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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

  • #18,341
  • Mar 18, 2016 12:18pm Mar 18, 2016 12:18pm
Quoting Mr. Pip
Hello Traders, I've made the video on MM spread sheet I will be uploading it later today with video it is rendering and I have to go do some things and meet with Scott Carney. I will be back later and it should be done so give me a few hours.
Great thank you !
  • #18,342
  • Mar 18, 2016 12:33pm Mar 18, 2016 12:33pm
Quoting Mr. Pip
Hello Traders, I've made the video on MM spread sheet I will be uploading it later today with video it is rendering and I have to go do some things and meet with Scott Carney. I will be back later and it should be done so give me a few hours.
Looking forward to it. Thanks Damian.

I would also like to second the request for a video on tighter stops if possible and whenever you have some time.

Have a nice weekend

Mat
  • #18,343
  • Mar 18, 2016 1:09pm Mar 18, 2016 1:09pm
Quoting Timwelch
Ok. So, the Fixed Ratio is great up to a point. But, because of the way it calculates, it will continually work the risk down to as near 0 as it can over time. This is not super ideal, and once you hit a certain level of risk, to continue to grow your balance at a decent pace (i.e. the whole point of this is to make your money work for you), you should then switch to something like the original fixed risk %. In doing this, assuming you fix that % at a small enough size, you will protect your capital from extreme loss. Below is an example. It's pretty...
Nice work. Very clear.
  • #18,344
  • Edited 3:22pm Mar 18, 2016 2:55pm | Edited 3:22pm
Quoting crixus
{quote} I use both platforms Ninjatrader and MT4 and yes there is a way to display tick chart interval on MT4. I bought this package collection a while ago and it works perfectly: There is a free trial if you want to test them. http://ovo.cz/products/offline-charts-for-mt4/omnia-charts-collection/ {image}

Many thanks for the info. I will have a try.
  • #18,345
  • Mar 18, 2016 4:11pm Mar 18, 2016 4:11pm
Here's the link to the Fixed Ratio override spreadsheet in Google sheets. It gives View access, so you'll have to go to "File -> Make a copy" and then you can edit your own copy. :-)

Big Note: IT is based off of USD base currency pairs. So, $1.00 per pip fixed. I have another spreadsheet that can do the calculations for other base pairs, but you have to manually enter the going rate. For me, I trade EURUSD and USDJPY (not at the same time, of course) almost exclusively, so this fits the bill.

Tim's FRO (Fixed Ratio Override) Money Management (https://docs.google.com/spreadsheets/d/1-2A9mNBiJxFHjLvTY2chXI3he1B55-MkEDHDbxBmb3I/edit?usp=sharing)
Markets can remain irrational longer than you can remain solvent - JMK
  • #18,346
  • Mar 18, 2016 4:30pm Mar 18, 2016 4:30pm
Quoting Timwelch
Here's the link to the Fixed Ratio override spreadsheet in Google sheets. It gives View access, so you'll have to go to "File -> Make a copy" and then you can edit your own copy. :-) Big Note: IT is based off of USD base currency pairs. So, $1.00 per pip fixed. I have another spreadsheet that can do the calculations for other base pairs, but you have to manually enter the going rate. For me, I trade EURUSD and USDJPY (not at the same time, of course) almost exclusively, so this fits the bill. Tim's (https://docs.google.com/spreadsheets/d/1-2A9mNBiJxFHjLvTY2chXI3he1B55-MkEDHDbxBmb3I/edit?usp=sharing)...
Thanks Tim, your contribution is appreciated. With fixed ratio is it mandatory to use a fixed stop loss?? Although most of my trades on a 5m timeframe for EURUSD, USDJPY, or AUDUSD are around the 20pip range... sometimes it's more, sometimes less.

It seems from what I gather from Mr. Pips videos that he trades the same amount of contracts regardless of SL. Granted this has to be used responsibly... just curious.
  • #18,347
  • Mar 18, 2016 4:36pm Mar 18, 2016 4:36pm
I personally set the stop loss to be the MAX stop loss that I'm willing to risk, ever. So, for instance, I usually use 13 pips. I won't ever trade if my stop loss is greater than that. I don't like having to watch price move more than 13 pips in my favor just to hit a 1:1. So, I'll use 13 as my base, and I'll "adjust" my lot size on the fly. I have an indicator that will tell me what my lot size should be based on a stop loss and % of my trade risked. So, all i have to do is plug in the stop loss that I'm wanting to use and the RISK % that the spreadsheet tells me, and the indicator will generate the lot size. If it's something close, I'll just wing it and guess.It's typically not that far off to just guess the number. I'm also not dealing with thousands of dollars risked per trade yet, so maybe that will be more important as time goes by. :-) I'm not worried about a couple dollars to either side if I choose 0.30 lots or 0.32 lots in guessing. But, if it were the difference between 5 lots and 6 lots, I'll look for more accuracy. But even still, you can do a quick calculation for say, your add-on size. Figure out what that is for the pair, or some arbitrary small number, like 0.01 lots, and that will multiply up for you accurately every time. Does that make sense?

Quoting Harmonic1976
{quote} Thanks Tim, your contribution is appreciated. With fixed ratio is it mandatory to use a fixed stop loss?? Although most of my trades on a 5m timeframe for EURUSD, USDJPY, or AUDUSD are around the 20pip range... sometimes it's more, sometimes less. It seems from what I gather from Mr. Pips videos that he trades the same amount of contracts regardless of SL. Granted this has to be used responsibly... just curious.
Markets can remain irrational longer than you can remain solvent - JMK
  • #18,348
  • Mar 18, 2016 5:00pm Mar 18, 2016 5:00pm
Quoting Timwelch
I personally set the stop loss to be the MAX stop loss that I'm willing to risk, ever. So, for instance, I usually use 13 pips. I won't ever trade if my stop loss is greater than that. I don't like having to watch price move more than 13 pips in my favor just to hit a 1:1. So, I'll use 13 as my base, and I'll "adjust" my lot size on the fly. I have an indicator that will tell me what my lot size should be based on a stop loss and % of my trade risked. So, all i have to do is plug in the stop loss that I'm wanting to use and the RISK % that the spreadsheet...
Makes sense, it's probably just me but I'm not understanding some of this... for instance, what does "Delta Pips" do? Does your lot size increase depend on pips gained total or in a trade or week or month? Or does the lot size just change based on account size, if that's the case then what does delta pips do?

If my starting balance is $1,000 and my delta balance is $100, I'm guessing that it should move up to the next lot size increment when the account hits $1100 right? Does it increase every time the account gains $100?

i.e.

$1000 = .1 Lot
$1100 = .11 Lot
$1200 = .12 Lot


Not trying to be hard on you... just trying to understand.
  • #18,349
  • Edited 6:25pm Mar 18, 2016 5:18pm | Edited 6:25pm
So, delta pips is the total number of pips needed to reach the next level. This doesn't account for losses. So, assume 100 pips means you gained 100 pips from the last level. Since pips earned correlates directly to a balance increase (minus spread and commissions, which are not noted here), "delta balance increase" is just a number derived from "delta pips" multiplied by cost/pip. Essentially, you just look on the left side and you should only move to the next level when your balance is the size indicated next to the level number. Now, when you move to the next level is totally up to you. How long it takes you and such. If you plug in 100 pips for each level, then you can divide that by days or weeks or whatever. There's no "SET" time you have to be in a level. If you have drawdowns and bad weeks, let it happen. For me, I am using a multiple of my stop loss. My stop loss max is 13 pips, so my level-up is 130 pips. I aim for 26 pips per day, so that gives me 5 days per level. If I lose a day, I just shoot for 6 days then. :-)

* Also note, if your balance goes below the Level minimum balance, you should step back down to the previous level. Even if it's the first trade on the new level that takes you down below that min. balance.

This link is where I understood it best (http://www.streetdirectory.com/travel_guide/37084/investment/fixed_ratio_money_management.html).
Markets can remain irrational longer than you can remain solvent - JMK
  • #18,350
  • Mar 18, 2016 7:14pm Mar 18, 2016 7:14pm
Hello Traders,

Here is the MM video and spreadsheet. Feel free to comment on the power of the smooth ratio MM.

https://youtu.be/Q8WSJBnfUb0
Attached File(s)
File Type: xlsx DCAST Money Management.xlsx   94 KB | 2,276 downloads
If you fail to plan, you plan to fail.
  • #18,351
  • Mar 18, 2016 7:53pm Mar 18, 2016 7:53pm
Thank you once again Sir.
  • #18,352
  • Mar 18, 2016 8:00pm Mar 18, 2016 8:00pm
Quoting Timwelch
So, delta pips is the total number of pips needed to reach the next level. This doesn't account for losses. So, assume 100 pips means you gained 100 pips from the last level. Since pips earned correlates directly to a balance increase (minus spread and commissions, which are not noted here), "delta balance increase" is just a number derived from "delta pips" multiplied by cost/pip. Essentially, you just look on the left side and you should only move to the next level when your balance is the size indicated next to the level number. Now, when you...
Tim thank you for all your help and the work you put in to the MM formula.
If you fail to plan, you plan to fail.
  • #18,353
  • Mar 18, 2016 10:49pm Mar 18, 2016 10:49pm
Quoting Mr. Pip
Hello Traders, Here is the MM video and spreadsheet. Feel free to comment on the power of the smooth ratio MM. https://youtu.be/Q8WSJBnfUb0 {file}
Thank you very much Damian. the video really helped to clear some things up.

Quoting Timwelch
Here's the link to the Fixed Ratio override spreadsheet in Google sheets. It gives View access, so you'll have to go to "File -> Make a copy" and then you can edit your own copy. :-) Big Note: IT is based off of USD base currency pairs. So, $1.00 per pip fixed. I have another spreadsheet that can do the calculations for other base pairs, but you have to manually enter the going rate. For me, I trade EURUSD and USDJPY (not at the same time, of course) almost exclusively, so this fits the bill. Tim's (https://docs.google.com/spreadsheets/d/1-2A9mNBiJxFHjLvTY2chXI3he1B55-MkEDHDbxBmb3I/edit?usp=sharing)...
Thanks Tim
  • #18,354
  • Mar 19, 2016 1:43am Mar 19, 2016 1:43am
Quoting Mr. Pip
Hello Traders, Here is the MM video and spreadsheet. Feel free to comment on the power of the smooth ratio MM. https://youtu.be/Q8WSJBnfUb0 {file}
Hi Mr. Pip,

Thanks for the MM sheet. It is really helpful.
I have a query in this. My starting capital is $1000. I'm planning to risk only 1% in every trade. So i want to keep the lot size as 0.01.

I changed the highlighted in the attached sheet. Let us know if this is correct.
Attached Image (click to enlarge)
Click to Enlarge Name: MM.png Size: 52 KB
  • #18,355
  • Edited 3:06am Mar 19, 2016 2:46am | Edited 3:06am
NZDJPY 4H. I am in Buy position and currently -40 pips drawdown. Will it make 3 drive pattern and hit my SL? Will consider early exit if it goes below 75.50 again. Entry was awkward and I somewhat regret this trade... In fundamental perspective, commodity currencies have good demand now and BOJ may come into intervention again next week. What do you think?

<4H>
Attached Image (click to enlarge)
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<D1>
Attached Image (click to enlarge)
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Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #18,356
  • Mar 19, 2016 6:45am Mar 19, 2016 6:45am
Quoting ramkirshnava
{quote} Hi Mr. Pip, Thanks for the MM sheet. It is really helpful. I have a query in this. My starting capital is $1000. I'm planning to risk only 1% in every trade. So i want to keep the lot size as 0.01. I changed the highlighted in the attached sheet. Let us know if this is correct. {image}
I have not tried those values but they should work. Run the scenario and see if it works.
If you fail to plan, you plan to fail.
  • #18,357
  • Mar 19, 2016 6:55am Mar 19, 2016 6:55am
Quoting heispark
NZDJPY 4H. I am in Buy position and currently -40 pips drawdown. Will it make 3 drive pattern and hit my SL? Will consider early exit if it goes below 75.50 again. Entry was awkward and I somewhat regret this trade... In fundamental perspective, commodity currencies have good demand now and BOJ may come into intervention again next week. What do you think? <4H> {image} <D1> {image}
Lim nt sure at what point you entered the market long a can see the level but it looks like you traded right into an area of resistance. It's identified on your chart you can also see some really strong selling volume entering the market at that level as well. The only good thing for you at the moment is that the Bulls are increasing buying volume either way the expectation is for a NSH and you are in a complex correction. Expect price to test the lows and the Bulls will try to prevent that. They show signs that they are already trying to do that. Good luck on your trade!
If you fail to plan, you plan to fail.
  • #18,358
  • Mar 19, 2016 7:24am Mar 19, 2016 7:24am
Quoting Mr. Pip
{quote} Lim nt sure at what point you entered the market long a can see the level but it looks like you traded right into an area of resistance. It's identified on your chart you can also see some really strong selling volume entering the market at that level as well. The only good thing for you at the moment is that the Bulls are increasing buying volume either way the expectation is for a NSH and you are in a complex correction. Expect price to test the lows and the Bulls will try to prevent that. They show signs that they are already trying to...
Thanks for your feedback... I feel omen...
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #18,359
  • Mar 19, 2016 7:53am Mar 19, 2016 7:53am
EURCHF D1
There are two master candles...
Attached Image (click to enlarge)
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Attached Image (click to enlarge)
Click to Enlarge Name: 2016-03-19_21-54-14.png Size: 16 KB
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #18,360
  • Mar 19, 2016 8:04am Mar 19, 2016 8:04am
Quoting ramkirshnava
{quote} Hi Mr. Pip, Thanks for the MM sheet. It is really helpful. I have a query in this. My starting capital is $1000. I'm planning to risk only 1% in every trade. So i want to keep the lot size as 0.01. I changed the highlighted in the attached sheet. Let us know if this is correct. {image}

Thanks Mr. Pip,

It looks this works for minimum 1 lot. If i change that to 0.01 then it is giving some different numbers. Also it seems formulae is based on minimum 1.
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