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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

  • #10,801
  • Nov 13, 2014 1:52pm Nov 13, 2014 1:52pm
Alright Traders lets talk about Rotation.

What is it and how important is it? Where do I look for it and how does it present itself?

What is it? Like the word suggest a rotation in price action. A transfer of power between the bulls and the bears.

How important is it? Very, very important! Having proper rotation in your PRZ or designated area of interest is paramount to your decision making and getting good timing on your entry.

Here do we look for it? At the end of moves and on lower highs or higher lows when expectations and confluence exist (Aggressive C).

How does it present itself? For that look at the chart below of the EU chart for today I will point out two examples. I will also make a video in the near future showing examples of this and I want you all to post some chart with examples of rotation in your PRZ or Areas of Interests.

I wanted you all to have this concept down before we do our live session.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (233 Tick) 11_13_2014.jpg Size: 167 KB
If you fail to plan, you plan to fail.
  • #10,802
  • Nov 13, 2014 1:55pm Nov 13, 2014 1:55pm
You have to consider the context of where you are at on the chart. Only look for rotation in the right places.
If you fail to plan, you plan to fail.
  • #10,803
  • Edited 2:03pm Nov 13, 2014 1:58pm | Edited 2:03pm
Quoting Mr. Pip
{quote} Nice did it work out?

Well Mr. Pip got to a BE point. but saw a double bottom at the round number. so got out.
The price at this moment is not doing much.

I do have a question:

Last week you traded the GBPNZD i have also seen you trade different pairs. How do you pick the pairs?
Do you just flip through a few pairs each morning ?
Do you have a basket of pairs from which you chose?

Thanks in advance
Attached Image (click to enlarge)
Click to Enlarge Name: $GBPAUD (144 Tick) 13-11-2014.jpg Size: 190 KB
  • #10,804
  • Nov 13, 2014 2:28pm Nov 13, 2014 2:28pm
Quoting claytonator
Hi Mr Pip, I am extremely new to Harmonic trading but I have been following your thread with extreme interest for the past couple of weeks and have just finished reading Scott Carney's first volume in Harmonic trading (I now have the 2nd volume to read). I have this afternoon been studying various charts and must admit am struggling to see many harmonics. This is understandable however would you mind helping me analyse this potential trade set up on the EURUSD 1hour chart? I believe I have spotted a Bearish Deep Crab pattern starting to form. Point...
This takes some time and hard work a simple book only provides you with examples and theory. Now you have to get intimate with the chart and the information. Forget the patterns for now learn to read the chart and become intimate with ratios and how to properly draw them. soon the harmonics will start to jump out and say hello. Time frame does not matter. Look at how many opportunities would have been missed waiting for the animals to complete.

I know Mr. Carney and others have their idea about harmonics but I have mine and it's about creating efficiency and identifying high probability kick ass trading! I would not trade any other way!
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (60 Min) 11_13_2014.jpg Size: 144 KB
If you fail to plan, you plan to fail.
  • #10,805
  • Nov 13, 2014 2:33pm Nov 13, 2014 2:33pm
Quoting DeepakJ
{quote} Well Mr. Pip got to a BE point. but saw a double bottom at the round number. so got out. The price at this moment is not doing much. I do have a question: Last week you traded the GBPNZD i have also seen you trade different pairs. How do you pick the pairs? Do you just flip through a few pairs each morning ? Do you have a basket of pairs from which you chose? Thanks in advance {image}
The pair does not really matter. But if see extremely bearish or bullish order flow I look for something with a low spread and decent corrections that has some range to it. The only two pairs I really trade are the EU or GBPNZD. I mainly trade the EU as the other is at time bipolar and can inflict pain without warning LOL.
If you fail to plan, you plan to fail.
  • #10,806
  • Nov 13, 2014 2:57pm Nov 13, 2014 2:57pm
Quoting Mr. Pip
{quote} The pair does not really matter. But if see extremely bearish or bullish order flow I look for something with a low spread and decent corrections that has some range to it. The only two pairs I really trade are the EU or GBPNZD. I mainly trade the EU as the other is at time bipolar and can inflict pain without warning LOL.
Ok will keep an eye on EU. GBPNZD is a scary pair to trade.
  • #10,807
  • Nov 13, 2014 3:30pm Nov 13, 2014 3:30pm
Quoting Mr. Pip
{quote} This takes some time and hard work a simple book only provides you with examples and theory. Now you have to get intimate with the chart and the information. Forget the patterns for now learn to read the chart and become intimate with ratios and how to properly draw them. soon the harmonics will start to jump out and say hello. Time frame does not matter. Look at how many opportunities would have been missed waiting for the animals to complete. I know Mr. Carney and others have their idea about harmonics but I have mine and it's about creating...
Thank you for your advice Mr Pip and for your analysis of the Eurusd chart. When you point it out it all looks so simple!! I have a lot to learn but very much thank you for your help and tuition. It is greatly appreciated.
  • #10,808
  • Nov 13, 2014 4:28pm Nov 13, 2014 4:28pm
An update on EU weak Rotation is seen here for a possible reattempt to complete the ABCD if long here aggressive trade management must be followed as heavy selling has occurred near the highs in the past.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (233 Tick) 11_13_2014 update.jpg Size: 128 KB
If you fail to plan, you plan to fail.
  • #10,809
  • Nov 13, 2014 6:43pm Nov 13, 2014 6:43pm
Failed Rotation on the Eu but not too surprise it was weak and off of heave selling off of supply. This was why I mentioned if you are long EU to manage aggressively.

We Traders talk to you tomorrow where I hope to see examples of Rotation from you all. Mr. Pip is signing off for the night going to enjoy some football and an Ice Cold Beer . Talk to ya tomorrow and green pips to all always!!!!
If you fail to plan, you plan to fail.
  • #10,810
  • Nov 13, 2014 9:18pm Nov 13, 2014 9:18pm
Quoting Mr. Pip
Alright Traders lets talk about Rotation. What is it and how important is it? Where do I look for it and how does it present itself? What is it? Like the word suggest a rotation in price action. A transfer of power between the bulls and the bears. How important is it? Very, very important! Having proper rotation in your PRZ or designated area of interest is paramount to your decision making and getting good timing on your entry. Here do we look for it? At the end of moves and on lower highs or higher lows when expectations and confluence exist (Aggressive...
Very nice example. great harmonics with the 1 to 1 on this par
  • #10,811
  • Nov 13, 2014 11:21pm Nov 13, 2014 11:21pm
Good evening. Here was a losing trade I took today on the GBPAUD - 1 Hr.

Set up: There wasn't any pattern, just a harmonic 1 to 1 that met at some ratio confluence with round number (1.8100) and nice structure.

In retrospect, I was to eager to get in this trade. I should of waited for some follow up from the bulls but I thought I could get in at a better price by pulling the trigger early. I didn't want to chase price and the risk to reward was good. Price has been ranging (1.81 - 1.86) so I took the chance against strength and against current order flow. I should of waited for bears to show some more weakness and to see if the 1.8100 would hold on the retest. I should of expected a retest because of the strength down

Lesson: 1) Listen to the candles on entry. Bad entry. 2) When structure is approached with strength, expect failure until price tells you otherwise.

Current expectations: I expect price to pullback to 1.8075-1.8100 before countinuing down. Target area is around the 1.7900 short term.

*Any comments or input is welcomed for discussion.*

https://www.tradingview.com/x/xt0G3zKS/
  • #10,812
  • Nov 14, 2014 12:24am Nov 14, 2014 12:24am
Good Morning Mr Pip,

Following your advice I saw what I believed to be an AB=CD structure on the CADCHF 15 min chart (point C was at 38.2% Fib ratio) . After doing some measurements I could see point D was confirmed by 2 sets of measurements as shown in my 1st screen shot. For further confirmation I scrolled back through the chart (zoomed out) and could see price was hitting an area of support around the 0.8460 region. Once I zoomed out I put on a Fibonacci retracement for the big move and could see price had pulled back to the 61.8% level (as shown in my 2nd screenshot). That was the 4th bit of confirmation telling me price could possibly reverse at this level.

I took a Demo trade on this but did not trade it straight away. I waited for price to start heading in my desired direction, waited for a pullback and then entered (the close of the candle as denoted by the green arrow was the entry). I hope I looked at this trade correctly.

Attached Image (click to enlarge)
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  • #10,813
  • Nov 14, 2014 12:35am Nov 14, 2014 12:35am
Quoting Mack2013
Good evening. Here was a losing trade I took today on the GBPAUD - 1 Hr. Set up: There wasn't any pattern, just a harmonic 1 to 1 that met at some ratio confluence with round number (1.8100) and nice structure. In retrospect, I was to eager to get in this trade. I should of waited for some follow up from the bulls but I thought I could get in at a better price by pulling the trigger early. I didn't want to chase price and the risk to reward was good. Price has been ranging (1.81 - 1.86) so I took the chance against strength and against current order...
Thank you for posting your failed trade Mack. Being new to Harmonic trading it is really good for me to see how some trades don't work and also people's analysis as to why they took/didn't take a trade.
  • #10,814
  • Edited 2:07am Nov 14, 2014 1:33am | Edited 2:07am
Goodmorning,

Was watching the GBPAUD.
expecting a NSH.
The last swing made a shallow pullback as is was expecting but it did it with strength so was not able to get in.
lets see how it will progress. price is at the moment fighting with the round number.

Also looking at the EU. with a possible rotation in an Agg C area with structure.
so entered long. TP is the roundnumber.
Update 1: at the moment at BE. price trying to get past the 61,8
Update 2: price interacting with the roundnumber. removed my limit order. price might get past the roundnumber
Update 3: price broke the roudnumber. possible retest. SL moved to +5
Update 4: Taken out, got 5 pips out of the trade.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: $GBPAUD (233 Tick) 14-11-2014.jpg Size: 220 KB
Click to Enlarge Name: $EURUSD (233 Tick) 14-11-2014.jpg Size: 176 KB
  • #10,815
  • Nov 14, 2014 2:18am Nov 14, 2014 2:18am
Hi Mr Pip

I've been following your thread recently and still busy going through all the posts and I must say it is very informative!
I've been trying to apply these patterns, but not 100% sure if I'm getting it right, so I do have some questions.

The first picture, is a Gartley pattern on the GBPUSB. It was a past pattern, but I am only looking at past patterns to train myself to recognise them.

In that picture I show my X point, but also show another point that may have been X ('X?' on the chart). The reason I chose the X point that I did, is because the price movement after the potential previous X looked like it was big enough to be considered a main swing (See first picture 'main swing?')

The B point did not reach the full 61.8 retracement of XA, and the D point did not close inside the PRZ, but did have wicks going into it. For these reasons, my thinking is that this is NOT a valid Gartley pattern, as there was not enough bullish strength to push the price to the 61.8XA, and in turn, not enough bullish strength to push the price into the PRZ.

So my questions are as follows;

Did I choose the correct X point?
Was my thinking about this pattern correct?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 11.13.2014b.png Size: 172 KB
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  • #10,816
  • Edited 4:09am Nov 14, 2014 2:33am | Edited 4:09am
Took a counter trend trade on the GU M5 chart. Price has been on a HUGE downward move and is looking for a little relief to the upside. My expectation is nothing more than a completion of and AB=CD pattern. Once in my PRZ I expect price to continue downward. Since this is a counter trend trade, I have been aggressive with my stop loss. In the picture I had already reduced some risk by moving my SL to just under the CD leg. As of now I am at BE. My entry candle was the second green bar on the CD leg. The CD leg also completes in an area of structure which further confirms a good reversal area.

EDIT: Closed the position for almost 10 pips. Glad I did!
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDM5.png Size: 64 KB
Damn The Torpedoes, Full Speed Ahead!
  • #10,817
  • Edited 3:36am Nov 14, 2014 2:38am | Edited 3:36am
Looking for an possible short EU.
Price is approaching with strength. So will wait for further confirmation

Update 1: Shorted EU. On a LH.
Update 2: as for now bears not taking control. price drifting.
Update 3: Price made an nsl on the shortterm orderflow. will get to minor resistance soon (1.2458)
Update 4: Moved SL to BE on touch of 38,2%. price broke minor resistance. now heading toward RN.
Update 5: price retracing. expecting to the 50% of the swing
Update 6: taken out on BE
Attached Image(s) (click to enlarge)
Click to Enlarge Name: $EURUSD (233 Tick) 14-11-2014.jpg Size: 180 KB
Click to Enlarge Name: $EURUSD (233 Tick) 14-11-2014.2.jpg Size: 185 KB
  • #10,818
  • Nov 14, 2014 5:34am Nov 14, 2014 5:34am
Hello DeepakJ,

Just an observation, as I took the same trade.

EU has been keeping a very steady rhythm today - the downward pulses are marked up in cyan on the chart. They're about 18 pips today.

You can see that your trade moved perfectly in line with the market's pulse. Perhaps a little more breathing room could have turned a BE into a profit?

Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD.png Size: 56 KB
  • #10,819
  • Nov 14, 2014 5:40am Nov 14, 2014 5:40am
Quoting DizzleFX
Took a counter trend trade on the GU M5 chart. {image}
Price went right into my PRZ and backed down. Just as I expected!
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDM5.png Size: 55 KB
Damn The Torpedoes, Full Speed Ahead!
  • #10,820
  • Nov 14, 2014 6:01am Nov 14, 2014 6:01am
Mr. Pip and any of you other traders out there that use FXCM, how do you like the new pricing model they use. Suppose to be super tight spreads with a commission charge. Just curious, thinking about giving them a try.
Damn The Torpedoes, Full Speed Ahead!
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