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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

  • #19,981
  • Jun 25, 2016 6:31pm Jun 25, 2016 6:31pm
@Wolves

Ok interesting exercise.

Including HL/LH as expectations = 35 out of 45 = 77%
Only NSH/NSL as expectations = 18 out of 28 = 64%

Friday's action.

Tempted to do this for an entire week to get a gauge. Unfortunately I can't use prior days now because the bars change on Ninja when you shut down the platform or switch the chart symbol / timeframe, so any old information won't be 100% accurate. I'll have to remember to do this after each live session.

Quoting Wolves77
{quote} Hi Jmezz, yeah, i see what your saying now, and if your fed up with being stopped out and then price going in your original direction then i know that one all too well. ultimately i think the best way to trade is whichever way we feel makes the most sense to us. however if i can just play devils advocate on the chart you posted, if you had gone long on the first rotation (yellow line) with a view to a 1:1 completion you would have been stopped out. but if you'd gone long on the second rotation it would have been a winning trade, leaving...
Re-entries are difficult for me to initiate, a lot of times my mentality is that if I try a position and I get stopped out right away then it prob is not set to workout at that time and I should wait for something to change. Although I *know* that this is not the case and that re-entries are viable, it's still a mental roadblock I have.

You can see I tried re-entering YM a few times on Friday and with re-entries I feel the need to watch them like a hawk because I have less expectation that they'll workout.

Question on your orange circles - you're referring to how bar 1 is going with the immediate price direction and then an opposing candle rotates and erases that candle's gain, right? I think these are called 2 bar reversals. Do you like entering on these?
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  • #19,982
  • Jun 25, 2016 11:11pm Jun 25, 2016 11:11pm
Quoting ujku80
{quote} Sorry again, i know it suck. It's just the ability that u have to show things in such a nice and funy way that i couldn't keep smiling as i was reading your post. I was'nt expecting your trade to end so quick and as i was watching your graph and it was also making sense to me to enter long in that place, then i read the bottom line "boooom...." which was so quick and funny in a way. Sorry if i made it sound like i was loughing at your expense. I hope u get my point. And of course u'll recover next week. It's just one single trade. Who cares...
No worries. no offence taken. I looked back at it and it wasnt a good trade. sometimes all you can do is laugh.
  • #19,983
  • Jun 25, 2016 11:12pm Jun 25, 2016 11:12pm
Quoting Wolves77
{quote} Yep, i reckon you will Mack, persistence is the key, and you have that in spades. I read your post a bit ago about what your up against when it comes to trading, i would also add to that long list, living in the worst possible time zone for trading and having a lousy choice of brokers which give you godawful spreads compared to what we get here in europe. and yet you keep on trading. your like the trading Terminator. "When it comes to the markets, Mack is out there, he can't be bargained with, he can't be reasoned with, he doesn't feel pity...
&*^&^% I love that movie
  • #19,984
  • Jun 26, 2016 8:39am Jun 26, 2016 8:39am
Hi guys,

Interesting discussion on the model HH HL LL LH. I would tend to agree with Wolves77. It seems the 70% figure is questionable. It is similar to looking at a roulette wheel for a few hours, you'll see runs of black or red but if you begin to track it for a few days the number of black vs red will average around 50%. Anyway, question to jmezz.. Why some high's or low's are not labeled as NSH or NSL, see green circles for a few examples.

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  • #19,985
  • Jun 26, 2016 8:53am Jun 26, 2016 8:53am
Quoting crixus
Hi guys, Interesting discussion on the model HH HL LL LH. I would tend to agree with Wolves77. It seems the 70% figure is questionable. It is similar to looking at a roulette wheel for a few hours, you'll see runs of black or red but if you begin to track it for a few days the number of black vs red will average around 50%. Anyway, question to jmezz.. Why some high's or low's are not labeled as NSH or NSL, see green circles for a few examples. {image}
Good morning Crixus.

I did not count those as they are just complex corrections within what I'd define as the main swing.
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  • #19,986
  • Jun 26, 2016 7:11pm Jun 26, 2016 7:11pm
@jmezz

Another chart, some precision...

What is valid here a new high has formed or is it still part of a complex correction of leg(1)? If i follow your last post leg(1) is the current swing until it is broken at one of its extremes. Correct?

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  • #19,987
  • Jun 26, 2016 7:51pm Jun 26, 2016 7:51pm
Quoting crixus
@jmezz Another chart, some precision... What is valid here a new high has formed or is it still part of a complex correction of leg(1)? If i follow your last post leg(1) is the current swing until it is broken at one of its extremes. Correct? {image}
That's right. So essentially that's a complex correction against the main swing (leg 1). I have not looked at CL much and since I'm on mobile right now I can't tell you which swings I would play. There are times where I identify a main swing on the long term however play the short term swings only. Then there are times where I'm looking to play against the main swing. I basically eyeball the swings and play the order flow that fits my risk parameters or will wait for the short term to realign with the long term so I have the stop of the short term order flow but price target of the long term order flow. This example you have the short term making that NSH but the big picture is saying that so far it's a 3 leg correction against the main trend and price *should* create a NSL by closing below leg 1.
  • #19,988
  • Jun 27, 2016 1:53am Jun 27, 2016 1:53am
Quoting Wolves77
{quote} Hi Ujku, never noticed that price sometimes retraces deep after the initial 1:1 after a break of the range. {image}
yes, and see the image below for more examples on short term order flow. Notice how market sometimes makes those 1/1 harmonic moves (either perfect 1/1 or up to 127% extensions) and then pulls back closing above the second swing. My feeling is that those who own the market do this to hit stops of other traders as in a downtrend market you would naturally place your stop just above the recent swing. right?! And if someone gets into believing that since the market just made a NS and it is reversing direction, then even better for them. so there you go.
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  • #19,989
  • Jun 27, 2016 2:03am Jun 27, 2016 2:03am
Quoting jmezz
{quote} I know you said you're beginning to neglect the smaller swings and for the most part I don't think it's a bad idea (they make things infinitely more confusing at times lol) but if you are already in a position then they could be of help. I am using your pic to draw over as when I brought up the 233tick chart of YM the PA was different from yours. However, at the time of your exit price had made a NSL on the extremely short term. At that time you could choose to treat it like regular swings and expect your mid to deep retracement, which would...
Thank you jmezz for this analysis. It's very helpful to get someone else's thoughts on the trades as usually I'm too "close" to watch clearly what's in front of me. And yes, I totally agree with you regarding that little short term swing and that gave me hope in the trade actually but my fear apparently overcame my hope. so... there you go. closed too soon.
  • #19,990
  • Jun 27, 2016 3:30am Jun 27, 2016 3:30am
I really like the discussion over the last few days and want to thank you guys for sharing your insight and posting your thoughts on new ways to improve our techniques and get a better understanding of the tendencies in which price moves. I also want to encourage (not silence) any criticism about our teacher's claims, because I think what he teaches to be true and well-equipped to face any criticism and because I think that only crititical thinking will incite meaningful discussion and improvement.

I myself unfortunately do not have much to add to the discussion at this point, that is why I am silently training myself, but I am still reading this thread very attentively everyday.

I think Mr. Pip's methods are very discretionary, as they are tools to effectively read the charts - but chart reading is an art that you must learn over many hours and mistakes. Which price move (short-term/long term) to base our analysis on, what rotation of many on the way is the right one, which support/resistance area is relevant...depending on how you look at this, the claim that price will make NSH/NSL 70% of the time is indeed superficial to the point of being untrue. Damian has shown us shortcuts with his well developed mechanical rules and excellent guidelines, but it is a very challenging way to success and a long one. That being said I enjoy doing this very much and have had so many moments of insight and baby-steps of improvement that this is worth-while and fulfilling to me. I know we will get there if we sweat it out.
  • #19,991
  • Jun 27, 2016 4:25am Jun 27, 2016 4:25am
Quoting stavrogijn
- but chart reading is an art that you must learn over many hours and mistakes.
and I would continue your thought by adding that: and in addition to chart reading the next step is training yourself to deal with emotions which would probably take twice the time you spent on learning the technique and chart reading. Do u agree with this?

Quoting stavrogijn
Damian has shown us shortcuts with his well developed mechanical rules and excellent guidelines, but it is a very challenging way to success and a long one.
Yes, it is challenging and yet very simple. Even when you think that we have a 50% chance of being right (or wrong), by simply following this technique, which can be basically summarized as waiting for price to make a NS and then enter at pullback with expectation of another NS, by entering at 50% of a swing (risking thus only 50 % of that swing in case we are wrong) and targeting 2/3 of that swing we are winners in the long run. The rest doesn't matter, in principle. No need to complicate things. All the complex thoughts and this and that, all this philosophical discussion on which swing is right or if we have a complex correction and bla bla bla... is because we want (need) to be right 100% of the time. which is not possible. But of course, that is also helpful to increase the winning rate. but it's not necessary to be profitable.

bwt, while typing this I missed a good opportunity to try a short on YM. see the chart below.
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  • #19,992
  • Jun 27, 2016 4:36am Jun 27, 2016 4:36am
and now imagine how high get the R/R ratio when you risk up to 78%-86% retracement of the swing and then reduce risk as soon as market is testing the low etc etc.
  • #19,993
  • Jun 27, 2016 4:42am Jun 27, 2016 4:42am
YM tradeable swings
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  • #19,994
  • Jun 27, 2016 6:50am Jun 27, 2016 6:50am
Quoting ujku80
{quote} Even when you think that we have a 50% chance of being right (or wrong), by simply following this technique, which can be basically summarized as waiting for price to make a NS and then enter at pullback with expectation of another NS, by entering at 50% of a swing (risking thus only 50 % of that swing in case we are wrong) and targeting 2/3 of that swing we are winners in the long run. The rest doesn't matter, in principle. No need to complicate things. All the complex thoughts and this and that, all this philosophical discussion on which...
and to illustrate this sort of probability calculation and to show everyone that with this technique even when u're 50% right, u still end up in the winning side, I am putting all my trades I took last week here.

there were 8 trades in total: 4 losers, 2 winners, and 2 sort of B.E (+10 pips). Actually those B.E. trades would have been good winners (see my last trade shown in this thread f.ex.) hadn't I freaked out and closed those. See for yourself and do the analysis. Now, one week means nothing in term of statistics, much less a number of 8 trades. But it however tells me where to focus and where to improve my trading and it provides me with the confidence to keep on trading this technique.
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  • #19,995
  • Jun 27, 2016 7:08am Jun 27, 2016 7:08am
[quote=ujku80;9001589]{quote} and I would continue your thought by adding that: and in addition to chart reading the next step is training yourself to deal with emotions which would probably take twice the time you spent on learning the technique and chart reading. Do u agree with this? {quote}

Absolutely. And it is good you bring it up, because it is the component that is most overlooked when you start trading and the part which I find hardest to efficiently work on.
I do not think it is the "next step", though, it starts as soon as you trade with real money and is a ongoing concern with every trade you take. Everybody finds himself breaking his own trading rules because of this: fear, greed, just the menatal pressure of the uncertain. It will make you do things you will wonder about afterwards. I know I am not a good enough trader to be too discretionary. That is why I have strict rules, that help me keep my emotions in check. I just will not touch the trade until the criteria are met and accept that it might become a loss or break-even or I leave some profit (or a lot of profit ) on the table. I must admit, I sometimes interfere with these rules: it is my emotions getting the better of me.

Congrats on your trading, mate! Good work!
  • #19,996
  • Jun 27, 2016 7:44am Jun 27, 2016 7:44am
Quoting stavrogijn
Quoting ujku80
{quote} and I would continue your thought by adding that: and in addition to chart reading the next step is training yourself to deal with emotions which would probably take twice the time you spent on learning the technique and chart reading. Do u agree with this? {quote} Absolutely. And it is good you bring it up, because it is the component that is most overlooked when you start trading and the part which I find hardest to efficiently work on. I do not think it is the "next step", though, it starts as soon as you trade with
...
yes, I agree with you very much. We're talking in the same wavelength here. However, you shouldn't congratulate me on such a poor trading outcome. I'm still a loser but I'm getting there, u know. So, let's see how things evolve. But it's so fun trading though. I enjoy it a lot.
  • #19,997
  • Jun 27, 2016 8:01am Jun 27, 2016 8:01am
YM story continues:

Market made a NSL both on short and long term order flow. There is a good rotation bar between 38.2% and 50% retrace of the recent swing which I didn't take as like I said, after completion of 1/1 harmonic moves market tends to retrace deeper. Let's see what happens before trading session.
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  • #19,998
  • Edited 8:51am Jun 27, 2016 8:32am | Edited 8:51am
my first trade. wish me luck guys.
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after market tested that NSL, I move SL to BE + 10 points
edit: moved SL to +40 points (market is 80 points in my favor so I'm risking to loos
  • #19,999
  • Jun 27, 2016 8:53am Jun 27, 2016 8:53am
oh this is funny. i had to leave as one of the students here asked for help in a device, but when i come back i see this:
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one point below and it wouldn't have been hit.
  • #20,000
  • Jun 27, 2016 4:09pm Jun 27, 2016 4:09pm
YM +23
ES +6.75, +.25, +5.5, -1.75 = +10.75

Notes on charts.
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