+Close)/3

But for the Support and Resistance Levels, following a personal concept of eliminating time as much as I can, I use the ADR of the last 10 days instead of yesterday's range (H-L)

There are 3 reasons why I do this:

- Price will generally trade around the Average Daily Range every day, some pips more, some pips less.

- After a choppy day, like mondays, regular pivots are going to be small, which is illogical, since tuesday will behave normally, and monday's range won't provide accurate measurements.

- After a news event day (like FOMC), regular pivots are going to expand like hell, which is also illogical, since next day's price will be more likely contained within a normal range so we need normal pivots.

So, by using the ADR(10) as a range, instead of only yesterday's, it's like if we are homogenizing these zones.

ADR(10) = ( (Day10 High - Day10 Low) + ... + (Day1 High - Day 1 Low) ) / 10

R100 = ADR(10); (100% Range)

R50 = R100 * 0.5; (50% Range)

C = (Y_High+Y_Low+Y_Close)/3;
S1s = C-R50;
S1e = C-(R100*0.618);
S2s = C-R100;
S2e = C-(R100*1.382);
R1s = C+R50;
R1e = C+(R100*0.618);
R2s = C+R100;
R2e = C+(R100*1.382);

Where:

C: Center Pivot Line
S1s-S1e: Support 1 (s start, e end)
S2s-S2e: Support 2
R1s-R1e: Resistance 1
R2s-R2e: Resistance 2

Notice that the center pivot line uses yesterday's HLC/3, but the S/R pivot lines are using the ADR(10) range.

Pivots should never be traded alone. They add confluence after we have made our job. But look how nice price reacts to them:

European trade went wrong for me in the GU: -20 pips.

I grabed some popcorn and saw the FOMC created a nice first swing. Time to project exhaustion areas!

To the pip, 161.8% working again. There were other considerations of course that I can quote from myself here:

Target 50% of the news move, around 60 pips.



Edit: Target hit! +65. I grabed my pips at 50%. Didn't wait for 61.8% even though I observed momentum to the downside. I'm good with it since I knew I captured the very top of the swing, so it's a luxury you can take!



Some of those days. You take a loss, but it was according to plan, just 20 pips, and it was then compensated by this other. Again, planning the entry. Trading news requires patience and observe signs of exhaustions and think like the big boys.

Alright, big mess yesterday with the FOMC. It ended up being great for my GU trade.

Ok, EURUSD. HUGE downtrend of 160 pips without any significant retracement so far. I call significative at leat 38.2% of the whole move.

Price started to show signs of exhaustion with an ABCD in the bottom. I took one position there just in case... unfornunatelly, that was the trade! So I am going in profit but with half my regular position. Anyway... that's always good



Trade is currently at BE taking into consideration the 38.2 of the bearish abcd.

Target is some number between 38.2 to 50% of the whole bearish move, with confluence of the daily pivot, around 1.3715/20

EURUSD is still trading in the downside without providing any significative retracement. I closed my previous long trade at BE+5, and continue to wait for my moment to jump in long. I see a lot of signs of exhaustion by the bears. But this always need to be taken with caution. There is a LOT of free empty space to 1.3620 (40 pips below) and then to 1.3560. No worries though. Harmonics will lead my way.

This is a month activity seen in a 1H chart. There is a lot to get to those rectangles and plenty of fun in the meanwhile. This is the reason I don't trade charts higher than H1. I know price will get there eventually, but I don't try to predict anything, I'm an intraday trader (at least for now) and I go where the daily harmonics, pivots and ADR lead me. I could say the same thing about 1.42 or 1.32. I know the bulls would be very happy to get to 1.42 and the bears a little bit more since they could load extremenly heavy positions once price is there.

in trading nothing is wrong and nothing is right, except for a method that makes you profitable.
What you exponed is surely interesting but i do not understand it.

Nice to see around one of my good friends! You are right about your statement.

I'll tell you a little of what I do. The plan is to deattach myself as much possible as I possibly can from the typical harmonic patterns. I'm looking instead for harmonic moves which are simply projections of previous swings taken from those swings' retracements. Is a constant search of A to B moves that at some point create a C, and project AB from that C, to get AB=CD. This is done multiple times to create an expectation to where price might be going. Finally after you have a completion of those projections you see if there is confluence with other variables such as supply/demand, support/resistance and fibonacci ratios. It all becomes very easy actually.

I hope to see you often here, you are invited to participate since you know a lot more than 2 cents about pivots as well

The plan at this moment continues to be the same with the EURUSD.

We have not observed a significative retracement from yesterday's FOMC 160 pips bearish move. The double (tripple) bottom is being very supportive to a long move, however I have expectation to go long if price gets 20 pips lower to 1.3630.

My aggresive C trade in the GBPUSD seems to be working right now. It's good I didn't move it to BE when it first got a 38.2% retracement. Price tested the level twice.

I saw confluence with the larger swing 38.2% as well. So I have 2 retracements for being aggresive: 1 for 618-786 in the short time orderflow and a 382 of the big swing created in the FOMC announcement. Also I got 161.8% fibo extension from the upwards move.

I want to let breathe this trade a little and see what happens.

One of my pending tasks is to master these C trades. I like taking D price reversal zones better.

GBPUSD 6 pips range bars:

Just closed an afternoon snack in the GBPUSD, short for +24 pips. I didn't take the 618-786 to go long, but I will go short again if price gets to the red supply area after an ABCD.



EURUSD. I waited price to get here all day long (you can see post #16 5 hours ago), however I didn't short the pair since price was really exhausted already so it could go long anytime. But now that price is where I wanted to be I am definetively a bull here. I have daily support confluence and multiple harmonics along the way with 161.8% fibo extensions that drove me here. I am very confidente about this one.

EURUSD. First daily support is containing price with not a solid reaction to the upside. Probably I will quit my idea for going long..

Stop listening to rumors!

This is a reminder to myself actually. I had made a hell of a great analysis for a EURUSD trade yesterday, but since price didn't depature soon as I would had liked then I started to listen to the rumors. I became awared that we were in a bid zone however it was very light and furthermore there were strong sell stops bellow my long SL. I even found good reasoning behind the words of the ridiculous people in the Interactive EURUSD thread.

What did I do? I closed my trade. I was loaded with my full position in a zone I knew I was buying at wholesale price, I waited a long time to jump in. I knew a lot of stops were hit until price got there.

The result: price DID go to where I had planned. I would had captured more than 70 pips easily, the move was actually 85 pips but my target was more conservative.



My entry was at the bottom at daily support with multiple harmonics to get there. My target was the 38.2% of the whole bearish move.