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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

  • #20,481
  • Sep 16, 2016 3:54am Sep 16, 2016 3:54am
Quoting jmezz
Ok I'm going to make a post to better explain how I use fibs and hopefully it will make my charts a little easier to follow. Below, I've drawn pics of how I use the fibs and then follow each concept up with pics of real price action. First I'll start with what Damian has taught here in the thread. What we've learned in this thread is to look for an ABC move then we project the 1:1 and bring out fib extensions. So our process starts with bringing out the fib retracement tool, looking for your ABC move, projecting the 1:1 from C, then bringing out...
Another impressive work!!

Thanks bro
  • #20,482
  • Sep 16, 2016 5:19am Sep 16, 2016 5:19am
Quoting jmezz
Ok I'm going to make a post to better explain how I use fibs and hopefully it will make my charts a little easier to follow...
Great explanation, You went above and beyond my expectation. Thanks a lot jmezz, i'll pass sometime to review and study it over the weekend.
  • #20,483
  • Sep 16, 2016 8:10am Sep 16, 2016 8:10am
YM

We've just had an orderflow change however are now bouncing up from big picture 50fib.

I may look to play a short if we get a little bit higher then show weakness in RTH.

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  • #20,484
  • Edited 10:16am Sep 16, 2016 9:25am | Edited 10:16am
YM

Price action to downside looking a little weak but think 17955-17972 still possible.

Edit - Guess not. Here's why I was looking for lower:

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  • #20,485
  • Sep 16, 2016 10:39am Sep 16, 2016 10:39am
YM -16, +35 = +19 for day

Ironically enough, today I had noted that we were net short and could face a squeeze but I chose to ignore it and play the orderflow as paying too much attention to the squeeze has caused me to miss out on some good opportunities lately. What do we get? A solid squeeze, lol.

I clearly still have issues on being able to flip flop on ideas. Always something to work on right?

Notes on charts.

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  • #20,486
  • Sep 16, 2016 10:41am Sep 16, 2016 10:41am
Quoting masen
{quote} Another impressive work!! Thanks bro
Quoting crixus
{quote} Great explanation, You went above and beyond my expectation. Thanks a lot jmezz, i'll pass sometime to review and study it over the weekend.

Np guys, I just hope the info comes across clearly haha.
  • #20,487
  • Sep 16, 2016 12:34pm Sep 16, 2016 12:34pm
Quoting jmezz
YM -16, +35 = +19 for day Ironically enough, today I had noted that we were net short and could face a squeeze but I chose to ignore it and play the orderflow as paying too much attention to the squeeze has caused me to miss out on some good opportunities lately. What do we get? A solid squeeze, lol. I clearly still have issues on being able to flip flop on ideas. Always something to work on right? Notes on charts. {image} {image}
I did not have a lot time for trading. Could catch +7. I was long right before the squeze up, but I hesitated and closed the trade a few seconds before the squeeze for +0.5 (lol).
  • #20,488
  • Sep 16, 2016 8:47pm Sep 16, 2016 8:47pm
Quoting jmezz
YM -16, +35 = +19 for day Ironically enough, today I had noted that we were net short and could face a squeeze but I chose to ignore it and play the orderflow as paying too much attention to the squeeze has caused me to miss out on some good opportunities lately. What do we get? A solid squeeze, lol. I clearly still have issues on being able to flip flop on ideas. Always something to work on right? Notes on charts. {image} {image}
Nice Job. At least you were able to make a comeback.

I had a similar set up later in the day but was unable to recover.

I missed the short down. Then miss read price when it broke out (nsl) and got burned. On the way down all the longs were getting consumed so I was thinking that eventually the longs would realize their error and exit or go short. Well, that wasn't the case. I guess the struggle down was too laboring for the bears to look for a continuation.

US30 -89T : -18 pips (First trade back on the live market)
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  • #20,489
  • Sep 18, 2016 11:35am Sep 18, 2016 11:35am
Quoting Mack2013
{quote} Nice Job. At least you were able to make a comeback. I had a similar set up later in the day but was unable to recover. I missed the short down. Then miss read price when it broke out (nsl) and got burned. On the way down all the longs were getting consumed so I was thinking that eventually the longs would realize their error and exit or go short. Well, that wasn't the case. I guess the struggle down was too laboring for the bears to look for a continuation. US30 -89T : -18 pips (First trade back on the live market) {image}
Yeah that 382 fib gets ya. I've labeled the 113 fib the 'break out' fib bc I think it catches breakout traders a lot of times, so it's a nice level to fade. I think I'm going to label the 382 fib the 'fk over' fib because it seems it serves to just fk people over who try to play a retracement off of it haha.

I'm actually toying with the idea of removing the 382 and the 50 so I have only the 618, 786, and the 886 so I don't tempt myself in playing a retracement under 618. We'll see.

Anyway, what was the reasoning for the entry? There wasn't a rotation so did you base your entry of the strong rejection at structure?
  • #20,490
  • Edited Sep 19, 2016 12:38am Sep 18, 2016 11:59pm | Edited Sep 19, 2016 12:38am
Quoting jmezz
{quote} Yeah that 382 fib gets ya. I've labeled the 113 fib the 'break out' fib bc I think it catches breakout traders a lot of times, so it's a nice level to fade. I think I'm going to label the 382 fib the 'fk over' fib because it seems it serves to just fk people over who try to play a retracement off of it haha. I'm actually toying with the idea of removing the 382 and the 50 so I have only the 618, 786, and the 886 so I don't tempt myself in playing a retracement under 618. We'll see. Anyway, what was the reasoning for the entry? There wasn't...
"I think I'm going to label the 382 fib the 'fk over' fib because it seems it serves to just fk people over who try to play a retracement off of it haha."

Haha. No doubt. Once and awhile I'll get luck with it but looking at my stat, it seems I lose money at the level overall.

"Anyway, what was the reasoning for the entry? There wasn't a rotation so did you base your entry of the strong rejection at structure?"

Well It seems I have a tough time getting the direction right when the market goes wonky. It puts in a nsh so I'm looking for a continuation on that but then it puts in a nsl which is inline with the overall trend so I reevaluate my bias and go with the overall direction and get burned.

I've never been good at BO's but it was in the overall trend so I thought the probabilities were on my side. I was wrong.

And yes, the rejection sold me on this set up. In real time the rejection looked strong. like with in a few ticks strong so I thought there was strength in the supply side but now, with hindsight, it was probable profit taking. I acted aggressively because I wanted a good price and not to chase price. when the continuation never came. I thought on exiting but decided to hold my position. (Again, another wrong decision)

Edit: PS forgot to ask. I was interested in your 113 fade strategy. I did use a reverse fib extension of the prior swing to see if I got a 127 just to gauge strength. Usually that is a requirement for me but were you thinking a 113 of the entire up swing like how I used it but from the nsh to the previous nsl)?

and please don't hesitate to point out any faults in my logic. Im looking to improve.

I added a chart with my thought processes
note: my set up looks worse with the ticks recalculated haha
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  • #20,491
  • Sep 19, 2016 4:31am Sep 19, 2016 4:31am
Quoting Mack2013
{quote} Nice Job. At least you were able to make a comeback. I had a similar set up later in the day but was unable to recover. I missed the short down. Then miss read price when it broke out (nsl) and got burned. On the way down all the longs were getting consumed so I was thinking that eventually the longs would realize their error and exit or go short. Well, that wasn't the case. I guess the struggle down was too laboring for the bears to look for a continuation. US30 -89T : -18 pips (First trade back on the live market) {image}
weak NSL, why do you expect 38% pullback ???
Even though I walk through the darkest valley, I will fear no evil
  • #20,492
  • Sep 19, 2016 7:11am Sep 19, 2016 7:11am
YM

Large pattern update: Order flow change on the short term, looks like it's trying for this 1:1 completion again.

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YM 233tick

I have some areas mapped out above and below our current price.

Overall this long term is saying NSH which aligns with the 4hr chart I posted above. I'm just keeping that 4hr pattern in the back of my mind, I'm not holding it too tightly or anything as it's way above the timeframe that I trade here.

We are 99% net long so keeping a fade in the back of my mind as well.

Not going to be in a hurry to do much, I'm just going to wait and see what patterns present themselves.

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  • #20,493
  • Sep 19, 2016 8:21am Sep 19, 2016 8:21am
Quoting Mack2013
{quote} "I think I'm going to label the 382 fib the 'fk over' fib because it seems it serves to just fk people over who try to play a retracement off of it haha." Haha. No doubt. Once and awhile I'll get luck with it but looking at my stat, it seems I lose money at the level overall. "Anyway, what was the reasoning for the entry? There wasn't a rotation so did you base your entry of the strong rejection at structure?" Well It seems I have a tough time getting the direction right when the market goes wonky. It puts in a nsh so I'm looking for a continuation...
"Well It seems I have a tough time getting the direction right when the market goes wonky. It puts in a nsh so I'm looking for a continuation on that but then it puts in a nsl which is inline with the overall trend so I reevaluate my bias and go with the overall direction and get burned."

I know exactly what your thought process was here because I've made this 'mistake' many times. I'm not even really sure that you can call it a mistake because you're following order flow and the order flow gives you a signal that it's ready to change but doesn't follow through. I think it just comes down to how you play this sort of thing. Remember this pic of mine?

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It's from this post: http://www.forexfactory.com/showthread.php?p=8955083#post8955083

Sometimes when price has a small swing followed by small NSL it's best not to treat it has its own swing, and include it as part of a larger swing. I try to tell myself to 'look for the clear high and low' (as Damian has said) and if the swing doesn't look clear then I'll include it as a larger one. And you can see that was my mentality when I posted on Friday about the short setup that I wanted to take but ultimately chickened out. Not to mention, this pattern jumped out at me because it did the same thing on 9/9 and I didn't notice it until after the fact lol.

Yeah on your initial chart the rejection looks very strong. Looking on my chart it appears that the 50fib players came in there pretty hard (at the onl as well) but there was just no follow through. Looking at the price action there, I want to assume that when they realized price wasn't dropping and they were trapped it caused a small squeeze given the strength of the next leg up.

In terms of what I might have done differently, (we know how calling things in hindsight is) save for a couple of scenarios I think waiting for the rotation is fairly important. But also something that I'm trying to get better at doing is waiting for the harmonic correction to take a trade:

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You can see where my trades got nowhere near it but price did hit it in the next swing. You have to eyeball each one and use reasoning because in every situation it will not complete that harmonic correction. Looking on your chart the price is different so it might have kept you out of a trade altogether or got you into one that would have gone into profit a little bit before reversing.

Regarding the 113, I like to use it on 'major' swing points. Swing points that I know will show up in multiple time frames that I think a lot of traders will be watching to play breakouts because ultimately they're the fuel for the fade. In your example you *could* use the swing that you used to gain confluence but I think the better swing to use would be the you labeled 'nsl' and 'nsh.'

Look at this example:

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A major swing high and also the overnight high - traders are going to be watching that. Increased depth, lost momentum, and lost projection into the 113 where it provided a beautiful fade.
  • #20,494
  • Edited 10:04am Sep 19, 2016 8:26am | Edited 10:04am
Quoting monocor
{quote} weak NSL, why do you expect 38% pullback ???
Yeah that's one way to look at it but also check this:

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Depending on how you were analyzing this at the time, you could have seen that the short term legs had picked up momentum when compared to the first long term leg (yellow) and that the entire leg itself did not lose any momentum.

Sometimes when you see the 2nd part of a 1:1 pick up strength, price won't hit that deep retracement.

Dizzle had posted a great chart illustrating the concept, I have it saved somewhere but market is about to open so I'll post it later on.

Edit here they are from posts http://www.forexfactory.com/showthread.php?p=8939010#post8939010 and http://www.forexfactory.com/showthread.php?p=8939014#post8939014

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  • #20,495
  • Sep 19, 2016 9:52am Sep 19, 2016 9:52am
Haven't seen anything I liked so looking like a no trade day for me.
  • #20,496
  • Sep 19, 2016 10:15am Sep 19, 2016 10:15am
Quoting jmezz
Haven't seen anything I liked so looking like a no trade day for me.
I had no time to trade (job), maybe the whole week will be like that.😠
  • #20,497
  • Edited 10:19pm Sep 19, 2016 10:06pm | Edited 10:19pm
Quoting monocor
{quote} weak NSL, why do you expect 38% pullback ???
Quoting jmezz
{quote} Yeah that's one way to look at it but also check this: {image} Depending on how you were analyzing this at the time, you could have seen that the short term legs had picked up momentum when compared to the first long term leg (yellow) and that the entire leg itself did not lose any momentum. Sometimes when you see the 2nd part of a 1:1 pick up strength, price won't hit that deep retracement. Dizzle had posted a great chart illustrating the concept, I have it saved somewhere but market is about to open so I'll post it later on. Edit here...
Thanks Jmezz. Thats exactly what I was looking at (the cyan swings)
  • #20,498
  • Sep 19, 2016 10:21pm Sep 19, 2016 10:21pm
Quoting jmezz
{quote} "Well It seems I have a tough time getting the direction right when the market goes wonky. It puts in a nsh so I'm looking for a continuation on that but then it puts in a nsl which is inline with the overall trend so I reevaluate my bias and go with the overall direction and get burned." I know exactly what your thought process was here because I've made this 'mistake' many times. I'm not even really sure that you can call it a mistake because you're following order flow and the order flow gives you a signal that it's ready to change but...
Thank you for your response. hopefully this week brings me clarity. good luck my friend.
  • #20,499
  • Sep 20, 2016 10:59am Sep 20, 2016 10:59am
YM -10, +45, +10 = +45 total

Notes on charts.

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  • #20,500
  • Sep 20, 2016 11:14am Sep 20, 2016 11:14am
Quoting Mack2013
{quote} Thank you for your response. hopefully this week brings me clarity. good luck my friend.
Thank you and good luck to you too bud
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