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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

  • #19,361
  • May 5, 2016 10:25am May 5, 2016 10:25am
Question for everyone - when there is a change of order flow which swing do you choose to anchor your fib to if you're going to try and enter on the next pullback?
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  • #19,362
  • May 5, 2016 11:14am May 5, 2016 11:14am
Quoting jmezz
Question for everyone - when there is a change of order flow which swing do you choose to anchor your fib to if you're going to try and enter on the next pullback? {image}
For the immediate PB I would go for 2 but if price starts to form a complex correction I would go for 1.
  • #19,363
  • May 5, 2016 11:20am May 5, 2016 11:20am
Quoting pinux76
what is the correct projection? A or B EU TF 15 thanks for fibo retracement {image} {image}
A
  • #19,364
  • May 5, 2016 11:34am May 5, 2016 11:34am
Quoting jmezz
2 b/e+1's 2 losses for -14 1 win for +35 +23 today {image}
Nicely done. I admire your skill at taking small losses and moving stops quickly to breakeven. very nice. I should work to mimic it. I see the reasoning for every trade except 1. You only took -4 but why did you enter so late into demand? There doesn't seem to be any sign of rotation either. (just so you know, I've made this mistake also so I'm no judge. haha)
  • #19,365
  • May 5, 2016 11:35am May 5, 2016 11:35am
Quoting skyline
{quote} closed with 50 pips profit
Boo yeah. cha-ching!
  • #19,366
  • Edited 3:49pm May 5, 2016 11:39am | Edited 3:49pm
Quoting jmezz
Question for everyone - when there is a change of order flow which swing do you choose to anchor your fib to if you're going to try and enter on the next pullback? {image}
It is these questions I ask myself a couple of times per day and get confused about sometimes. I use 1, since 2 did not make a NSL. But I don't think it matters much. What I do sometimes is measure both and treat the two resulting Fibs as an area, which they are anyways.
  • #19,367
  • May 5, 2016 11:45am May 5, 2016 11:45am
Quoting Mack2013
{quote} Boo yeah. cha-ching!
  • #19,368
  • May 5, 2016 11:56am May 5, 2016 11:56am
US30 - 144T

I'll be playing this one pretty aggressively

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Edit: Out - 15pips
  • #19,369
  • May 5, 2016 12:15pm May 5, 2016 12:15pm
Quoting Mack2013
{quote} Nicely done. I admire your skill at taking small losses and moving stops quickly to breakeven. very nice. I should work to mimic it. I see the reasoning for every trade except 1. You only took -4 but why did you enter so late into demand? There doesn't seem to be any sign of rotation either. (just so you know, I've made this mistake also so I'm no judge. haha)
With that trade I was trying to play a bounce at the 78.6.

I've seen a lot of instances where price will come down and touch the 78.6 then either bounce right there or retrace a little bit further to around the 88.6. Many of these times I've noticed that price will not go past the mid point between 88.6 and 100.

So essentially it gives you amazing r:r and trade location if you're able to get filled at the 78.6 and price reverses.

On that trade I had a limit order sitting on the DOM at 17607 and entered my stop at the same time at 17603, so I was only risking 4points to play the bounce. Price had just created a NSH which then changed the short term order flow and I thought that we were going to realign with the long term. If we had retested structure at the NSH that would have been 21 points and put the r:r to over 5:1.

Where I really f'd up on the trade was not cancelling my order as the momentum on the leg down definitely increased, but by the time I wondered to myself if I should cancel the order I was already filled and out at the loss lol. I could have also put my stop below structure at 17600 and it would have been at least a b/e1.

This type of trade is definitely a leap of faith but the tiny stop makes it worth it to at least try provided that you are going in the direction of current order flow and watching to see if price legs are building strength against you, something that I clearly didn't do in time this morning lol.

With the YM I think sitting on the DOM is just fine if trying to play one of these however on the ES I think I'll have to try and shoot off a market as soon as it touches as there's too much liquidity and these bounces happen so fast sometimes I think you'd have an issue getting filled with a limit order.

So basically I was just tired of stalking trades and then not being able to take them due to expensive rotations and tried to look for an efficient way to eliminate having to wait for confirmation. So far this is the best way I've come up with and we'll see how it works out over the long run with more testing.

Edit - where I got the idea was from Bulkowski's testing of retracements. His research shows that 90% of all retracements that he tested retraced less than 81%. So stop beyond the 88.6/100 seems like it'd be relatively safe in most cases. More researching will be done haha.
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  • #19,370
  • May 5, 2016 12:46pm May 5, 2016 12:46pm
Quoting Mack2013
{quote} For the immediate PB I would go for 2 but if price starts to form a complex correction I would go for 1.
Quoting stavrogijn
{quote} It is these questions I ask myself a couple of times and get confused about sometimes. I use 1, since 2 did not make a NSL. But I don't think it matteers much. What I do sometimes is measure both and treat the two resulting Fibs as an area, which they are anyways.
These are both great ideas, thank you guys.

Quoting crixus
{quote} The breakout failure at your supply zone is a good illustration of trapped traders trying to reverse the longer term downtrend. You want to fade these guys. I know you don't look at horizontal volume but 2053.50 was the most transacted price level overnight. The ES likes to tag these high volume levels before resuming their natural course.
Overnight POCs for ES and YM before open were 2053.75 and 17632.

Interesting to see the levels tested in RTH today as you stated.
  • #19,371
  • May 5, 2016 1:19pm May 5, 2016 1:19pm
Quoting jmezz
{quote} With that trade I was trying to play a bounce at the 78.6. I've seen a lot of instances where price will come down and touch the 78.6 then either bounce right there or retrace a little bit further to around the 88.6. Many of these times I've noticed that price will not go past the mid point between 88.6 and 100. So essentially it gives you amazing r:r and trade location if you're able to get filled at the 78.6 and price reverses. On that trade I had a limit order sitting on the DOM at 17607 and entered my stop at the same time at 17603,...

Uhmmmm interesting . I never did learn how to read the depth of market. let me know of your testing results
  • #19,372
  • May 5, 2016 2:30pm May 5, 2016 2:30pm
US - 144T

1 X -15 pip
1 X B/E

interesting Price action which I couldn't capitalize on. I though I would highlight the 2

1) Today's PA was a deja-vu for yesterdays PA. I noticed it right off the hop but chose to go long based on observation 2. Obviously a mistake and missed opportunity.

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2) I started my day at the red line. shot term order flow (blue line) zig zagged down to retest previous HL then put in a S/T nsh (L/T LH tho). I was expecting a deep retrace to a strong area of demand so I was expecting PA to push into the above supply area. My bias was mostly based on the recent bullish strength and the strength of projection. (Btw; Small cap = S/T , Large cap = L/T)

One thing I forgot to keep in mine was the strength of the Bearish market in the last couple of days. O'well

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  • #19,373
  • May 5, 2016 5:23pm May 5, 2016 5:23pm
Quoting Mack2013
US - 144T 1 X -15 pip 1 X B/E interesting Price action which I couldn't capitalize on. I though I would highlight the 2 1) Today's PA was a deja-vu for yesterdays PA. I noticed it right off the hop but chose to go long based on observation 2. Obviously a mistake and missed opportunity. {image} 2) I started my day at the red line. shot term order flow (blue line) zig zagged down to retest previous HL then put in a S/T nsh (L/T LH tho). I was expecting a deep retrace to a strong area of demand so I was expecting PA to push into the above supply area....
Good call on the analog. I see a few traders on Twitter who trade off of them and it seems pretty cool, however unless they're blatantly obvious I can't pick up on them lol. Probably gets easier as you train your brain to look for them.

I too lost sight of just how bearish the past week has been and also the fact that the overnight inventory was almost 100% net long, which usually means to watch out for a fade.

My brain was clearly not all there this morning, might try going for an early morning jog to wake up a little more before market open.
  • #19,374
  • May 5, 2016 5:27pm May 5, 2016 5:27pm
After rubbish entries (Dax & DOW) in the morning where all went wrong (-40 pips in total), I could get them back in the afternoon. So BE day.
  • #19,375
  • May 5, 2016 5:38pm May 5, 2016 5:38pm
Quoting Mr_Burns
{quote} I use a similar strategy as yours when it comes to trailing stops but I move to BE once price tests the high/low of my main swing. For example if I enter a trade at a 61.8 retracement I will move to BE once price tests 0 retracement. Technically my stop should initially be below 100 retracement because that's when I know im wrong but I know Mr. Pip tested a more aggressive management method where you place it below 78.6. For shallow pullbacks, ie 38.2-50, I prefer to build a case for a short term zone that should hold and place my SL just...
Just wish to share my experience. I had one case where I placed a SL above the 78.6 Fib and although price did not passed the 78.6 Fib, it took my SL.
Maybe there was a massive spread in this area (CFD), but appeared strange to me.
  • #19,376
  • May 6, 2016 2:01am May 6, 2016 2:01am
Quoting jmezz
{quote} What has been your experience with placing stops at the 100 and 78.6 when taking entry at the 61.8? Also something else that I want to look into over the weekend is possibly moving to b/e when the position moves past the 38.2. When taking deeper entries at the 61.8/78.6, moreso the 78.6, the expectation of a NSH/NSL is weakened so maybe it might be better to lock in a little earlier. I'll attach a screenshot to show what I'm referring to. {image}
Well I prefer retraces to 61.8 because then I can put my SL above/below structure but that's mostly from a psychological standpoint. Regarding the same trade but with a SL above/below 78.6 you have to ask Mr. Pip since I haven't played around with it.
If price has a shallow pullback (38.2-50) I can't give you any numbers but the feel is once I take these and my stop goes above/below a minor structure zone they plays out more often than not.

Your example is good, with a conservative SL->BE management you would end up with profit (albeit while enduring more pain) but with a more aggressive management it would most likely be a BE trade.
Rise and rise again until lambs become lions
  • #19,377
  • May 6, 2016 2:07am May 6, 2016 2:07am
Morning traders !

EurUsd M15 , expectation in my view is for a NSL , I'm waiting for a little more retrace around 38.2% level and some bearish candle to pick my entries (bar-by-bar analysis).
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  • #19,378
  • May 6, 2016 2:15am May 6, 2016 2:15am
Quoting skyline
Morning traders ! EurUsd M15 , expectation in my view is for a NSL , I'm waiting for a little more retrace around 38.2% level and some bearish candle to pick my entries (bar-by-bar analysis). {image}
Just a friendly reminder, non-farms today so expect a lot of volatility.
Rise and rise again until lambs become lions
  • #19,379
  • May 6, 2016 2:28am May 6, 2016 2:28am
Quoting Mr_Burns
{quote} Just a friendly reminder, non-farms today so expect a lot of volatility.
Yes Mr Burns, i know that infact my entry (if any) will eventually be closed before NFP will start
  • #19,380
  • May 6, 2016 3:24am May 6, 2016 3:24am
Eurusd 15m

expectation nsl

still have open trade since yesterday

locked in be +4pts
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