Harmonic Trading...

[Mike]

HARMONIC TRADING MADE SIMPLER: Download Here

I found a very informative website on the subject, a trader who tests this extensively and with multiple feeds whereas many of us are limited to a feed or two.

Harmonic patterns are similar - but not the same

Mass human behaviour/psychology produces similar, but not exactly the same, recurring patterns in the currency price charts. Price patterns are not geometrically perfect - they are fractal, chaotic (as in Chaos Theory) and imperfect.

So, every Bat, Butterfly, Crab and Gartley pattern will be slightly different from every other Bat, Butterfly, Crab and Gartley pattern, in some way, even by a pip or two.

All harmonic pattern recognition software struggles with that because of its digital nature.

And it really doesn't matter which software we're talking about - zup, autochartist, elementaltrader, korharmonics, search_patterns - whatever. They all have the same limitations.

Pattern recognition software has logic rules encoded with in-built tolerances for the Fibonacci ratios of the harmonic patterns. It only needs a few pips variation to make the difference between the software recognizing a pattern - or not.

http://www.trade-forex-harmonic-patt...cognition.html

Unrecognized patterns - it's a problem

Unrecognised patterns and poor quality patterns are a problem - they reduce consistency and probabilities.

What is the solution?

Although I use zup and search_patternsv6 on my charts (default setting on both) - I don't rely on them totally, because of the issues mentioned above. (You can download both from this link).

The reason is that fxgroundworks (see right side-bar) have already solved much of the above problems for me.

They take 5 different data feeds, for about 27 markets, including gold and silver, across 8 timeframes (Monthly through to 5 Min), to produce aggregated alerts.

They only publish a pattern alert if 3 or more data feeds produce the same pattern - indicating the similar behaviour of more traders - and that increases the chances of a valid pattern.

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

[Mike]

Great trade that just happened after a bullish Gartley appeared using the ZUP method. Entry occurred near 1.4411 and I'm still in the trade, quite a few pips from a pair I thought already made its big move.



Comparing it to TopGun charts, you wouldn't find the same entry but you see price float all morning down to the Midpoint line of the containment bands and tap it; this in itself is an entry trigger except for price appearing to be weak. Going one step further from using top gun, applying Harmonics augments my strategy so well that, well, like I said pictures speak a thousand words.




Good luck everyone.

[Mike]

Today was another very interesting day for the Harmonic method.




Sticking with EURUSD and EURJPY which made similar moves toward resistance levels at the same time (9AM), we see that on the EURUSD 15m a bullish bat form, within 2 bars the target is hit and does not even retrace until a few hours later, even then not significantly. For Sniper I always tend to flip through time frames settling on 15minute charts primariy but I do mind all time frames down to 5minute charts. Today the only pattern to appear for EURUSD on the FXDD feed was this bullish bat on the 15minute which simply got me into the best trade all week.



TopGun also catches these moves and heavily reinforces the idea that you could make pips buy going long right here, right now and there are certain indicators that are very difficult to NOT have in my toolchest to maximize profits (not just get into a good trade, but have a complete plan of trade management from entry to exit, then factor in entering multiple trades at once). So I will continue to use both programs, my old method and harmonics together to find trades, find exits, but many times TopGun's strength/weakness indicators may keep me out of a trade that the harmonic method suggests I should enter. So I'm really starting to give precedence to the harmonic patterns over all other indicators or movements of price action, yet you still need something like TopGun with the always reliable "containment bands" to alert us to where price will likely stall statistically speaking; I have yet to find an indicator that comes near the accuracy the containment bands have.




In fact you see on the EURJPY that the huge move upward today was set off by price touching the lower containment band, the statistical area where price is likely to stall or reverse; today it was a rapid reversal based on negative economic news out of the US at the time, but technical indicators were really on point today.



Not only that, even though a bullish formation appeared on EURUSD, NONE appeared on EURJPY, even though a great move occurred, so following harmonics only got me into a great trade on EURUSD but nothing on the EURJPY.

[DickP]

Ok, there was a guy who was posting on the forum for a few days. He was really getting at TRO and for the most part, I agreed with everything he was saying. He knew a lot about trading but he never told us too much about how he traded. [/URL]

....Because he's too busy rallying for gay rights or better yet, Obama's re-election campaign. I've never heard anyone pick **** out of the air so much to defend a man he doesn't even know with such fervor. Makes you wonder what a successful trader is doing defending a man that is trying to increase the taxes on him, someone who already lives in the most heavily taxed state in the nation. I just call him HoaxAmerican, because whoopie, he read a book about harmonics and made 2 posts about it... 30 other posts about how I was an idiot for getting a date wrong as he spews how great our country is doing now that Obama is in charge.

3 words for HoaxAmerican:
"QUANTITATVE EASING 3" --- BEEYTICH!
Enjoy the breadline there in Cali bro, and think of me when your on it



Sniper's the man, good thread. I'm just on a rant about this other guy, don't mind me.


Woke up...wrong side of the bed...

[assitaste]

I like!

[TopTrader]

....Because he's too busy rallying for gay rights or better yet, Obama's re-election campaign.

Hahaha, sounds like a real mans man.

[Mike]

Sniper's the man, good thread. I'm just on a rant about this other guy, don't mind me.


Woke up...wrong side of the bed...

On that note, let's move on.



I have now dedicated another screen to showing 8-10 tinier charts of my favorite pairs on 4 HOUR time frames.

And the result is amazing, but I will concede dedicated an entire monitor to ONE PAIR and 3 different time frames, these formations do sometimes appear no matter what the time frame is, in fact, reading through Carney it states as much, and thinking about it logically the same move is occuring, 30min, 1hour, 4hour, and can create the same Gartley Bat or Crab, but who can legitmately follow 8 different screens of Harmonic charts and trade one thing at a time, the answer is, to each his own (again) whatever works for you works, whatever does not work, won't and you will find that out quickly.



Taking this chart into account, we see Harmonics do VERY well for us on all of these charts, and when I say "well" I mean in two cases it works and nets you hundreds of pips, and in the cases it doesn't work as well, we enter but can easily break even and exit as we begin to see price move back toward entry. In all, what does following this method lose you here? Nothing.


TRADING IS AS MUCH ABOUT PROTECTING YOUR CAPITAL AS IT IS ABOUT MAKING THAT CAPITAL GROW. THIS HARMONIC APPROACH IS GREAT FOR BOTH, (FOR ME AT LEAST, ANYONE ELSE)?

[Duffy]

this is pure greatness, show me how to use these to trade forex best

[skynet]

THANK YOU ALL!!!!

[Mike]

My question is who does not use Harmonics at this point in the game?