ofcourse it works but again you won’t have a system that works 100% all the time, if such everyone is a winner…
so lets say it works 70% of the time, then it will up to the individual to study, analyze and understand that why the other 30% did not work…if we are able to do that, then we can avoid the 30% and only trade the 70% but ofcourse this isn’t easy stuffs…
as i have read, i noticed some other traders traded every single pattern that came up in their chart but i prefer to see if there’s any other way (as i couldn’t stay in front of the computer all the time, like TMB )
That’s the sign of an evolving community, thank you for pointing out that there are people thinking outside the box and not just blinded by what is obvious :).
Our trading style has evolved from solely trading Patterns (continuously counter trading the market) to using harmonics as a “tool” within our trading system. In effect, there are other factors that come towards analyzing the markets which we implement along side the techniques shown within this thread. The reason for this is because the markets are always evolving and if we do not progress with them… we will be left behind and not understand the reason behind it. To clarify, we have implemented the following to our “tool box” when conducting our trades: Fibonacci, Harmonic Patterns (Gartley’s, Butterfly’s), Candle Stick Patterns, Fundamentals, Astronomy, MVA’s, Prev. Price History, Trendlines, Triangles, Head & Shoulders, and Mac D Divergence. As a result, you probably couldn’t find the reason behind the trade because of these factors (even though a D point was triggered)…
*Please note that our implementation of some of these basic tools, though unorthodox… work and are expressed throughout the thread (Go through the thread thoroughly and you will see ).
I glad you touched on this, and I agree wholeheartedly. If you don’t mind I would like to share my observations on the matter.
Harmonic patterns are useless in isolation.
I believe most new traders will learn one “tool” or “setup” and apply it every time it appears. This is particularly true for harmonic patterns where, initially, you are just happy to find one.
The fact is, there should be multiple reasons for taking a trade. You might have as many as 10 critera such as MA, TL, S/R, time of day, ATR, MACD, crowns, harmonic pattern etc, and if you dont see say 8 out of 10, you simply let the trade pass (not always easy but it’s the trades you don’t take that will make your year). You need to have a set of critera to filter out the rubbish trades from the high probability ones. [B]You need to know exactly what you want to see and where you want to see it[/B]. This will be your trading stlye and is as individual as a fingerprint. Finding your style is typically a painful, time consuming and costly journey, and is only one third of the battle. The other 1/3rd is money management, and the final, most important, 1/3rd is learning the patience to wait for your setup, and the courage to execute it.
In order to find the patience you must be indifferent to having a position, and your default setting should be to NOT have a position. Forex is like any other asset class. To be efficient you must know exactly what you are looking for, and once you find it you must not overpay. These opportunites are typically rare, so most of your time will be spent waiting. It should be boring. I truly believe that patience is the most important attribute of a trader.
You must not fear missing out as there are limitless opportunites, and eventually one will present itself that is ticks every box. On such occasions you can execute without fear of recrimination because you have waited for your criteria and executed your plan.
Patience will become easier as you see results and get positive reinforcement. It depends on your timeframe, but I find it helpful to start from the position of “I probably wont get a trade today, maybe not even this week.” Taking a position should be the exception not the rule. I like the analogy of a hunter, like a cheetah on the Serengetti waiting for that little baby impala with a limp who is seperated from the pack. You wait, you wait, you conserve energy…then BAM…you strike.
In terms of looking for patterns I find it helpful to have some kind of directinal filter from the timeframe higher than that which you are trading. There is no substitute for trading with the trend, and I believe harmonic patterns are at their best when used as mean reverting strategies to enter in the direction of the higher timeframe trend. The beauty of the directional filter is that is narrows down your pattern search and gives it top down trend following structure.
Finally, I believe trading is essentially about formulating a plan and executing it. This concept can be practiced in many ways outside trading…big and small. I firmly believe you can improve your trading just as much away from the screen by setting small goals and building your discipline. I have been doing this for a couple of years now and am only just starting to reap the rewards. I was weak and lazy, but after many excercises am now extremely disciplined and have noticed my self talk has changed completely. My mind has become stronger, just as your body would after excercising. Now when I commit , I trust I will follow through. This is the beauty of trading. In order to improve as a trader you must improve as a person. The market will highlight your weaknesses and unless you address them you will fail.
I hope this does not come accoss as self righteous. I still have a long way to go with my trading, and it’s only my failings that have led me to these conclusions. The main point I am trying to make is that you need to build a case for a trade, not simply execute every pattern you find.
Hi Pr1NZ, glad to here you find it useful. What I posted was simply the definition for each major pattern, each having a range of fib confluence zones, that provide a base for identification/conversation. With regard to precision, or more importantly higher degrees of probability, you are more concerned with having tighter confluence zones, than having price changes occurring exactly at a certain fib level. With that said you will find, more often than not, reversals (even if only temporary) will indeed happen precisely at a fib level - the trick, only gained from experience, is figuring out which one
To be completely honest, I have moved on from these patterns into Elliot Wave and more generalized harmonic trading (this isn’t to say that I’m not using these patterns, but rather I’m not actively looking for them anymore). My reason for sticking around thread is to give something back to it when I can; as I took so much from it before.
Very well stated Modo, an excellent summation of everything this thread has laid bare. I would like to offer a couple of book suggestions in the spirit of your post; they combine a dose of inspiration with an equal measure of reality.
Market Wizards, Jack D. Schwager
Reminiscences of a Stock Operator, Edwin Lefevre
Both of these are older than the hills (the 2nd is from 1923 ;)), and yet entirely relevant; there’s more to trading than charts.
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