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Ratios & Harmonics: a Different Way to Trade

  • #18,901
  • Apr 7, 2016 7:58am Apr 7, 2016 7:58am
Quoting fonx
{quote} That is trading the breakout. Do you usually trade like this? My experience trading breakouts is that they fail many times, I mean, they are traps and many times it is difficult to reach a point where you can set the trade to BE. The system is about trying to find the best entry once price corrects to a certain level so that you can ride the trade longer.
Thanks fonx , that's another lesson for me It's against the rule for our entry."Trying to find the best entry once price corrects to a certain level so that you can ride the trade longer."I'll avoid that... thanks
  • #18,902
  • Apr 7, 2016 8:16am Apr 7, 2016 8:16am
EURUSD 15M

EXPECTATION NSL

Moved SL @BE 2pts
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  • #18,903
  • Apr 7, 2016 8:59am Apr 7, 2016 8:59am
Hey guys, these are my trades for the day:

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Sorry if it is not clearly readable on Tradingview, I marked the winning and losing trades with arrows so you can see them better. EDIT: Damn it, I realize the direction of the arrows is misleading: they just show "winning" or "losing", whether I am long or short is depending on the direction of the red area = "SL" (all but the very first trade and the trade numbered "2." are bearish).

I feel like I was a bit too confident and overtraded a bit. There were a few bad trades I feel pretty stupid about now, even though they partly worked out for me. Overall I think the market moved "nicely" today and mostly fulfilled its expectations - or am I fooling myself? I am especially interested to hear some input on the trades I numbered (my thoughts below).

1. This is the first "unconventional" trade. I just had the feeling, that the direction was turning and went in directly at a support and resistance area with no room to protect my trade. It was the 23%-Fib retracement from the prior swing and I felt the bearish move had enough steam to not pull back further. But I am in doubt whether this is a winning trade in the long run - might be too many factors against me.
I also think I could have taken more from the big last candle. There was a candle on the 1M chart, above which I could have put my SL. Tough decisions there.

2. I tried a counter-expectations trade here. The bullish candle I entered on looked too juicy and in my analysis the bears had problems to drag price lower in this area where they should come up. Still not any room to protect my trade with the S/R right above and it is against my expectation, although it was weakened by the very deep bullish correction. I think I overtraded this one and got too fancy, when trading with expectation would have been the right call.

3. I know this looks senseless and I knew it while I took the trade (I got greedy and did it anyway even though I realized that I was just dumb and greedy). My thought process was that even though we are in a very strong resistance area, the bulls still could not come up and price was even sinking further despite their efforts. They were especially unable to get price over the line that the 4 candles beside the last big bearish candle build (1.13713). So I thought there will be a breakout and basically thought that the downside is more likely with all the momentum and volume the bears had pushing into that zone.
Can we ever stack enough reasons for such a trade to be of positive expectation or am I losing money here?

Overall I would have done better if I had simply traded with expectation and this is very reassuring to me, although I am a bit annoyed by my lack of discipline. Sorry for the wall of text and the ranting, but maybe we can get some insight out of this .
  • #18,904
  • Apr 7, 2016 10:06am Apr 7, 2016 10:06am
good morning

US30 - 3M

Same projection with increase momentum going into structure. I'm expecting a shorter correction (50-61.8 / previous 78.6) and increase volatility.

Took a trade this morning. fear drove me out at +5 pips. Price did as expected and I acted on bearish strength but then I second guessed my entry, my risk and how price was previously reject and thought I would scratch it instead only to watch it become a winner.

Which brings me to a question: Not saying that my entry was wrong, in this case my fear and confidence was, but how does everybody handle wrong entries? do you exit right a way, reassess, or just play it out? not sure if there are any other strategies.

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  • #18,905
  • Edited 10:57am Apr 7, 2016 10:20am | Edited 10:57am
Quoting Mack2013
good morning US30 - 3M Same projection with increase momentum going into structure. I'm expecting a shorter correction (50-61.8 / previous 78.6) and increase volatility. Took a trade this morning. fear drove me out at +5 pips. Price did as expected and I acted on bearish strength but then I second guessed my entry, my risk and how price was previously reject and thought I would scratch it instead only to watch it become a winner. Which brings me to a question: Not saying that my entry was wrong, in this case my fear and confidence was, but...
I know the problem, once a trade is live all possible losing scenarios happen in my head. I just have a strict rule: I never touch my SL until first profit target is reached and then I trail my SL according to my rules. What I want to say is that the more emotions are involved the more I need to follow mechanical rules that eliminate emotions: before I enter a trade I accept that it can go against me and that I can lose that money, but I tell myself that the entry is correct and that as long as I chose correct entries I will be profitable in the long run and then I enter and it is in the markets hands. From this point on I do nothing but follow my plan with the trade in question according to my (mechanical) rules.
  • #18,906
  • Apr 7, 2016 11:47am Apr 7, 2016 11:47am
Quoting stavrogijn
{quote} I know the problem, once a trade is live all possible losing scenarios happen in my head. I just have a strict rule: I never touch my SL until first profit target is reached and then I trail my SL according to my rules. What I want to say is that the more emotions are involved the more I need to follow mechanical rules that eliminate emotions: before I enter a trade I accept that it can go against me and that I can lose that money, but I tell myself that the entry is correct and that as long as I chose correct entries I will be profitable...
Thanks for your response. I totally agree. got to stick to the plan. sometimes easier said then done. sometimes I look at price and know its not working out especially when I'm in the red and I got to say, I'm usually right (when I'm in the red) but it has me second guessing my entry now before I've given it a chance to prove itself.

I guess back to sticking to rules.
  • #18,907
  • Edited 12:56pm Apr 7, 2016 11:51am | Edited 12:56pm
US30 - 3M

Took this counter trend trade with the expectation of a PB and currently eating dirt. haha serves me right for going counter trend but I was seeing a break down of price at structure. Overall I'm looking at a 50 - 61.8 retrace and another NSL long term.

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Edit +34 pips - I think I might of exited to soon. Bulls stronger then expected but I do think Price is going to break down here.

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Edit: Blah.... PA was too fast. R:R was not good so price left without me . Had to let it go

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  • #18,908
  • Apr 7, 2016 3:55pm Apr 7, 2016 3:55pm
Quoting stavrogijn
Hey guys, these are my trades for the day: {image} Sorry if it is not clearly readable on Tradingview, I marked the winning and losing trades with arrows so you can see them better. EDIT: Damn it, I realize the direction of the arrows is misleading: they just show "winning" or "losing", whether I am long or short is depending on the direction of the red area = "SL" (all but the very first trade and the trade numbered "2." are bearish). I feel like I was a bit too confident and overtraded a bit. There were a few bad trades I feel pretty stupid about...

I can't tell you if you did or did not. If you feel like you did, your feelings are probable right but when you see opportunity you have to act. with that being said, trying to juggle low / med / high probability can be difficult at times especially when your trying to be patient or when you had 4 cups of coffee. It looks like your chasing every swing tho. But your doing a good job at it so who am I to say your doing it wrong. All that matters is if your winning and it looks like you are.

trade 1: In my opinion, trade 1 and 3 were pretty bullsy. As my general rule, I expect structure to hold unless approached with strength and the Bears did have strength. Good call but I don't think I would of entered there. You entered before the break out. personally I don't like trading into structure but thats just me

As for your trailed stop, I thought it was alright. It looked about 2/3's of the bar. looks like you played it conservative with plenty of room but the bull bar did take 1/2 so , I think you would of been justified if you set stops just above the bull candle or even closing at candle close. But you did alright.

Your next trade after that was excellent bwt.

Trade 3: I personally don't like this one. Sorry no offense. But I think you printed structure wrong and should of included the low. Price found support there for a reason and S/T made a deep correction. So again you traded into support, stronger support this time and it was a loser t.

Sometimes positive results will support bad habits. But I was never that good at playing B/O's. I'm a bit conservative. I usually wait to analysis the strength of the PB after the B/O (so I miss a lot of them), more aggressively you can enter on the strength of the B/O.

If this is a strategy that in the long run is producing positive results then hey this could be your thing but I would track how many go bust and the amount of profits you can get from this strategy just to be sure. My advice anyway

Trade2: Even tho it was counter trend. I think you were justified in taking it. You had a 1 to 1 up which established a deeper then expected correction. But Up until your entry bull bar, bears looked weak so honestly, I think I would of taken it too. bulls momentum looked to be increasing, projection was good, previous bear pull back was short sooo... I would be expecting a similar retracement bar by bar looked to confirm that. the only thing was the 1 to 1 and it was counter trend..

With that being said, it wasn't part of your expectations. But I also believe that you have to adapt to circumstances as information is becoming present.

Risk was small and you aggressively managed it.

Question: I notice that your entering before the close, are you watching a lower TF for entries or looking for power strokes?

all in all good trading. Its nice to see fellow trades banking pips. all you can really do is capture the opportunities that present themselves and try to make one less mistake everyday.
  • #18,909
  • Apr 7, 2016 8:00pm Apr 7, 2016 8:00pm
Hello traders, just thought i'd post something showing the importance of bar by bar and waiting for a candle close before making a decision, i'm not saying this is right or wrong but found these results interesting. last year i started practising bar by bar in earnest and just for fun decided to take trades purely based on each candlestick, to my surprise i started seeing a small return at the end of nov, dec. Now, cynic that i am i didn't think anyone would believe this was possible, so i opened a demo account with FXCM so i could link the account to myfxbook.
I zoomed in the chart and using no analysis whatsoever other than bar by bar i placed trades on the DOW, (please note, i'm not suggesting anyone should ever trade this way in real life, it was just to see what would happen). I had to make some pretty shocking trades, like going short after a massive bullrun, but if the bears took out the bulls with one big candle thats the trade i had to take.
Anyway, here is the link to myfxbook, showing the verified results https://www.myfxbook.com/portfolio/dean/1472298.
the leverage used was my normal 7:1 and not 10:1 as shown, and the March return was based on one days trading which was obviously a losing day.

Incase the link doesn't work, an overview of the results were

122 trades
8.9% return for january
1.87% return for february

These results were achieved using bar by bar for around one hour, 2 or 3 days a week, which was used to determine entry, whether to hold the trade or not, or when to exit.
I did cheat slightly sometimes with exits. I use daily pivots on my charts and if price hit one i would exit rather than wait for bar by bar to confirm it, but in all other respects i just shut off my brain and traded whatever my expectation for the next candle was.

This shows how powerful bar by bar can be (remember NO other analysis at all), especially when you consider that i generally suck at trading. I've been trading my real account using Mr. Pips methodology now for 14 months on E/U 3M chart and still haven't managed a winning month. i always manage to somehow conspire to screw everything up and end the month slightly down. but just micro lots so no big deal.

So. hopefully this shows the newer traders not to neglect learning to read the bars.
  • #18,910
  • Apr 7, 2016 9:39pm Apr 7, 2016 9:39pm
Quoting Wolves77
Hello traders, just thought i'd post something showing the importance of bar by bar and waiting for a candle close before making a decision, i'm not saying this is right or wrong but found these results interesting. last year i started practising bar by bar in earnest and just for fun decided to take trades purely based on each candlestick, to my surprise i started seeing a small return at the end of nov, dec. Now, cynic that i am i didn't think anyone would believe this was possible, so i opened a demo account with FXCM so i could link the account...
Interesting.... I noticed you had 1 unusual trade in there. all are in line except 1 under MAE/MFE. It looks like an improper lot size and it was a loss so your results should of been higher... ???? am I assuming correct
  • #18,911
  • Apr 8, 2016 2:16am Apr 8, 2016 2:16am
Hello everyone,

EURUSD 15M

EXPECTATION NSL
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  • #18,912
  • Apr 8, 2016 2:20am Apr 8, 2016 2:20am
Quoting Mack2013
{quote} I can't tell you if you did or did not. If you feel like you did, your feelings are probable right but when you see opportunity you have to act. with that being said, trying to juggle low / med / high probability can be difficult at times especially when your trying to be patient or when you had 4 cups of coffee. It looks like your chasing every swing tho. But your doing a good job at it so who am I to say your doing it wrong. All that matters is if your winning and it looks like you are. trade 1: In my opinion, trade 1 and 3 were pretty...
Thank you for taking the time to share your insight, it was very helpful.

Trade1: I think my read was right, but my entry was premature: follwong our rules I should have waited and then entered after the correction where the second pink line is originating. I was impatient and afraidf to miss the move.

Trade2: I was very in doubt and it was great to hear your explanation. Gave me some confidence, that my reasoning was not completely crazy. I almost never trade against expectation, but I agree with you, that sometimes it is the right thing to do and in this case there was some reason to do so imo.

Trade3: Again I agree with you: a really bad trade and one that should cost me a lot of money in the long run. I need to stop these kind of trades. It was especially helpful to hear your critique about my structure analysis. These fundamentals are applied almost unconsciously and mistakes here are immensely costly. Thank you for pointing it out, I will be more diligent.

You put it very well, when you said that I chase every swing. This is my concern, too. I think it stems from not being able to discern high probabilty setups from low probability ones. I can see the basic setup and trade it, but tend to take every single one and not shed out the less profitable ones. That I am winning more at the moment is pure luck, I hope I am a break-even trader overall.

Yes, I sometimes take entries before the bar closes. I do this when the entry would get too costly from a risk-reward standpoint otherwise. It has bitten me before too, but I think I got a little better at it (or luckier).
  • #18,913
  • Edited 6:12am Apr 8, 2016 2:37am | Edited 6:12am
Quoting Mack2013
US30 - 3M Took this counter trend trade with the expectation of a PB and currently eating dirt. haha serves me right for going counter trend but I was seeing a break down of price at structure. Overall I'm looking at a 50 - 61.8 retrace and another NSL long term. {image} Edit +34 pips - I think I might of exited to soon. Bulls stronger then expected but I do think Price is going to break down here. {image} Edit: Blah.... PA was too fast. R:R was not good so price left without me . Had to let it go {image}
I want to try say something about your trades, too.

Trade1: This is the trade you panic-exited, right? What a pity! I like this trade a lot. With expectation. From a good area. And a beautiful candle to take it with, very decisive, never traded above its opening and the previous candle. Just a very big candle, which is not great for our R/R, but not a problem imo. Beforehand there was an increase in volatility. The candles got larger for both sides and the bulls were able to drive price higher, also there was some rejection to the downside. But if I take a trade there and I think it is a good spot, then I take it short the same way you did.

Trade2: I am a bit more hesitant about this one than the other one actually. First of all I must say that you managed it beautifully and took the maximum from it. Gratz!
I personally have problems with trading when price behaves like it did in this scenario (so I can probably learn something from this trade): Price broke down and found a floor. The bulls were stopping the bears and the small corrections got bigger to the upside. Although the bears printed very big bars still, they could not drive price down any further. Then price made a small lower timeframe higher low and you took a long with the expectation of a deeper correction maybe even a extended move to the upside.
Now that I wrote it out and thought it through, it actually makes a lot of sense. Nice trade! I myself have a problem when price breaks down like this to decide which direction it is gonna go. It is similar to the complex correction after your first cyan line where price then continued downwards - the difference being (in my untrained eyes) that price made a small lower low then and this time it failed to do so and produced the small higher low.

So, nice trades in both cases. I can not add some good critique: carry on !
  • #18,914
  • Apr 8, 2016 6:41am Apr 8, 2016 6:41am
Quoting Mack2013
{quote} Interesting.... I noticed you had 1 unusual trade in there. all are in line except 1 under MAE/MFE. It looks like an improper lot size and it was a loss so your results should of been higher... ???? am I assuming correct
hey mack, yeah i was getting used to fxcm and placed a trade or two just to see how things worked, forgot about it, then about 2 days later wondered why there was a fluctuating p/l . i hadn't set any stops/limits, so closed it out for a loss, this is also why it says average time duration per trade was 45 mins. in reality it was more like 5 mins, but that two day trade bumped up the average time massively.

catching up with the thread it seems your doing pretty well, which is great to see, how are things going for you at the minute, have you managed to move into profitable territory, or are you still bubbling just under break even like myself.
  • #18,915
  • Apr 8, 2016 7:54am Apr 8, 2016 7:54am
went long at blue arrow

short term order flow was bullish (dotted lines) long term expectation (slightly off screen) was a NSH,
the bears were decreasing in momentum, and price was holding in the golden zone, which was also an area of structure.
ah well, shitty week all told, 8 trades, 8 losses. might leave it at one trade for today and hope things turn around next week.

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  • #18,916
  • Apr 8, 2016 8:25am Apr 8, 2016 8:25am
Hello traders, is it good idea to use PA for entrys? I dont feel confident with enties using bar by bar
  • #18,917
  • Edited 8:40am Apr 8, 2016 8:27am | Edited 8:40am
Quoting Wolves77
went long at blue arrow short term order flow was bullish (dotted lines) long term expectation (slightly off screen) was a NSH, the bears were decreasing in momentum, and price was holding in the golden zone, which was also an area of structure. ah well, shitty week all told, 8 trades, 8 losses. might leave it at one trade for today and hope things turn around next week. {image}
I was looking at that opportunity, too. I almost feel like one either has to enter immediately with the small candle or at least before the big bullish candle has fully closed or not at all. I do that same thing all the time and end up having a trade right in a S/R area without room to protect it. You can see what I mean on my chart below , although the situation is a little different. Otherwise I think it is a fine area and so on.

I only took one trade today and it was a loser. Market did not move with momentum much. So I did not see many opportunities and quit for the week before we finally saw some action:

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Not a good trade by me: I was actually expecting a deeper PB just because it was a NSH with shallow projection even though price had gained quite a bit of momentum. I was distracted for 5 minutes or so and when I looked at the chart I saw the nice reversal candle I would have definitely taken. So I jumped the waggon way too late expecting another big move up, rationalizing that I only got a slightly worse entry. As it turns out it mattered a lot for the same reason as above: I was not able to move to BE with good consciousness which I would have done otherwise when price hit its highs. I took a full loss for it.

What do you guys think about the reversal at the red arrow? It is very nice price action, but price was just accelerating to the downside beforehand, so I am not sure if I would have taken the trade, if I had been at the computer. I know Damian said there is sometimes a last effort before the reversal, but how to know? What arguments can be made to take the trade?
  • #18,918
  • Apr 8, 2016 8:44am Apr 8, 2016 8:44am
Quoting stavrogijn
{quote} I was looking at that opportunity, too. I almost feel like one either has to enter immediately with the small candle or at least before the big bullish candle has fully closed or not at all. I do that same thing all the time and end up having a trade right in a S/R area without room to protect it. You can see what I mean on my chart below , although the situation is a little different. Otherwise I think it is a fine area and so on. I only took one trade today and it was a loser. Market did not move with momentum much. So I did...
yeah i see what you mean,

the strong bull candle in hindsight looked a good entry and ultimately the expectation was a nsh, but price had broke the 78.6, the bears were showing strength and accelerating and price had broken previous support.
in general i think its a bad trade to go long when price has just broken support, even if it immediately retraces back to the support area, so for me this would have been a bad trade to take from a technical perspective, even though it would have been a great winner, but i agree, its very hard to judge when to take a trade or not.

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  • #18,919
  • Apr 8, 2016 8:48am Apr 8, 2016 8:48am
Quoting Wolves77
{quote} yeah i see what you mean, the strong bull candle in hindsight looked a good entry and ultimately the expectation was a nsh, but price had broke the 78.6, the bears were showing strength and accelerating and price had broken previous support. in general i think its a bad trade to go long when price has just broken support, even if it immediately retraces back to the support area, so for me this would have been a bad trade to take from a technical perspective, even though it would have been a great winner, but i agree, its very hard to judge...
Very good point! I had not drawn in that S/R area, but it is an important one. It was trading right into a ceiling...
  • #18,920
  • Apr 8, 2016 11:38am Apr 8, 2016 11:38am
These last entries saved me my week (+150 pips)

I was reading the thread from page 1 this week. It is very interesting because there is a lot of knowledge and explanation about harmonic patterns (ABCD, Bat, Gartley, etc).

If I understood MrPip's rules well, then it can be an ABCD on 1H chart (although last pull back closed near 78%) ?
If it is an ABCD then I should not have closed the entries ...

Nice weekend!
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