yeah, I know… Forex should be a 7/24/365 market… well maybe it close on weekends to force some people to rest.
I know, 5% on 37 pips looks like a lot of risk, but I’m trading with a micro account, and that 5 % is less than 1 dollar hehehehe, I can’t reduce more the lot size. But after looking at stats, I think it is possible to risk that 5 % safely with harmonics, just like TMB does. In the begining of the thread, he said that he risk 5-10 % per trade, because the huge win/loss ratio, that is about 70 % or more (because that 70 % is with targets on 61.8CD, and he es trading with smaller target, so it is more probable and it is also bigger the win/loss ratio)
Check this bullish bat… it is on EURUSD but in 1M (1 minute) view. It’s almost perfect! I think the fractal characteristic of harmonic patterns is shown here with full detail
50XAB, 88.6XAD, 161.8BCD, 150AB=CD(price), 127.2AB=CD(time), previous support at 1.3190, round number (in tens, 1.3190). Target at 61.8CD and stop at 127.2CD, that gives a total RR of 2:3 in only 18 minutes, this trade, if traded, could generate 9 pips in 18 minutes! Harmonics are good for scalpers too!
Do not trade more than 2 pairs at one time. Any other orders must be cancelled once 2 trades are triggered
Only trade pairs that are “Ace” setups. Always look for convergences with Pivots, higher time frame’s significant fib levels, the daily highs and lows and significant support/resistance levels in higher tf
Fib must be drawn from the extreme high to extreme low, from extreme low to extreme high, no “in-betweens”
If the pattern is not clear, than it’s not that pattern. Do not “force” patterns.
Point D’s convergence must be 5 pips or lower of fib levels
Risk to Reward ratio must always be at least 1:2
TP is set at 23.6% of AD
If profit is more than 20 pips, always move SL to breakeven whenever possible, and take out half of the profit.
Point D must be at least 100% of CD
If Point C is less or equivalent of 38% of AB, it must be a butterfly pattern. Do not trade pattern as Gartley if Point C is less or equivalent of 38% of AB
I’m using very similar rules[ol]
[li]Don’t risk more than 5% of “free margin” at any time. MT4 tells me the free margin, and based on that number I calculate the volume of the trade to be 5% or less.[/li][li]I trade 1 or more pairs at a time, but I check if they are correlated or not. What I do is not place trades on correlated pairs, because that could generate double loss.[/li][li]I also check pivots, fibos and s/r. But also check the round numbers, 50s, 100s, 1000s.[/li][li]My fibos are traced from high to low of candles, not mixing open/close with high/low. In my analysis (automated, about 6000 patterns in all time frames since 2004) I got that patterns work better when using high and lows instead of open/close.[/li][li]If I detect a pattern that is not clear, I check it again in smaller time frame, to see if in that TF the pattern is clear. But I need a pattern to be at least 15 pip wide at the 23.6CD, this is a requirement.[/li][li]For confluence (convergence) I use 1ATR(20) to check if the levels are confluent. I use the main XAD fibo as a guide to look for confluences, and if in the XAD+/- 0.5ATR(20) are confluent pivots, round numbers, other fibos, some s/r, other patterns’ D point, then it is accepted as a good PRZ[/li][li]Because I place my first take profit at 38.2CD and my stop loss at -38.2CD, and second profit at 78.6CD, my RR is always fixed to about 1:1.5[/li][li]I place two TP levels, one on 38.2CD and other on 78.6CD[/li][li]When profits reach the 15 pips, I then move the SL to breakeven, and trail it 3 pips until the price is at 17 pip win, that way I lock 3 pips and get a free trade at the same time. After that I trail the price using various rules, moving the SL to previous swings, other fibo levels, and special rules like if the price is above the 2/3 distance to the TP, I start trailing it locking some more profit every minute or so. If the price shows to hesitate at some point, I then trail the price faster. If the momentum is getting lower, then I trail the price faster too. This way I lock profits fast, and fulfills the rule “never let a profit convert to a loss”.[/li][li]I check that D point be at least 100AB=CD(price), that is almost the same thing like you.[/li][li]I always check that there is an AB=CD on price and on time. If one of the two are not OK, then I place my entry in some other level.[/li][li]I’m strict with the levels on XAB and XAD points. If B point is on 33.1 instead of 38.2+/-5 % then I ignore it, the same to D point. They need to be pretty near to one of the base fibo levels. 23.6, 38.2, 50, 61.8, 78.6, 88.6, 100, 112.8, 123.6, 127.2, 138.2,150,161.8,178.6,200,238.2, 250, 261.8, 300, 361.8, 400, 423.6, 461.8 are the levels that I consider valid fibo levels for B and D points.[/li][li]B level never exceeds X, C level never exceeds A, and D level always exceeds B.[/li][li]I calculate the Gauss Bell for 100 past swings bull and bear, then I use the median value plus 61.8 standard deviation as the harmonic number of impulse moves on that pair and time frame. The XA leg must be at least 1 harmonic number, if possible a factor of that. Let say, EUR/USD at 30M has a 70 pip harmonic number for impulse moves. If you see an XA leg that is 89 pip length, then it is 127.1 of the 70 base harmonic, and it is a valid (for me) XA. But if the size of that is 61, that is 88.6 of the 70, and is below the base size, so it could be considered a correction instead of an impulse move, and I don’t consider that XA leg valid.[/li][li]I never let a trade to be active on weekend, never, and never. I have bad experience letting trades opened on weekends.[/li][li]Some of my rules are from the book that TMB recommended in this trade at the beginning :)[/li][/ol]
Personally, I would like to see Point A higher than Point C to call it a valid pattern. I would not put money on something that I have doubt. Pick another “Ace” pair to trade
I just finished this trade on NZDJPY. First part of the trade with 26 pips, the second with 3 pips, about 2.87 percent of the account. I’m really falling in love with harmonic trading. I’m also waiting for three more trades, one on the AUDUSD, other on AUDJPY and last on EURUSD.
Is only with drawing tools, draw triangles, trend lines and so.
Please read at least the first 10-20 pages of this thread. There you can find the basis of this method, and references and a book that the creator of this thread recommends, and I also recommend, is pretty good and a good reading. You should read twice or more times it, until you are sure you understood it.
Did you saw my chart on AJ? I’m looking for a long entry, and the last move on the pair is a big red bar, without reaching your D for the head-shoulders pattern.
I’m waiting for this, but with your head-shoulders pattern I’m with some doubts about this, and with the strong down move, I have some more doubts, but the past patterns I discovered and trades followed the same “rules”, and I’m sticking with my trade setup, but your opinion on why yes or why not to trade that pattern could change my mind heheheh
Looking with my wife the chart (she is not a trader, but I explained her what to look and what reasons could invalidate my thoughts about this trade) at the chart, we found that AJ is in a strong uptrend, and that the impulse moves are about 240 pips and corrections about 170 pips, or about 70.7 percent, and the trade I’m looking has the D point at the 70.7XAD. Also I traced fibos on two previous big swings, and found confluences of the 0 level of the first and 38.2 of the second almost on the same place.
The pattern for AJ has been invalidated, mediasoft. I have cancelled the order. RBA about to announce decision on interest rate. Economists predict an interest rate hold, causing the Aussie to dive down.
Well, the trade on AJ was partially successful. It entered at the price, the price moved about 16 pips. Move the stop to BE when the price reached 15pips, and locked 1 pip of profit when reached 16 pips. After that, the price returned to BE and stopped me out with only 1 pip profit. Not to bad, because it was not a loss, but also not to good because the profit was very limited.
One way to prevent this type of very low profit trades is a feature I was thinking. I’m still waiting for some time to evaluate the stats, but the idea is this, is obvious and is also written on the book “trade what you see” of pesavento.
Using round numbers, based on 50, 100, 1000. A lot of times they have some type of reaction. I’m going to measure the reaction. Measuring some reactions on the AJ I found that price reacts about 11-17 pips when it touches a round number. In this case the reaction was about 16 pips. I move to BE by default when the trade is 15 pips in profit, but this stat on AJ tells me that I should move to BE when price is only 11 pips in profit and continue locking profit until 17 pips. If price is going to retrace, then I may be stopped out with 6 pip profit, but if the price is going to continue to a higher level, then I can let it run for a while.
If price is not going to have a reaction on the round number, then that level is going to be broken fast and furious hehehe.
This is just an idea to try to extract more juice to the market for every trade, but what I know that is a fact is that price has some type of reaction on round numbers more than half of the time.
Damn! I checked again the AJ, and a little time after I got stopped out with just 1 pip, the price rallied to the 38.2CD with more than 30 pips!!! hahahahaha, well, the good thing is that I was able to predict the point of retracement very well. It formed a candlestick pattern just on the point of my D, it was something like spinner or doji. Well, good learning today!
Keep it up guys
