I see, I have some resources that have those answers. I am short on time atm, but I will find that info and post it for you. I understand your question now though.
Funny… Since I have been here I have associated myself with Tro, MP, and a few other mad forex scientists out there. The whole time my focus was so much on the strategy and method used to trade. So focused on entering and exiting perfectly. Over the last year and a half… the one reality has been that these are just tools. I have had 3 losing trades in a row… then 1 winner that pulled me into positive. I have also had 3 winners in a row and 1 loser that pulled me negative. I have learned a lot and hope to learn a lot more. In the end I realize the method is only a small part of the picture. How easy we forget ya?
This worked a very well with B retrace greater than .764 of XA.
Personally I prefer trading butterfly’s to gartleys, particularly if the gartley D is .886 retrace of XA, as I hate getting set and putting my stop in the predictable place above/below the recent high/low.
I am far more comfortable taking butterflies where a load of stops have already been taken out.
Wrtm I knew you’d see it …and perhaps you others do to and it’s just me that finally sees it…lol.
So if you’re trading a bearish butterfly in an uptrend, then you are shorting into the correction of the trend, so you might not get as many pips as it might look like…why?..because apparently the trend may continue back up again. It may not, but a high probability is that the trend will continue.
On the other hand, trading the bullish gartley in an uptrend, you are trading back into the trend, and could expect quite a few more pips… if the trend continues. Apparently it takes quite a bit of effort to change a trend.
Of course the reverse is true in a downtrend…a bullish butterfly is trading into the correction of the downtrend, and a bearish gartley is trading into the down trend.
for this reason i find bearish butterflies in uptrends useful profit targets for longs taken on bullish gartleys. this is obviously and aggressive target, but may be appropriate if you have scaled out of the majority of the long position and only have a small residual on.
Let’s see how this works out…bullish gartley eurjpy on the M30.
There were 2 possible D’s…the first one, labeled “1st”, is where AB=CD in price symmetry…but has cut thru it, although hasn’t closed yet. The “2nd” one is the next possible D.
This time I added the 3rd fib set measuring AB…it isn’t part of the 1st D which may cause it to failed, but it is part of the 2nd D. Still, a long order at that 1st D would have reached 35 pips before heading back down again
Due to the possible greater upside potential, I’m going to wait for some confirmation of an upward movement before entering long.
I have D at 133.30. Although I also have a weak convergence at 133.70ish, I prefer 133.30 as this D is a .618 retracement of XA, which I believe makes for a more valid butterfly. The additional time taken to reach this lower D may also improve the time symmetry of the pattern.
Once again, apologies for the small chart, hope you can make it out.
Please let me know if you can see where I am going wrong.
sorry, of course this is a gartley not a butterfly, but in your experience are D’s at .618 retracement of XA stronger than those with shallower retracements?
I don’t really know…lol. Shallow retracements are thought to mean a stronger trend…but…
According to RC Miner…who wrote a book on trading high probability strategies that I’m reading right now…the 50 & 61.8% are both significant levels for retracements to end at. 38% is usually not an end of a correction level, just a minor support or resistance area.
This of course depends on where you draw X from, so if one draws the AB from C fib first, then draws XA 2nd, then you could manipulate where you put X to find a closer match…lol.
Looking at my 1st D, it does not fall on a key internal retracement level…it falls between 38.2 & 50%…even if I move X point around, I can’t really get it to fall on 50 or 61.8. However, A does have a larger than normal high spike, so if I bring A down, I can get it to match with 38.2…not really liking it anymore. My 2nd D does fall on the 50%.
Now TMoneyBags seems to have researched various pairs and has documented which levels are more common for each pair, so I’d have to go back thru the thread and find what he said about ej…
The 3rd D where you have yours, has about a 10 pip range between the 2 fibs…so not as desirable either. Eventually we will find out…
Speaking of eventually time-wise, I have plotted the time retracement, and it’s almost at the 38% point of the time range of the XA leg…corrections usually end between 38 & 61% on the vertical axis… and that is this new hour bar…hmmmm…
Hi LUD, yes those are correct. Here’s a quote in part from TMoneyBags post where he explains his 3 fib sets…
Miner uses a fib from B to C and uses it’s key EXTernal levels to[B] confirm[/B] the D projections from the other 2 fibs…3 converging lines are stronger than 2 supposedly…lol
TMB uses it for C as per his reasons above, but I don’t understand his explanation of how it relates to D when it doesn’t project anything to D, and the AB=CD relationship is established with the APP fibs……maybe he’ll drop in again someday and clarify that.
Ok, so accordingly, ej normally respects the 50%, but with the upcoming euro news release which is now in about 45 mins, I have a feeling the market is ,what I’ve just come to hear about, “discounting”…which means the eur news forecast is good, so the big players are pushing prices down so that when the good news comes out, they will start buying at a low price…at least I think that’s what it means :o. This seems to happen at least 3 hours ahead of news releases I’ve been noticing.
I threw a stochastic indicator on and now seeing a bullish divergence…another sign it may start going up now?.. but again referring to TMB’s quote, if it failed at 50%, it’ll turn into a butterfly and head down to 127-161%?
My 50% 2nd D trade did trigger, but I had a 10 pip stop, so no big loss. It’s too late now for me to stay up and find out how it reacts to the news, so I’m just going to stay out…
I have a rule that I’m still testing but that has been working well so far keeping me out of failed trades.
In this case price went down 4 pips above our D point, and retraced to our 23,6% fib. When price behaves that way I assume the pattern already made and early retrace, so if price goes back down to D, pattern already lose validity.
It’s just my personal observation wich worked this time, and price did the same on cad yen and eur/gbp. What you think guys? :rolleyes:
I think I’m struggling with the seemingly less stringent requirements for gartleys presented in this thread compared with other literature I’m reading on the matter. Is it that the fib convergence negates some of the criteria presented elsewhere?
I’m not saying anyone is right or wrong, simply trying to understand as a newcomer to the field. Thanks so much for your valuable insights. I have only just scratched the surface on these patterns, and I think the only way to answer my questions will come through further study and experience.
As for the ej pattern, I’m not sure how you got a 10 pip diff at my D convergence, and it did seem to pull up just shy of that level (an my limit order to enter lol). I am using the “ask” to calculate longs, is this correct?
Looking at your chart Modo, I do see that yours doesn’t have the 10 diff that mine does…probably due to the different brokers with slightly different feeds that cause some candles to form differently.
Yes the fib requirements are less stringent here than what is documented elsewhere. I have a printout that includes the bat and crab too, but I’ve stopped trying to match the fib levels to all 4 patterns cause sometimes they materialize and fail, and sometimes they work even with a different combo of key levels. Most don’t use the 14.4 & 88.6 levels either.
Sometime I wonder if it’s different because the original criteria was developed on the stock market and so in translation to forex it altered somewhat.
Whatever the reason, I just keep in mind a concept that Miner put in his book…
[I][B]Most highs & lows are made in proportion to one or more previous sections of the trend or countertrend.[/B][/I]
Well… this week has been slow for me. To be honest I have been sort of lazy. I have only made 3 trades and am at about a 2% overall loss on total capital. I think my confidence has been shaken a bit by the markets, but I also just haven’t caught too many valid patterns.
Here is one that I am tracking:
It is getting closer to D point so thought it was time to put it out there.
B is 50% of XA
C is slightly less than 38.2% of AB
100% AB (D) would fall slightly more than 78.6 of X
The Expansion of AB (Green Fib) has a 161.8% ratio fall in this area as well.
Nice Round number area of 91.00 that has acted as resistance in the past.
Stoc and RSI would support this trade
Entry: 90.96 - I am entering here since this is a strong resistance area. This doesn’t mean that price still will not come up the other 9 pips to hit the 100% of AB.
Stop: 91.35 - Recent Extreme High - 40 pips from my entry.
Money Management - Risking 2% of total account on a trade that at this time offers no less than a 1:1 RR based on my TP objectives.
TP Objectives: Once the 23.6% fib is reached all stops will be moved to BE. The 38.2 (40 pips) will be TP1 with 50% of the open position closed. The 61.8 will serve as TP2. Based on market movements stops might be moved up to 23.6% once 50% fib is hit.
Notes: I wish the R:R on this trade was a little better. nonetheless, the pattern looks good and utilizing proper money management will control the overall risk. I also like that this pattern could continue the overall trend that I view on the H4. The 127% expansion (green) is exactly on the 61.8% XA. Could serve as a bounce. Plan the Trade. Trade the Plan.
…maybe he’ll drop in again someday and clarify that.