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Ratios & Harmonics: a Different Way to Trade

  • #18,041
  • Mar 10, 2016 6:19am Mar 10, 2016 6:19am
Quoting GnG
Good morning everyone!!Good morning Mr Pip, Here is a set up for today (March 10,EUR/USD 5 min) Many times you have said that we should pay attention and not enter a trade near a zone of support or resistance,in order to have room to protect our trade.This is one thing that still confuses me a little.. in this set up we have: 1)a strong move up (bullish move) 2)a retracement that reached the 0.786 a)bad(because its a deep retracement and maybe market wants to move down) b)good(bacause we have a very very nice risk reward ratio) 3)the retracement...
That bullish move was during the news, I wouldn't take it seriously, and wait until market will find a fear price
Even though I walk through the darkest valley, I will fear no evil
  • #18,042
  • Mar 10, 2016 6:21am Mar 10, 2016 6:21am
Quoting GnG
Good morning everyone!!Good morning Mr Pip, Here is a set up for today (March 10,EUR/USD 5 min) Many times you have said that we should pay attention and not enter a trade near a zone of support or resistance,in order to have room to protect our trade.This is one thing that still confuses me a little.. in this set up we have: 1)a strong move up (bullish move) 2)a retracement that reached the 0.786 a)bad(because its a deep retracement and maybe market wants to move down) b)good(bacause we have a very very nice risk reward ratio) 3)the retracement...
Interested to see other opinions on this - mine is:

1) the big move up seems very violent, news event? possibly not representative of general market direction
2) since then, all the power has been with the bears until hitting the 78 level, but price didn't really respect that level so I would be surprised if the retrace was over - there's no major support where it stopped
3) there was strong bearish rejection of the attempt to push back up above the 61 level

I wouldn't be taking the trade yet, personally.
  • #18,043
  • Mar 10, 2016 6:22am Mar 10, 2016 6:22am
Quoting Harmonic1976
Started off the week rough by misreading strength... the volume in the candles (strength) when increasing against expectation seems to be a good warning sign to look for a graceful exit. That's looking at what price is telling us regardless of expectation. Despite the setback in two trades, managed to wipe away all of the loses and end up in the green today by sticking to the concepts taught here. Powerful stuff!! It also builds confidence in the edge that the methodology does provide. I think once I get the money management piece down and start...
If you fail to plan, you plan to fail.
  • #18,044
  • Mar 10, 2016 6:25am Mar 10, 2016 6:25am
Quoting beepbop2015
One more chart! This is my somewhat embarrassing postmortem of an ill fated EUR/JPY long. In the chart are the reasons I should not have taken this trade, or maybe taken it but in the opposite direction. {image}
Clean it up beepbop you traded into a supply zone with no room to protect the trade. Don't chase price around.
If you fail to plan, you plan to fail.
  • #18,045
  • Mar 10, 2016 6:28am Mar 10, 2016 6:28am
Quoting Harmonic1976
I think harmonics are just the instruments breath in and out at it's current cycle. Think of it like your breathing, you can only breath in and out so much. But you can't breath out all the time without breathing in some to continue. If the market starts moving fast (running for instance) then the moves will increase. If the markets are meditating... aka breath slows (think Japan session many times LOL)... the breaths are not as strong due to decreased volatility. As we all know, price rarely goes from Point A to B in a straight line (and a lot...
If you fail to plan, you plan to fail.
  • #18,046
  • Mar 10, 2016 6:29am Mar 10, 2016 6:29am
Quoting PipTrendz
{quote} Really? I made over 50 pips today (don't tell anyone about the 73 pip loss yesterday though )
Nice work!
If you fail to plan, you plan to fail.
  • #18,047
  • Mar 10, 2016 6:37am Mar 10, 2016 6:37am
Mr. Pip, can you explain (maybe a tiny short video?) how to use your DCASTFX_money_management_spreadsheet.xls. I opened it and it looks daunting to me to figure it out (I'm a Chief Systems Engineer at work, but I design / build / manage computer environments, not very good with Excel.. hah).
Markets can remain irrational longer than you can remain solvent - JMK
  • #18,048
  • Mar 10, 2016 6:45am Mar 10, 2016 6:45am
Quoting djbenny1
Mr Pip, Like others have mentioned I think the trade management side will be very difficult to perfect. It seems that most of your trades you exit by hitting a trailing SL, whether it's BE or on down the line. I was wondering just what % (roughly of course) you reckon you take vs the "absolute best exit" you COULD have had if you exited at the swing low? I would guess that it's less than 50%? The point I'm trying to make and teach myself is that we shouldn't regret pips we didn't take so long as the ones we do take keep us moving in the right direction?...
Trade management is very difficult, I don't have stats to answer your question. But giving your trades some room and using the trail in a mechanical way keeps the difficult emotions out of wanting to take profit early. It's true that you will end up leaving some money at the table sometimes but you will also capture those extended move that occur pretty often. It's a balance and giving yourself those options increase your account better in the long tern. Patience must be a part of this whole process.
If you fail to plan, you plan to fail.
  • #18,049
  • Mar 10, 2016 6:51am Mar 10, 2016 6:51am
Quoting monocor
UJ, Trade I am in {image}
Closed +2,2%, 40 pips
Attached Image (click to enlarge)
Click to Enlarge Name: Capture.JPG Size: 255 KB
Even though I walk through the darkest valley, I will fear no evil
  • #18,050
  • Mar 10, 2016 6:52am Mar 10, 2016 6:52am
Quoting Phx62
I decided a while back to quit posting on FF but I wanted to post one more time just to thank Damian for his insight, his instruction and explanations. I have been a successful trader for several years with a working trading plan but always felt there was more I needed to know about price movement, harmonics and structure. I found this thread a couple of weeks ago while studying some of Scott Carney's work and have watched all the recent videos by Damian. I appreciate the clear, concise way you present the information. I have a long way to go to...
Thank you for you comments and I'm glad you found the information useful. Scott is great and his contribution to the trading community has changed the way I see and trade the markets. He will be starting a thread soon in the commercial section and we are going to be working on a couple of projects together. It's going to be fun and very exciting.
If you fail to plan, you plan to fail.
  • #18,051
  • Mar 10, 2016 6:56am Mar 10, 2016 6:56am
Quoting djbenny1
{quote} Interested to see other opinions on this - mine is: 1) the big move up seems very violent, news event? possibly not representative of general market direction 2) since then, all the power has been with the bears until hitting the 78 level, but price didn't really respect that level so I would be surprised if the retrace was over - there's no major support where it stopped 3) there was strong bearish rejection of the attempt to push back up above the 61 level I wouldn't be taking the trade yet, personally.
Attached Image (click to enlarge)
Click to Enlarge Name: uou.png Size: 75 KB


......what do you mean you'' wouldn't be taking the trade yet'',.????
..i don't know if should laugh or cry..
learn more , earn more
  • #18,052
  • Mar 10, 2016 6:56am Mar 10, 2016 6:56am
Quoting Timwelch
Mr. Pip, can you explain (maybe a tiny short video?) how to use your DCASTFX_money_management_spreadsheet.xls. I opened it and it looks daunting to me to figure it out (I'm a Chief Systems Engineer at work, but I design / build / manage computer environments, not very good with Excel.. hah).
Can you show, where is it ?
Even though I walk through the darkest valley, I will fear no evil
  • #18,053
  • Edited 7:08am Mar 10, 2016 6:58am | Edited 7:08am
After analysing some of my trades, it always comes back tot he same thing - not enough room for the trade to breathe, and ultimately being stopped out with a loss.

So I have done a couple of things, but moving to a new way of trading this strategy with regards to trade management (while at the same time moving to how I am used to trading and comfortable to trading!)

Basically, I have taken Mr P's harmonic video, and have basically implemented it as a TP... Not exactly revolutionary, but I have found that it does a couple of things for me... I like certainty, even if that certainty is 10%!!! So I have implemented a set TP, while also placing the SL under the last swing... regardless of the risk. The simple reason being that a) the wider the sl, the less likely to be taken out b) my analysis should mostly be correct, and this should give me a R:R of c. 1:2... for the whole strategy, not just on each individual trade (rough figures, and not verified). I still plan to remove my risk to B/E at structure test... But I am very happy to let trades run their course, but not having a TP makes me nervous - how bizzare is that!!!

Anyway, 2 trades from me today:

Attached Image (click to enlarge)
Click to Enlarge Name: DOW 2.JPG Size: 397 KB


Nice winner here, harmonics played out great!

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPY3.JPG Size: 460 KB


This is a live trade, and just after I snipped this, the pair jumped up very nicely, and I was able to lock in about 18 pips or so, so on the free train ride at the moment... hang on, its not free, they are paying me to ride it!

I am placing my TP about 5%-10% below the 1:1 projection so that I can capture the ones that don't quite hit the projection, and happy to leave a few pips on the table for a guarantee of my actual TP as opposed to some fictional pips!

EDIT * I took my profits at the 161.8 extension, that will do me very nicely thank you!
  • #18,054
  • Mar 10, 2016 6:58am Mar 10, 2016 6:58am
Quoting GnG
Good morning everyone!!Good morning Mr Pip, Here is a set up for today (March 10,EUR/USD 5 min) Many times you have said that we should pay attention and not enter a trade near a zone of support or resistance,in order to have room to protect our trade.This is one thing that still confuses me a little.. in this set up we have: 1)a strong move up (bullish move) 2)a retracement that reached the 0.786 a)bad(because its a deep retracement and maybe market wants to move down) b)good(bacause we have a very very nice risk reward ratio) 3)the retracement...
It's a good opportunity from a risk/reward stand point and from the expectation stand point as well. But, for the same reasons you pointed out above the trade also has some weakness as the bears made much more progress then they should have so there is an element of lower probability on this particular trade.
If you fail to plan, you plan to fail.
  • #18,055
  • Mar 10, 2016 7:00am Mar 10, 2016 7:00am
Quoting monocor
{quote} That bullish move was during the news, I wouldn't take it seriously, and wait until market will find a fear price

yes ,maybe we should also have the parametere news when we examine a move
learn more , earn more
  • #18,056
  • Mar 10, 2016 7:00am Mar 10, 2016 7:00am
Quoting Timwelch
Mr. Pip, can you explain (maybe a tiny short video?) how to use your DCASTFX_money_management_spreadsheet.xls. I opened it and it looks daunting to me to figure it out (I'm a Chief Systems Engineer at work, but I design / build / manage computer environments, not very good with Excel.. hah).
Yes will do
If you fail to plan, you plan to fail.
  • #18,057
  • Mar 10, 2016 7:02am Mar 10, 2016 7:02am
Quoting monocor
{quote} Can you show, where is it ?
I will be posting a new one soon with a video.
If you fail to plan, you plan to fail.
  • #18,058
  • Mar 10, 2016 7:11am Mar 10, 2016 7:11am
Quoting Mr. Pip
{quote} It's a good opportunity from a risk/reward stand point and from the expectation stand point as well. But, for the same reasons you pointed out above the trade also has some weakness as the bears made much more progress then they should have so there is an element of lower probability on this particular trade.
you are right..
we should be very selective with our entries and engage only when everything is according to the rules..the difficult part is to find this equilibrium (that is so fragile) .you have something in your favor ,and at the same time something else goes against you..
learn more , earn more
  • #18,059
  • Mar 10, 2016 7:36am Mar 10, 2016 7:36am
Quoting GnG
{quote} you are right.. we should be very selective with our entries and engage only when everything is according to the rules..the difficult part is to find this equilibrium (that is so fragile) .you have something in your favor ,and at the same time something else goes against you..
I know what you mean but at the end of the day the odds are stacked in our favor so in the long run it all works out. Identify with the types of setups that you will take and write out your trade plan. You don't have to take every correction price makes so identify which correction you are particularly interested in and put your trade plan together. If there is more risk then you would like to take but the opportunity is still good there are only three choices on how to proceed. which one you take should not be a flip of a coin it should be the one that is in your trade plan 100% of the time. Because that is the one that you are psychologically in tune with and the one that you are most comfortable with. your choices are simple really:

1. Enter with a full position size and manage your trade per your rules.
2. Enter with a smaller position size to minimize your risk and have an option to scale in the remainder of the position size if applicable.
3. Pass and wait for another opportunity.

Don't complicate thing by thinking to much it's emotional baggage that could hurt your trading.
If you fail to plan, you plan to fail.
  • #18,060
  • Mar 10, 2016 7:57am Mar 10, 2016 7:57am
Quoting Mr. Pip
{quote} I know what you mean but at the end of the day the odds are stacked in our favor so in the long run it all works out. Identify with the types of setups that you will take and write out your trade plan. You don't have to take every correction price makes so identify which correction you are particularly interested in and put your trade plan together. If there is more risk then you would like to take but the opportunity is still good there are only three choices on how to proceed. which one you take should not be a flip of a coin it should...
learn more , earn more
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