Musical PIP - How Harmonic Patters can make me (and you) to sing

[medisoft]

Hi all!

This new thread is to explore from the beginning the power of harmonic numbers and patterns in Forex (and also Stock) market. Here I'm going to place my trades, my ideas and all the knowledge I acquire during this musical journey. Very thanks to TMoneyBag, Modo, StuPIP and all the traders on the "30 Pips A day Keeps the your money at bay" thread, that introduced me to this wonderful trading method.

I recommend you to read at least the first 10 pages of that thread and the last 10 pages also to see examples of trades and patterns, and to find references of books and other documents.

The basic theory on Harmonic Patterns is that the market repeats itself because it is traded by humans, and we all are wired almost exactly in the deep of our brains. We, as individuals react in a unique way to the external (and internal) stimulus, but as a crowd, we can be predicted with well known rules. This form the patterns in a repeatable, predictable way, you only need to look at the right place and the right time.

This one is the hardest thing. Many thanks to H.M.Gartley, Scott Carney and Leonardo di Pisa that are the fathers of this knowledge. They made discoveries that gives to us a way, based on well defined rules to find this right place and right time.

The harmonic patterns are effective to at least 70%, making it very good way to trade and win. You can use them on Forex, but also on Stocks, Futures and maybe on the birth rate of rabbits and other events in nature.

I consider myself an almost newbie trader, both on stocks and forex, and I'm open to learn from you all, and also to teach what I know.

The rules of this thread are simply:

• harmonic trading is the principal topic, you can post something about other methods that help improve the trades with harmonic.
• blames are not permitted, they will be reported ASAP
• please put your charts when you are explaining a trade or a pattern, because a picture says more than 1000 words.

Thanks, and welcome!

[medisoft]

I'm recalculating the stats for harmonic patterns, I include Gartley, Bat, Butterfly, Crab, AltBat and DeepCrab. I'm looking for Three Drives, but until I understand it, it will not be calculated.

Previous stats show this:

winners	total	percent winner	percent loser	pattern
3389	4732	71	28	Crab
2810	3920	71	28	Butterfly
428	597	71	28	DeepCrab
7790	11382	68	31	Gartley
4527	6757	66	33	Bat

This are from any time frame, from 5M to 1D, from all the history I have on my MT4. The total column shows the number of patterns I found, the winners are the number of patterns that reached the target of 38.2CD.

[medisoft]

This is a current trade I just entered. It is a butterfly with 161.8XAD confluent with 261.8BCD and 161.8AB=CD on CHFJPY 30M

Risk is 21 pips, Reward 21 pips, so it is 1:1

[medisoft]

This is a new bearish gartley pattern I found on AUDUSD 15M. I'm trading CD leg and hope to trade also the D point.



After a zoom out on the hart, I see that maybe it could be a Crab pattern instead of a Gartley, because there are more confluence on 161.8XAD than on 78.6XAD. The only confluence is AB=CD on the 78.6XAD. I think I'm going to place a limit sell at 78.6 with stop above the 127.2BCD and if the trade is stopped out, then I'm going to place another limit order on the 161.8XAD.

[mikhail86]

Will be following this thread. I too read the "30 Pips A day Keeps the your money at bay" thread a while back even read the Trade What You See book they recommended.

I have always been attracted to this method because I prefer trading by price action but I have never been able to identify the patterns in real time. I can see them clearly after they have formed and completed but I can't make money on that now can I?!

Hopefully following along with your trades here will help me out. I had given up on this method many times but always keep coming back to it for some reason hopefully this time I can get the hang of it!

[medisoft]

I'm going to trade this alternate bat on GBP/USD daily view.

From the current point, I'm going to trade the way from C to D, using small trades, entering just after the fibo confluence has been broken and exiting just before the next confluence of fibo level. The stop is placed just before the more recent confluence. That gives to me at least 3 trades on the way down. The first, sell stop order, has a 1:2 RR, 21 pips risked to win 42 pips.

I placed a buy limit at 70.7XAD with a 20 pip stop and a pretty good reward of 125 pips, just at the confluence and 38.2CD on that point. If the stop is triggered then the next buy limit is at 88.6XAD, again with 20 pip stop but now a 214 pip reward. That is going to be the last trade on this pattern, if it breaks the X point, then I'm going to look for other pattern elsewhere.

[zirzovat]

This is a current trade I just entered. It is a butterfly with 161.8XAD confluent with 261.8BCD and 161.8AB=CD on CHFJPY 30M

Risk is 21 pips, Reward 21 pips, so it is 1:1

is there any recognition software MQ you may recommend us?

[jtalpha]

I would love seeing reliable software that identifies patterns. I can do a setup in real time on higher timeframes but on 15 and 5 I cannot keep up. There was an indicator that was listed on the other thread but I was unhappy with the results. with hand drawing I am happy with the results but got troublesome to try to keep up with markets and when I try to trade some the D points kept sliding on me

[medisoft]

Nop, I'm also not happy with the existent indicators. I do trades on higher timeframes also because that. I think the 30M is good place to start, it is slow enough to make calculations by hand, and faster enough to get trades finished on the same day.

I would love seeing reliable software that identifies patterns. I can do a setup in real time on higher timeframes but on 15 and 5 I cannot keep up. There was an indicator that was listed on the other thread but I was unhappy with the results. with hand drawing I am happy with the results but got troublesome to try to keep up with markets and when I try to trade some the D points kept sliding on me

[medisoft]

I'm testing a strategy for "small patterns". So far, the "big patterns" or normal ones for my strategy requires that the distance from PRZ to 38.2CD be at least 20pips, to have a stop of 20pip and to have a 1:1 risk:reward.

But there are lots of smaller patterns that appears on any pair at anytime, and a lot of them are just very good to ignore them. So I just started a new strategy for them.

This strategy detects the pattern the same way as others, calculate the PRZ based on fibonacci confluences, like bigger ones, but instead of using my default risk, I use a fraction of it, 1/7 of it, because small patterns are more frequent, but also can be stopped easily than bigger ones. I place a fixed stop of 10 pips, and very precise entry with a limit order at the prz. The take profit is also on 38.2CD.

The limit order is placed with an expiration based on the amount of pips needed to reach the entry price plus the spread divided by the number of pips per minute plus 60 seconds. If the pattern is good and the price reaches the entry between this time limit, then it is entered.

Once entered, the stop loss begins to trail. The limit is a pip below (for bull signals) the end of the PRZ or the lowest low from D point to current time, choosing the lower of both. Invert the rule for bear signals.

Once the price is near the TP (7 pips distance), every 20 seconds the stop is trailed 1 pip, to try to capture the most of this small trades, this way, if the move is strong enough, the price will hit the TP, but if it is slow, at least the SL will protect some profits. This is to take in account the rule: "never let a winning trade transform to a losing one"