30 Pips A day Keeps the your money at bay

Trading Discussion
3855

Hey, TMB glad to see you back. I have a question, it is more of a personal preference thing. If you are trading small TF’s like 30 or 15 mins and it is only good for say 5 or 10 pips, do you take it or do you only take trades that will yield 30 pips on a single trade? On the 5 or 10 pip scalp trades (if you take them) do you increase your leverage? You say you go for 30 pips a day, so do you only take larger than 60 min TF’s?

My big problem is that I am a firefighter in my real life. I go to work for 24 hours at a time and it always seems that those darned 4H patterns that are worth a ton of pips hit in that 24 hour period :D.

By the way, I have been trading live for about 3 weeks and am 9 for 11. The book is great, best 30 bucks I ever spent, BTW, it has already paid for itself.

Thanks

3856

Hello Schweaty, I for the most part trade 30/60 min patterns. This time frame allows me to scalp 30 pips from the market with ease. This is because of the fact that a Gartley/Butterfly pattern has a 70% chance of reaching a .618 retracement. As a result, the avg move of a 30/60 min pattern is around the 60-80 pip range. To illustrate please refer to the image bellow.

Here we have the NZD/JPY which I traded this morning and scalped 30 pips from it. Yes the pattern continued towards its designated target (.618) and completed it self. In effect moving for total of 83.8 pips. As you can see, you can ‘milk’ a lot more then 30 pips from any given 30min/60min pattern. The use of limiting my self to 30 pips is to remove the psychological effects of greed and fear from my self along with increasing my win % from that of 70% to and avg of 85-90% range.

1024×640

As for trading 4hr/Daily patterns. You can easily ‘steal’ 60 pips from these and an increase of margin would not be necessary. Alternately, you can use the .382 of AD or of CD as your limit for any given time frame. This will dramatically increase your win % in long term trades. In addition, I suggest lowering your margin from 10% to that of 5% if you are going to be trading these frequently and using automatic entries/exits as I do with the .382 of AD or of CD as your limit.

*Note that as long as your growing your account consistently and in a disciplined manner, then their should be no rush in increasing your margin or the frequency of trades. For in the end it will grow substantially because of the fact that your profit grows exponentially as you progress with your account… (An 8k account traded 30 pips a day with less margin then what I use can turn into a billion dollar account in just 5 years, the only set back is yourself and lack of discipline is the only thing that can stop you from achieving such a goal).

3857

This unfortunately didn’t work. Reasons:

  1. 1.00XA pattern, which I see doesn’t work as well as other XA levels.
  2. I didn’t use the first swing. But even if I did, there was again convergence at 1.00XA.
  3. It was and still is in a big uptrend without significant price swinging.
  4. The price shot up near the convergence point. I was sleeping so it automatically triggered my entry.
  5. There was a 8h pattern with convergence just above this one… however it didn’t work as well.
3858

HI TMB,i like your trading style and i studied the whole thread from a side…my q is are you still using the same entry rules/like candle close below converg lvl/ in your strategy …im asking becouse i remember reading somewhere further back that you are trying a new strategy/same method of trading/…anyway good luck

3859

Yes, I use the same method for my failures with an exception. If I am already up 15+ pips I use the new strategy to determine if the trade will fake out and exit with profit instead of waiting for the close bellow.

3860

first of all i would like to thank you TMB for this useful strategy and thread… u changed the way i trade…
im still a newbie but im sure with more practice i will be better and better.
i have a question for u please.
in ur reply above u said when u make 15+ pips, u check the new strategy to see if it’s fake yes or no, so u take the profit before it close down!!!
may be i miss a thread but i couldnt find any new strategy that u already said that ur testing???
can u please share it with us !!! and if u dont want can u just tell me no because im searchin and searchin and i couldnt find anything in the thread…
thank you once again and hope to see u often here
:smiley:

3861

Sounds very good, especially on lower time frames like 30min, it’s wrong to assume that every pattern will bring 30 pips because the ranges are usually too limited. Please share your new strategy about this with us!

3862

Hello TMB

Good day to you

this is weekly bearish gartley on Gbpusd… do you think there is chances of this will play out…

thanks

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3863

Hello, that on the weekly is not a bearish gartley. The retracement necessary to make a BC leg (.382 minimum) is not met. In other words, the market in that current time frame is not symmetrical. In addition, using the weekly chart the closest thing to convergence that I can find is around the 1.88 of price (way up there).

On the other hand the fact that it is around the .618 of the higher time frames with the combination of price slowing down, indicates that people are realizing that the pair is being over bought and a reversal should happen (or the development of various bearish patterns between the 5min-4 hour time frame signaling the sell). As a result, I suggest waiting for the GBP/JPY and the EUR/GBP to hit some sort of bearish signal for the pair before trading the GBP/USD since these pairs have been moving better and respecting the fibs unlike the current GBP/USD movement.

3865

Greeting to all,

as a newbie to the thread i wanted to ask TMB and the older subscribers to this post for some help. i have bought the recommended book and have read through the first 20 pages of posts on this thread whilst taking notes.

however i wondered if anyone would be so kind as to post any rules or reccomendations established, specifically relating to convergence.

like, i know that point C must have at least a .382 retracement of the AB leg. retracements between .500 - 1.000 indicate a gartley pattern and
.382 - < .500 retracements indicate a butterfly pattern in formation.

so what i do is to look for convergence below the 1.000 of XA if the C point retracement is between .500 - 1.000 and look for convergence above if a butterfly is forming. [B]however, what if multiple levels of convergence is found?[/B]

are there any reccomendations… ie, if the C point retracement is .618 and i find convergence at the .500 and .618 levels of XA, which level is most likely to form a ‘true D’.

i hate to come accross as if im too lazy to read through the whole thread, im sure you can appreciate that as a newbie there is a lot of information to go through and im just very eager to start trading this formation accurately.

finally a big thank you to TMB and all those who have contributed to this amazing thread!

3866

I’m pretty sure other frequent members of this thread will have better insight. As for me, I look at the following the most (some or all of the following may have been covered within this thread):

There are multiple fib levels (including additional levels TMB identifies), but some may argue that certain fib levels are more important than the other. When I see multiple convergences, I first look at where each convergence is taking place relative to the XA leg. I personally put more weight on those convergence or D that completes at 61.8 or 38.2 level of XA leg. So for instance, if there are two convergences (assuming the same proximity range of convergence) with one completing at 88.6 and 61.8, then I aim for 61.8.

If multiple convergences represent different patterns, like gartley with D at anywhere less than 100 level of XA leg and butterfly with D at 161.8, I personally choose gartley over butterfly.

Next, as TMB suggests, I look at the proximity range of convergence and give more weight to the convergence with better range.

If all else fails and I really can’t decide an entry point because every convergence looks good, then I just simply stay away and observe, instead of entering at every equally-good looking convergence points. Better to miss a good trade than enter a bad trade IMHO.

3867

my notes of the entire thread…this info is priceless…read it like a book…enjoy…

setting up limit
If you want to find a limit that would work in any given time frame just about 85-90% of the time, I would set my limit at the .382 of the CD fib measurement (Conservative). Another option which works as well is the .382 of the AD leg (less Conservative). This is because of the fact that usually when a pattern such as a Gartley fails, it retraces to the .382 of AD (testing price) before it fails. Also take note that its roughly 50% of a patterns target 1 which is typically the .618 of AD. Also, a good tactic that works (if you have the discipline to follow it). Is to set your stop as a free trade once it hits the .236 of your XA. I’ve found that when 8/10 times when a pattern fails it will reach the .236 measurement of AD (wick to wick) and then fail. An even more conservative way to set a stop or limit with this method is draw your fibs from the Base price of A to the wick of D. Go back through your charts and put the theaory to the test. Its real and it works, Again I highly stress that you must be disciplined to follow methods such as this.

2am-4am EST.
6am-8am EST.
10:30am-12pm EST.
6pm-8pm EST.

FAKE OUT TIMES
9am-10am EST. is usually fake out where market makes a Lower or higher D
9pm-12pm

You left aside 12am-2am
4am-6am
8am-9am
12pm-6pm.

So what happens during this periods.

Thanks for your help!

Yes those are the ussual D points and fake out times. Now for the hours which I left off, the market for the most part prepares it self to establish a new D point during those hours. It is possible for a D to form and trade it for 30 pips during such hours; I suggest only doing this if you are comfortable taking a possible loss from a fakeout you know may occure and are experienced at pattern trading. But why take the risk FPRIVATE “TYPE=PICT;ALT=” … heh

FOUR convergences! The first one failed, though. And since the C retracement was near %100, I think this might be a Gartley pattern instead of a Butterfly, and the highest convergence point might not be the real one.
answer:
On pairs like these-gbp/jpy you should take the 786 - 2.618 convergence levels. Especially if you have good multiple convergences at different areas

There can be variations of the key fibs depending on the pair, but according to that site, the way I read it is:

B - Must be near 61.8% of XA.

C - Must be 38.2% of XA or
88.6% of AB.

D - Must be 78.6% of XA and
between 127% and 161.8% of BC.

One of the guidelines is that price must exceed the 100% line of the 2nd fib.
So what I notice most when traders post their charts with patterns that have more than one possible convergence is a problem in determining which one would be the true D. Whether this is more attributable to when it’s not being symmetrical is a good question.

Apparently the key is in the BC leg and it’s slope. The book briefly states that if the BC leg is a shallow retracement of the AB leg, under 50%, then the extension will be much longer and faster than if it retraced more than 50%

AB=CD -By measuring AB with your fibs, CD must be at least the size of AB (100% fibs).

Just keep in mind that you should close your trade if your entry candle closes negative. That is a sign of a possible fakeout.

Doing so you don’t wait for your stop loss to be hit and your losses are considerably decreased.

500, .618, .786, .886, 1.000
These are your major ratracement zones and are typically the “D” area of a gartley pattern. Please note that these fibs depend on the pair that you are trading. For example, the EURO/JPY, AUD/USD and the GBP/USD for the most part have major resistance at the .500. and typically if price does not respect this area for these pairs it will continue towards the extreme levels (1.272, 1.618, etc). The EURO/USD, USD/CHF, and the NZD/USD Typically retrace from the .618 (the .500 will normally allow price to “breathe” before reaching this fib). In addition, the EUR/GBP finds support or resistance at the .786 (you can draw your fibs from high to low swings in history and you will see that 9 out of 10 times it will bounce from this point or reach its vicinity before doing a true retracement).

  1. Enter after my entry candle has closed positive.
  2. Watching really close if price hasn’t retraced already to the 23.6% AD fib. If this is the case, probably it’s not a re-test, but a fake out, and price is going to continue in the opposite direction

tmb -I use the 30, 15, or 5 min time frame to determine the close depending on which time frame I found the pattern. If I am trading the 60-30 min I will normally wait for a 30 min close. If I am trading the 15-5 min I will wait for a 5 minute close.

Identifying a Gartley and avoiding a failed pattern:

The number one rule to this is that the BC leg of the pattern must have atleast a .500 fib retracement in order for it to develop a true Gartley. This means that the BC can retrace from the .500, .618, .786, .886, 100.0 fib levels and still be considered a gartley. You will know when the true gartley is formed because of the fact that an avg of 80% of the time it will bounce (find support or resistance) when it reaches symetry with AB. As a result you will see that the 100% of CD will converge with x fib point. You see this in the last trade I made. The BC leg bounced of the .886 and its 100% completed in the proximity of the .618 of XA.

A butterfly pattern is the result of a failed Gartley. This is why a number of traders would sell a pair if it closes bellow the 100.0 fib and have an entry waiting for them at the 1.272 for a buy or vice versa. In addition, 80% of the time if BC leg reaches the .382 and retraces (without ever touching the .500), the Gartley will fail an reach the 127%. This doesn’t mean that it always has to reach the 1.272 of XA it simply states that the CD leg will retrace when cd = 127% of AD and still be considered a gartley if it hasnt passed the 1.000. Personally, these trades that do not hit the 1.272 of the XA are less symmetrical and should not be traded until you have more experience pattern trading.

Times when most D’s develop on any given pair (EST time):
6pm-8pm, 12am-3am, 5am-6am, 10am-11:30pm

Times when D’s tend to "Fake out"
9pm-11:00pm, 7am-9:30am, 2pm-4:30pm
(These times can be traded, simply note that it typically fail towards a more profound D).

This is why I normally begin to analyze the market from 2-4am and initiate my trade at 5-6am (I typically set my entry around 3am or 4am using the 30 min time frame).

-Fib levels-

The following Fib levels should be added to your Fibonacci tool:

0.000, 0.236, .382, .500, .618, .786, .886, 1.000, 1.272, 1.618, 2.000, and 2.618

.236 and .382
If you are using visual stops and wish to trade these pattern conservatively, I recommend that you draw your fib points from the Base price of your high low swing to the wick of the low or high swing and place a physical stop once price reaches the .236 fib level. Your limit should be a the .382 as price usually tends to test this zone before it continues towards the target or before it fails to become a bigger pattern.

.500, .618, .786, .886, 1.000
These are your major ratracement zones and are typically the “D” area of a gartley pattern. Please note that these fibs depend on the pair that you are trading. For example, the EURO/JPY, AUD/USD and the GBP/USD for the most part have major resistance at the .500. and typically if price does not respect this area for these pairs it will continue towards the extreme levels (1.272, 1.618, etc). The EURO/USD, USD/CHF, and the NZD/USD Typically retrace from the .618 (the .500 will normally allow price to “breathe” before reaching this fib). In addition, the EUR/GBP finds support or resistance at the .786 (you can draw your fibs from high to low swings in history and you will see that 9 out of 10 times it will bounce from this point or reach its vicinity before doing a true retracement).

1.272, 1.618, 2.000, 2.618
These are your extreme levels and where your butterfly patterns will form. The 1.272 will be your major retracement level. If price for example closes bellow the 1.272 (bullish trade) the pattern typically fails and retraces from the 1.618. If I want to be risky, I can trade price towards the next “target”. The close should always be the time frame where you found the pattern. The 2.000 and 2.618 are basically the most extreme zone and if price does not respect these it will typically continue the trend and not give you a retracement.

Please note that the 100-2.618% levels of CD should always be used to finding convergence with XA.

The longer you are in a trade the higher your risk loss %. This is because price becomes comfortable with the levels it “continues to test” and can easily switch directions…

In addition knowing that every pattern has an 80% chance of completing to the .618 in normal market conditions, greatly increases my odds as I only choose patterns which have good “convergence” and in markets that are symmetrical.
during critical news times, I make sure that we have a concrete pattern waiting for it

A CD must be at least 100% of AD and your D point seems to be only at 65% of AD. In addition, the BC leg is a .382 retracement meaning that D will most likely reach the extensions of your XA and definitely 127% of CD
When the SSD/stochastic slow/ crosses on the 5-15-30, their are at times D’s set up.
your D must be at least 100% of CD no exceptions.
always wait for the close on the time frame you found the pattern

EURO/JPY Loves .500 retracement from D point /for profit/ target point

  1. Is there a difference if B is found on .382 or .500 of XA?

  2. What if we’re looking for B and it rests between .382 and .500?

  3. Does C always have to be between X and A in all 4 patterns?

  4. Take a look at the following chart. You’ve said that if a trade close beyond the entry point for 30 min on a 30-60 min trade or 5 min for 5-15 min, you would exit. Would you have exited this trade?
    answer tmb

  5. I haven’t seen a difference really other then a trade that has at least a .382 B retracement from XA has more symmetry then one that does not. Also, the most important retracement involving B is that of C which is the measurement of the AB leg.

  6. It is still valid

  7. Yes

  8. Yes and No, Yes as a daily pattern, No as a 30 min pattern. *See bellow.

First of all, what you have shown has a reason and divergence to go with it. If you where to draw your fibs from the base price of the extreme on the daily, then you would have noticed great divergence and a perfect bounce. Which is shown bellow where you can see perfect divergence with 127% of CD and the .500 of XA.

In regards to drawing your X from base to wick or wick to wick, it really depends on the market. What you want to do is test each one and see which one price respects the best. I normally do this when things aren’t making sense (no valid patterns are found, like you have). And if non work, then i switch pairs.
Also, make sure that X is always at an extreme of price and not in the middle of a leg. ?!
I only trade Gartley patterns for the EUR/GBP which touch a .786 or .886 fib convergence

Convergence between the percentage of CD (its measurement in relation to AB) and the fib point of XA must be within a 0-10 pip range based on a 30 min time frame. The higher the time frame, the higher the pip range can be. 0 = best 10 = worst

*Note: If you are looking for a bullish trade, and your convergence is bellow the XA fib level, typically price will spike bellow the fib level to touch the CD % and then close above the XA fib level. In this and in every case I always suggest that your entry or market order should be exactly on the XA fib level or a few pips above it (in order to make sure the trade goes in depending on the market). On the other hand If I did not need to be in a trade but I wouldn’t mind making an extra 30 pips for the day then in this situation, I would place my entry right on the CD % that’s bellow the fib level and If price spikes down and gets me in then I typically would end up with a perfect wick. If not then I simply did not get into the trade and that is good as well

take notice that convergence = symmetry

So with the XA leg, is it typically the more extreme highs/lows you use, the more powerful the signal?
Correct! Also, make sure that X is always at an extreme of price and not in the middle of a leg.

B can be a maximum of 100% of XA (this is rare but possible). Their is no rule for the minimum other than that it should always be in between XA. But I much rather you trade a pattern where B at least retraces off the .236 or .382 for symmetry.
This is why I said that sometimes you need to draw your XA level starting from Base (of the extreme) to wick (of A). Some times the market off set them selves by a bit. Just try and see which fibs price is currently respecting. Usually it is wick to wick but when things as you say happen, then you must do the mentioned check as well. Or possibly used a different X

3868

What constitutes good symmetry? Is there a technical way to measure that, or is it more based on how the triangles of the pattern form in relation to each other?
The time that it took price to create AB when equal to the time price took to form CD constitutes perfect symmetry. The zig zag’s that the market forms the actual flow of pattern after pattern also adds towards symmetry.

(CD should be above B before we make prediction).
there could be no point in price from B to C that is lower then the C point.

Bellow are the 3 possible patterns the GBP can form:

Here 100% of CD has convergence with the .886 of XA. This would be the place where you would like your buy entry because BC has more then a .382 retracement (it reaches the .618 fib). This means that the D leg should be at 100% if there is convergence. In addition, 161% of CD has perfect convergence with the 1.272 of XA (My second entry would of course be here) and a good place to make up for losses if the first one does fail (or to rack in more pips FPRIVATE “TYPE=PICT;ALT=”). First (100% CD = Bullish Gartley) (161% CD = Bullish Butterfly)-pic pro 72/tmb folder/

If your going to be trading the Asian Market. I recommend starting around 4:30-5pm EST. From working that session in the past, I have noticed much movement on the AUS and KIWI pairs around the 6pm-8pm time some times even starting at 5pm right after the NY close.

following take profit levels (if holding beyond 30 pips)
50% of AD for the GBP/USD, AUD/USD, and EUR/JPY and .618 for all the other pairs.

The market can rip you apart if you become impatient and just jump in because you “want” to be in a trade.

If I recall correctly, during the spring time each year around March-May. Phenomena occurs in the change of emotions within the traders. In effect leading to more and more failed patterns throughout those months. I think that we might be near the end of this phenomena… especially because of the fact that right at the market open I was able to find 3 D’s in 3 different markets around exactly the same time. Which from testing this method for months has definitely proved.

The Butterfly pattern was discovered by Bryce Gilmore after doing a deeper analysis of the Gartley 222 pattern with its relationship to the market and Fibonacci. Again, a Butterfly is a failed Garltey which will reach towards the extension levels of XA signaling a major trend reversal. These patterns are for the most part more powerful then a gartley 222 and rare in essence since it must pass the extension of XA. Gartley 222 patterns where discovered in 1935 by Mr. Gartley and I believe that Bryce Gilmore discovered this new phenomenon around the 1980’s. In addition, the reason why I recommend the reading of Trade What You See: How to Profit From Pattern Recognition by Larry Pesavento, is because of the fact that he fully “dissects” both patterns and explains to you in full detail what they are, why they are, and how to trade them. Also the book goes on to giving you a full scope of Fibonacci and its relationship with price, along with the patterns. Furthermore he shows you how to trade the patterns and gives you the basics to creating a stop/loss/take profit system that can be adjusted to your preferable trading style. All in all, it is always good to know the basics and key elements behind any strategy and form of trading. Especially when it comes from traders who are part of that 1% making “REAL MONEY”. Very rarely have I seen authors such as this one that teach you how to exactly trade it. Giving you confidence to get in at the right time and know when to get out.

Find an extreme high or low. This will be called X.
Where the first retracement is made from that point, label as A
Fib from X to A
Where the first retracement is made from point A, label as B
Fib from B to A
Where the market bounces between AB, label as C
Click and drag BA fib until 0% is aligned with C
Look for convergences at 127.2%, 161.8% and or 200%
These will be the probable turning points
Hope this helps. Please remember also to look at Tmoney’s Videos.

I can say that just bout 95% of my trades are triggered by entry points which are set exactly on or a few pips around the convergence area (depending on the spread and or convergence difference between fib and the CD %). As for the GBP/USD trade, Notice how we had two patterns predicted, the first one being at the 1.000 of XA and the other at the 1.272 of XA. Because of the fact that it was a 60/30 min pattern and that there where two level of convergence right after the other, you could have waited for an hourly close before failing and ended up positive if your entry was set at the 1.000 of XA. The rule of “thumb” that I use for patterns and entries is that if price did not trigger me into the trade then I did not have to be in it. The D formed at 6am…
A lot of you have been asking me for “clearer picture” on convergence. So here it is, I will illustrate it for you.

Lets put it in basic terms. Fibonacci percentages are support and resistance areas. The percentage of the AB and CD legs are also considered support and resistance areas (the reason why we can use Fibonacci to meassure them). Now when the closer 1 S/R area is to one another, the stronger that point becomes. So think of these “convergence” points in price as a walls. Having convergence is basically the same as me building one wall behind the other to add fortitude. Making it even harder to penetrate
It is critical as a trader to accept your losses and know that they are caused by your own mistakes and not the markets. In addition, it is highly important to never give up on your trading day. Learn from your mistakes, analyze the market correctly and eliminate any emotions that might be lingering in you from your previous trades.
trading c leg-page 77

When choosing an entry at your convergence point, it is best to set your entry on top of the fib point in the majority of cases. What price tends to do is touch the % of CD and then run towards the fib level it converges with before taking off. As a result, another place in which you can place your entry is in between the fib point and the CD % (middle of the convergence). You should do this if you are unsure of how the pair you are trading behaves. This will typically prevent you from missing on trades where price barely touches the fib point and then retraces. Also, take note that your convergence will always differ depending on if you drew your pattern on the BID or ASK. As a result, make sure that your Bullish trades are drawn on the Ask and your Bearish trades are drawn on the Bid. This will ensure that your entry point is triggered and not “skimmed” (this is because of the fact that your Bid and Ask price will always differ). All in all depending on your spread, your entry point should always be exactly on the fib level or a few pips above it (bullish trade).

Review the rules for more info on convergence and its “quality”.

1). Gartley/Butterfly patterns work in every market which has a greed/fear factor (AKA Every single market; Stocks, Forex, Options, Futures, Bonds, Commodities, ETC). As for different pairs, through out the thread you will see me mention specific fib levels to look out for (I.E. I only trade Gartley patterns for the EUR/GBP which touch a .786 or .886 fib convergence).

2). You will find Gartley/Butterfly patterns on every single time frame (even that of the 1 minute chart). Always keep in mind though that the higher the time frame, the more power the pattern will have. I recommend trading the 60/30 min patterns for they are most reliable for me. In addition, using the 5 minute chart is great practice for learning how to trade these patterns for they will show up most frequently and later on can be used to enter at the “wick of price” as you’ve seen me do on the first post of the thread.

Well apart from morning/evening stars, hammers etc… (which are great for justifying a D point), I look for these same exact patterns while price is moving. To clarify as a bar is “moving” in a 30 min chart, it can form a doji, hammer, shooting star etc… in real time before it closes. This in effect will illustrate to you what the traders are inputting at that given time. Each bar as it is “alive” will “speak” to you with its movement (fast or slow) in respect to fear and greed. For example if a BULLISH candle (5-10+ pips candle) reaches my convergence point for a sell and then it immediately reacts to that point and retraces 5-10+ pips, even if the candle returns and closes right by my entry the event that had occurred would be a good indication. This is because the motion of price that I had seen before the close is indicating to me that new sellers are entering the market which are beginning to prevent the buyers from gaining strength. A plus to such a scenario is in the case where price might be exhausting from its current direction (Typically when a trend hasn’t retraced more than .236-.382). In addition since a D point for the most part creates a “Valley” in price (peak of the mountain), we should look through price history of each pair we trade and see what candle sticks had formed at the turn around of price. This in effect will prepare you in determining a fake out or a true ‘D’ point. This tends to be true because price history repeats itself through out the course (same reason why the patterns repeat themselves… human emotion is simply predictable and repeatable).

75-80% of the time a Gartley or a Butterfly pattern will give you a .618 retracement when measuring from A to D as your first take profit point, 90%+ of the time it will hit the .382 and retrace from this point. As a result, I have narrowed take profit of all patterns on the 30/60/240/Daily charts to 30 pips because of the fact that such a take profit level will generally be less then 50% of the predicted retracement in the market. As a result, significantly increasing our positive trade ratio and allowing us to profit from “fake outs” in the market.

What I’ve been noticing on the 4hr charts is that the best setups have a ‘D’ that forms at the 118%-161% Extension of the A-B swing.

So if ‘D’ forms between 118%-138%, I use 161% as my stop.
If the ‘D’ forms @ the 161%, I’ll use the 200% extension as my stop.

I try to go for a 1-1 RRR, and then close out 1/2 - 3/4 of my position, and am letting the rest run until I get stopped out.
Although I am still demo-ing these patterns, and another possibility that I’d like to experiement with is to close out half after a 1-1 RRR is reached and let the rest run to either the 38% or 50% of the A-D swing (which is more like is taught in ‘Trade What You See’.

Lot size is 1-2% of acct size, so I’ll just adjust it depending on my stop and the currency that I’m trading.

Hope that helps!
As I’ve mentioned throughout the thread, I use a visual stop on all my trades. For example if I place an entry on the .500 of the GBP/USD for a bearish pattern, then I will wait for a close above the .500 fib level (depending what time frame I found the pattern [usually a 30 min close]) before I consider it to be a failed pattern. If the pattern fails, then I close out the trade and wait for the next one to come along if it has excellent convergence. If not, I stop trading for the day and wait for the next session. This method of course may be a bit advanced for most, I suggest placing a stop above the 5-20 pips if you need to use one. If trading a volatile pair like the Yens, I suggest placing that stop above the next fib level or CD% because of the fact that these pairs tend to pass the convergence by 5-20 pips and respect it by the close.

Thank you and here are the stop/loss rules for the trading style you are trying to use at the moment. When a trade is active, set your stop on the next XA fib point. Once price reaches 23% (the .236 fib point) make the trade “free” by placing your stop at 0 or 1-5 pips above your entry. Your limit should be the .382 of AD or CD. The reason we place a stop at zero once price reaches a 23% retracement is because 9/10 price will fail if it retraces from the 23% back to your entry.

*Also, it is highly recommended to close your trade if price closes negative past your entry which should be on the fib point or a few pips before it (based on a 30 min close if its a 30 min trade).

Remember that patterns have an 80% chance of doing the 50 or 61% retracement depending on the pair. So a limit at the.382 is basically half of what your true target is. Giving you a higher win ratio and allowing you to profit from fake outs (just taking the 30 pips from a 30 min patter or greater will give you a higher chance though).

we should look at significant support/resistance levels in the convergence areas that we sight, that way you have better confirmation.

According to the ideal patterns, B should retrace to 61.8 or 78.6% of XA. Other ideal retracements are at 38.2 & 50%

Good times to find D’s forming (PST):
3-5am
7:30-9am
3-5pm
11pm-1am

if the BC leg is a shallow retracement of the AB leg, under 50%, then the extension will be much longer and faster than if it retraced more than 50%.

A very important clue for knowing wich one is your true D, is the AB retracement Fib. If this one is 38,2 or less, your D is more likely to be more than 100% XA. So if you a convergence at 100% XA I suggest you to ignore it and look for a further convergence.

Very very important to look for additional convergences at a D point, not just the ones from the pattern, but also some others for different X points. The more convergences a D point has, the more likely for it to be the true D.

I also use MACD to spot divergences in order to confirm a reversal, but that is just me. And also a very strong tool that I’ve been using lately is trend lines.

Most of my D’s form where a trendline passes. So there you have another way to spot your true D.

If you don’t feel safe about the D you just chose, don’t take the trade, many more obvious patterns will appear in the future.

There’s been cases where I’ve seen three D’s in the same pattern, and all of them have worked nicely for 20 or 30 pips. That’s the beauty of this convergences, that even when it’s not a true D, almost always you find a small retracement at this points, allowing you exit at Be if it wasn’t the true one and continue further up/down for the next D.

Practice practice practice. I’ll try to post more charts in order for you guys to see some trades, good ones and bad ones, so you can watch in your charts and have a better idea how to spot your trades

3869

When you find a pattern on the 60/30 min, your C-D Leg usually turns into a 15/5 min pattern. When the convergence of this is let say… 5-10 pips higher then your 60/30 min convergence, you can expect price to spike up and touch that convergence and create a wick starting in the lower time frame. Remember the basics, all trends start from the 5 min chart. This is also true when taking long term pattern trades on the daily-4 hour charts (use the 60/30 min to see if patterns develop near their convergence areas). As a result, when you find a pattern, always check if their is a smaller pattern adding to the convergence point you have found. In effect the more convergences you have at a given point from different time frames, the stronger the pattern should be. All in all use this method to find the best currency to trade for the day, you might find a great bullish pattern on the EUR/USD and on the GBP/USD but the GBP/USD might have multiple convergence points which you missed out on if you did not fully analyze the lower time frames.

*Note: Such an analysis prevents typically prevents you from being fakes out, especially when you have multiple converging fib levels on the 30/60 min pattern.

I.E. The 30 min Eur/Usd can have convergence at the .382, .500, .618, and the .786. Even though the .618 is the favored fib level to take, the .786 may have patterns from the higher and lower time frames developing at this zone. In effect, hinting that the other convergences on your patterns may be fake outs and the .786 is the ‘true’ D point.

So in an ideal abcd pattern, point C will be at 61.8 or 78.6 fib levels of A to B. If the trend is aggressive its more likely to be at the 38.2 level. i.e. a small retracement.
From here you can then estimate where you think point D will land. If the retracement of b to c was quite short lived (.382 retracement), or if the bars that followed c are of a wide range or have a gap in price, you can expect c to d to be whats called an extension of a to b. Meaning point d will be around the 1.272 or 1.618 fib levels of a to b. A larger zig zag.

If C was around the 618 or 786 retracement of A to B, then you can expect point d to be 1.272 or 1.618 extension of b to c. Meaning a more proportional zig zag.

The above are guidelines obviously your points arent always gonna land right on your fib levels but i they do its a good sign and will make it easier to map out the rest of the pattern.

theese are my notes /not up to date,but up to like 20 posts back/…hope it can help…CHEERS!

3870

Today (and actually yesterday) was incredibly volatile, with fibs being crushed all over.

I say it’s not a good time to be trading these patterns right now. Breakout trades seem a better option.

3871

Hi guys,

I missed this gartley pattern this morning but can you please let me know if it is valid? Any feedback welcome.

Cheers,

Jay

2010-08-12_UJ_missed_gartley_formation.jpg700×238 27.3 KB

3872

Cheers TMB, this is a very important point!!! And an obvious one that didn’t even register with me until you mentioned it… duhhh. :rolleyes:

Since I’ve been trading harmonics I’ve always gone for the B point as my ultimate target, no matter the timeframe. It’s worked very well, however since you mentioned this (last week), I’ve noticed my recent trades going +30 before retracing and sometimes not reaching the B point.

Thanks for bringing it up, merits further investigation.

3873

Yeah, I got hammered on my yen trades the other day. Made it back today.

As long as you’re disciplined, everything should work out. :cool:

3874

Hi Jay,

Strictly speaking, it wasn’t a perfect gartley (due to fib ratios) - so it’s up to you how you want to play them. Personally, my harmonics alot of the time aren’t perfect (hey, what is?! :rolleyes:) but the majority still play out fine.

Incidentally, this USDJPY bear gartley has reformed and I’m in a position right now. X, A, B points same, with D at the 200BC leg. Also it’s 5 pips off an AB=BC completion in the D leg. Plus, at a big round number of 86.00 - all nice enough factors for me. :wink:

Cheers,
inspira

3875

cashdemoN u r a diamond. thank you for consolidating the thread.

i will review your notes and will hopefully be up to speed soon enough. wish you all the best. cheers