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Harmonic Currency Pair Cross Index
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Harmonic Currency Pair Cross Index

  #11 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
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feelnot View Post
Hello JetTrader

I need to leave my home office, but I'll be back to reply to your post when I return. Thanks.

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  #12 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

feelnot View Post
Hello JetTrader

Would it be a good idea to trade non-standard time frames or a few pairs together to ridden some of that competition while I trade very standard lagging indicators?

I don't use standard technical indicators of any kind, other than an EMA8 over an EMA21 and the only reason I use those combined EMA ratios is for a visual reference in my test trading of my new Harmonic set-ups on the M1 time-frame - mostly for testing and data gathering purposes. I'm basically a Delta Trader, as outline in brief above. It is a different way to trade the markets and certain it won't float everyone's boat - mostly because of the enormous research involved in building good Trajectory Frameworks. I have also noticed over the years, that some people have a little difficulty at times, grasping the Delta concept, or in how to apply it to actual trading. I've discussed the fundamentals online for a few years, some time ago. I don't in-depth or detailed discussions of that kind anymore, but I still tend to spend some time discussing the matter on a conceptual basis - when I have the time to do so.

As far as multiple pairs simultaneously is concerned, I do have a Non-Directional pair strategy that is not predicated on my trading system, but it does use one of the systems older principles that I created many years ago. The principle is simple:

1) All positions are entered at the end of the trading session and just before the start of the new session. I typically use the D1 bar, but this can be done with H1 and H4 for quasi-day traders. Or, you can use W1 and MN1 for longer term "swing to position" type traders.

2) Long if: current session Close is < current session Open. Short if: current session Close is > current session Open.

3) Use either a small basket of currency pairs with correlation coefficients as close to zero as you can find, or use a larger basket of currency pairs with as close to symmetric weighting as you can find and as much global representation as possible.

4) No Stop Orders are used and No Limit Orders are used.

Now, before any of this can be done correctly, one has to know the Magnitude of each pair, in order to make sure that the pair qualifies for entry into the basket. One also has to weight the impact of high spread currency pairs on the overall performance of the basket as well - especially when attempting this strategy in the lower time-frames. Some currency pairs have inherent low Magnitude, which basically means that their ATR will be low (although I use a bit more complex formula for determining my definition of Magnitude). Basically, you need movers and shakers in the basket, so you'll need a way to determine whether or not each pair has good movement within the time-frame that you have selected.

Your Stop and Limits are manual. So, if you are doing this on the small time-frames, then you need to manage each position in real-time. If you are using the larger bars like the D1, then I basically enter my positions before the end of the current session and then check them in the morning to determine which positions I will close and which positions I will allow to run. Essentially, I am the Stop and I am the Limit.

Essentially, I'm looking for an aggregate net gain for the entire basket, over the course of the time-frame used. So, I want to see a baseline ROI on my cost basis used for that particular basket - then I make the decision to shut down the basket.

feelnot View Post
Because (off topic!) I am checking out DMI-/DMI+ or ADX going by an older post of yours saying that you could trade with just that.

You'll have to show me that post, given I don't use conventional TA, other than what I listed above as a test measure, or unless I take something and modify it well beyond its normal parameters with something that I created.

feelnot View Post
Before I had just developed a great parabolic mechanical system but then I noticed the Parabolic SAR re positioned its dots like crazy.

Incorrect usage of Magnitude (what's the probability for movement in both directions for this bar) is what typically kills PSAR, unless one uses it as a very simplistic way to trail a stop. Use the wrong time-frame and you also increase the risk, which could have a negative impact on your RR, depending on what you are trying to accomplish. Reducing the PSAR values, speeds up its responsiveness and makes the ride more choppy and all PSAR configurations typically get whipsawed to death in horizontal markets. So, it is clear that one will have to either modify PSAR with something that makes it dynamic, or suffer the consequences of whipsaw when deciding to use it.

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  #13 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

feelnot View Post
Putting a high period ADX on the chart for direction and then me pin pointing entries myself. I think will make me much more comfortable trading in general. When a high period ADX is on, even though it lags. It seems to find the powerhouse direction so it's much more likely that any sudden spikes go in your direction. I don't like the default period because it whipsaws a lot so crossings can not be used. But waiting for a more clear + over - and it becomes irrelevant because the direction has reversed on you.

feelnot View Post
My point is I don't want to go trade harmonic patterns or some advanced stuff before I'm comfortable trading a very nooby way yet still able to make a profit.

Newbie ways of trading are not the optimal ways of trading. I would not call Harmonic Patterns very advanced and certainly the Newbie can understand them and trade them after spending the requisite amount of time studying them. In fact, they are easier for the Newbie, because you really are not that much concerned with tracking a trend -and- you can have equally as many good trades against the trend, as you can trading with the trend when using Harmonics.

I would most certainly classify Elliot Waves, has being more "advanced" than Harmonic Patterns. I would not tell a Newbie (unless they already had a technical background) to go out and start learning about Elliot Wave Theory, and be ready to implement a trading plan within a week. However, in less time, you can learn Harmonics and be trading with it to some degree of success. Once you get used to seeing them, Harmonic patterns are easily spotted on almost any chart. It is like anything else - the more you expose your brain to it, the easier it becomes to recognize it.

On the other side of your statement, you should know that the newbie can take a simple EMA Cross Over method and make it work, using the right MM strategy. However, it won't (can't) be optimized to remove the high percentage of failed trades that must occur with such methodologies, unless you add other filters to the strategy. Newbies, do have choices, but getting them to see those choices is another matter altogether.

Anybody that has spent enough time on the M1 (or M5) chart, should know how to pay the bills trading the right currency pair at the right time. Unfortunately, just like my signature says, it takes people a really long time to figuring this out, such that they finally realize that the most basic of trading methods can and do work, if applied correctly and if decent MM is used. But, that's just a basic, pay the bills existence. I'm not talking about building real wealth using an EMA Cross Over. I don't want to be misquoted, here. I'm talking about a Newbie, building up some initial confidence that he or she can make it in this business by doing something simple enough that a 12 year old should be able to do with relative ease. Just don't expect to "drain the banks" doing it!

What I'm attempting to do, is formulate the basis for a pure Harmonic trading system that is different from the standard Harmonic patterns or systems out there. I use two (2) different types of Harmonic Patterns (conventional and my own creation) and I am trying to understand whether or not there is a causal link. I already know that some kind of link exists between the two. What I need to find is the causality for the link between the two patterns and that takes a lot of research.

I'll post some pics to help illustrate.

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  #14 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
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This is a basic M1 chart showing the last three (3) hours of trading on 17 June 11. The vertical lines (yellow and blue) denote 1 hr each:

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Ignore the digital panel below the chart and take note of the last 3 hours. The first yellow vertical line is 1700 GMT, the blue vertical line in the middle is 1800 GMT and the last vertical yellow line on the right side is 1900 GMT.

Now, just looking at this bare bones M1 chart, the Newbie should be able to clearly see at least one profitable Harmonic pattern to trade. If not, visit this sight HarmonicTrader.com - Harmonic Price Patterns and read the short summaries on "Patterns." Don't buy anything - just read the summary definitions on what makes a pattern "harmonic" and take mental snapshots on the primary difference between a Bullish and Bearish Harmonic Pattern. Essentially, if the direction of the XA leg is down, then the Harmonic trade will be Short. If the direction of the XA leg is up, then the Harmonic trade will be Long. This applies to the majority of the Harmonic patterns.

If you still can't identify at least one Harmonic on the above M1 chart, then follow this link YouTube - &#x202a;Fibonacci: 4/9: Larry Pesavento: 8/7/10&#x202c;&rlm; and watch videos 4 through 9. I've linked you to video 4 of 9, but you can watch the entire series if you want. I am personally not into the Astrology Trading part of Larry's presentation, but videos 4 through 9 should sharpen your eye for the most basic of Harmonic Patterns. Larry, also likes the Astro Trading approach, but that's not my cup of tea. This should be enough to at least get your eye to recognize at least one (1) Harmonic pattern that can be successfully traded on the M1 chart above.

This second pic below shows a basic Bearish Crab Pattern in the exact same M1 chart. After a while, your eye will be able to see this without any indicator plotting on screen for you. Even though you won't know the exact ratios without calculating them, your eye should be trained to see this:

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Here is another pic. This time I have removed the Standard Harmonic Crab Pattern and I have drawn my own Harmonic pattern that I call the TCD Falcon. What's different about my Falcon, as opposed to the Crab? Standard Harmonic Patterns are dynamic relative to Time and my TCD Patterns are static relative to Time. A Standard Harmonic Pattern can develop at anytime, while a TCD Pattern develops only across a specific time interval. In this case, I just randomly selected the last three (3) hours of last Friday's trading session (1700, 1800 and 1900 GMT). I could have selected any three (3) consecutive time periods on any chart.

The TCD Falcon Pattern needs three consecutive bars of data in order to plot it on screen. The first two hours is for the pattern itself and the third hour is for the trade entry. The reason I call it the TCD pattern is because it uses one of the first Delta concepts that I developed in my trading system several years ago (mentioned above in my reply to Fat Tails). It is called the Transequential Contiguous Delta (TCD) and it is simply the Trajectory Sequence of:

High [0] - Low [1] = Long TCD
High [1] - Low [0] = Short TCD

Those two Trajectories will intersect each other when plotted on a chart, approximately 97% of the time. The only time they do not intersect when drawn on the chart, is when the market is in an extremely Bullish or an extremely Bearish condition. These are the baseline TCDs upon which many other TCD concepts are built inside my system.

There are two (2) types of TCD Falcon Patterns:


For now, the Conforming Falcon is the one I'm most interested in learning more about. However, I hope that now that my attention has been shifted to the Standard Harmonics, that the Non-Conforming Falcon causal link to the Standard Harmonic Pattern, will become clearer with more study. For now, just know that there are only two (2) Falcon conditions.

The Conforming Falcon is known because both Trajectories will terminate their respective Lows, inside the wingtips of the Falcon relative to the Time scale. So, when Low [1] and Low [0] price points occur between both wingtips in Time, then the TCD Falcon Pattern is said to be Conforming. When the one of the Lows moves outside the wingtips relative to Time, then the TCD Falcon Pattern is said to be Non-Conforming. I'm only interested in Conforming Falcons for now.

The current trade-set up logic is fairly simple for the TCD Falcon. The basic entry principle is to always enter the trade that takes price back towards the Falcon's Tails. So, if the Falcon is Conforming and it displays its wings above its tail, then the trade entry is Short at the start of the third bar. If the Falcon is Conforming and it displays its wings below its tail, then the trade entry is Long at the start of the third bar. It takes two (2) bars to display the Falcon, and the trade is entered on the start of the new bar. Remember, you are looking at a 1 Hour TCD Falcon Pattern, because I've selected 1 hour as the delimiter. I could have selected any TCD Falcon Pattern Time Delimiter, as long as the first two (2) bars that contain the Falcon are equal in Time.

This pic shows a Conforming Falcon on the same M1 chart as above, with its wings spread across the hours of 1700 to 1800 GMT. It is Conforming, because its tails are inside the wingtips relative to the Time scale across the first two time delimiter bars that contain the entire TCD Falcon Pattern:

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As you can see, this is not very technical at all and any Newbie can learn this with some study. Now, the next pic is where things start to get a bit interesting - especially for me as a systems developer.

This pic below ties both the Standard Harmonic Crab together with my TCD Falcon. Note that both patterns turned out to be Bullish at the same time. I find that very interesting, indeed. One of the differences between both patterns is the entry protocol. Because the Standard Harmonic Pattern is dynamic relative to Time, its entry trigger won't always match the entry trigger of the TCD Falcon Pattern, as the Falcon's entry is always fixed at the start of bar [0] of the Time Delimiter used. Recall, that I took an M1 chart, but I used two (2) 1 hour time delimiters for the Falcon pattern with leaves the last hourly time delimiter for the entry at the start of its new bar:

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If you notice carefully, you will see a shallow Bearish Gartley emerging directly in between the "Crab Entry Short" and the "Falcon Entry Short" points. My dear friend, I am convinced that this is all the market does all day long and that all we really need to do as Traders is to make sure that we are observing the correct time-frames when (not if) these kinds of patterns emerge. By adding my TCD Falcon, I get confirmation of the Standard Harmonic.

Now, here are a few additional note that you might find interesting. I cannot go very far with the following in public, but I'll cover the highlights.

In that last pic, you also see that I'm using two (2) basic ZigZigs in MT4 that do not repaint - each set using different parameters to make one faster and the other slower, essentially. I use the ZigZags to help me hunt for internal Harmonic Patterns riding inside the primary Harmonic Pattern that I intend to trade. The same can be done with the TCD Falcon Pattern, by simply using Internal Time Delimiters that ride inside the primary Time Delimiters used to detect the Falcon's existence.

If you think about using Internal Patterns (for the Standard Harmonics) and Internal Time Delimiters (for the TCD Falcon) will start to make sense after a while. That is where the synergy will be found and that's where I believe the predictive nature of all this will become readily apparent - but it will take more study and more research.

Also, in the last pic, you can see the Standard Harmonic Crab emerge between 1700 - 1800 GMT. (vertical yellow line on left. vertical blue line in the middle.) From that pattern, you can see its XA, AB, BC and CD legs and the corresponding B, C and D points. I do not have the ratio values themselves plotted, because at this point, I'm really not interested in that right now - though I will be later. For now, my eye tells me that the initial "B" point, qualifies this pattern as having initial Harmonic features and that's pretty much what I care about at this point. From there, it is a simple matter of determining whether or not the TCD Falcon Pattern is either Conforming or Non-Conforming.

I'm studying this to find out if there is enough consistency in the price behavior after these patterns form and whether or not that behavior contains enough Magnitude on a basis significant enough to net pips in accordance with my revenue goals on a per trade basis.

I hope I got to most of your questions.

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  #15 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

And, here is another with very powerful synergy and it comes directly on the heels of the last combination of patterns. In fact, the termination of the last Crab/Falcon sequence of patterns, resulted in the revelation of two more Bullish patterns. So, previously, you were trading the market Short with two Bearish patterns and now, in a dime, you get two additional Bullish patterns.

The pattern in blue appears on the surface to be a Standard Harmonic Pattern to the naked eye, while the other (in white) is noted as the fixed TCD Falcon Pattern. Remember that Standard Harmonic patterns are dynamic and emerge relative to Time, but TCD Falcon patterns are static (fixed) relative to Time. As you look even closer, you see that something is not quite right with the Standard Harmonic Pattern.

In the pic below, you see convergence in the two patterns to an almost perfect match. The TCD Falcon Intersection between the Long TCD and the Short TCD, cross very near the Standard Harmonic Pattern's "B" point. That's very strong pattern synergy and that's a good thing.

However, there is divergence or disagreement in the Timing of the Entry between the two patterns. Remember, you enter on a Standard Harmonic at point "D" and you enter on a TCD Falcon at the start of the next bar depending on which Timing Delimiter you used to locate the pattern. Note the addition of another blue vertical line. I put that on the chart to show the start of the next hour, which was 2200 hrs GMT on 19 June 11, because if you recall, the week ended on Friday in the charts posted above. So, for the TCD Falcon Pattern, the next available entry would be after the move was over at 2200 hrs GMT on 19 June 11, where the second vertical blue bar is located. Well, that seems to present a problem.

In addition, for the strict Standard Harmonic Pattern Trader, there is another apparent problem here. The legs don't match either the Gartley, Butterfly, Crab or the Bat, if you follow Scott Carney's theoretical set-ups.

So, while it might look "Standard," it is really not and here is why.

For the Bat, point "B" has to be less than .618 of the XA leg. If you follow the strict Gartley theories, then point "B" is perfect at .618 of the XA leg, but point "D" has to be .786 of the XA leg. If you switch back to Scott Carney, and attempt to turn it into a Crab, the once again, point "D" is wrong because it would need to be 1.618 of the XA leg. And, if you attempt to switch over to Bryce Gilmore, and turn it into a Butterfly, then point "B" is perfect at .618 of the XA leg, but point "D" is wrong again as it needs to extend all the way to between 1.27 to 1.618 of the XA leg.

So, what does the Harmonic Trader do at this point? This is where having a good understanding of one of the most powerful principles in trading comes in handy. Once again, Magnitude can save the day in this situation. But, how?

Take a look at this chart:
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The first thing that jumps out at my eye, even without my indicators, is the Magnitude of the downward move in price in the last hour, outlined by the last vertical yellow line and the last vertical blue line. The Time between both of those lines is precisely 1 Hour. Why? Because I'm using that Time Delimiter to for my TCD Falcon Pattern. Recall, that I can use any Time Delimiter I want, but once I pick one, the TCD Falcon Pattern is fixed within that specific time-frame. So, I'm using an M1 chart, but I'm looking for 1 Hour Falcons and as many Standard Harmonics as I can find at the same time.

Now, not the downward move in the hour leading up to the what should be the Falcon Long entry level at the start of the next hourly bar. Now, look at point "D" of what appears to be the Standard Harmonic Pattern. At point "D" the market already launches Long and remains Long right up to the Close of Friday, which is the Entry point for the Long Falcon. So, the move for the Falcon, is already over and I missed it, right? Not really. Here's why.

If I understand a currency pair's Magnitude (the high probability for going up or down in any time-frame) and I know how to properly measure it, then I can have a very good idea about whether or not that downward move is over. When I compare both the Magnitude for the pair and the 127.0 extension of the "D" point for what appears to be the Standard Harmonic Pattern, I can increase my confidence that the downward move is over for that particular time-frame. It is very important to remember that ALL Magnitude definitions are time-frame specific. It is about the historical and empirical evidence for Magnitude within a specific time-frame and for a specific currency pair.

So, observing these two things, I can feel confident in placing my entry at or near the 127.0 extension of point "D," knowing that for any Conforming TCD Falcon Pattern with its wings pointed upwards, my entry will always be Long and that for any Standard Bullish Harmonic Pattern, my entry will also be Long. What confirms this? The rock solid bottom spike laid on the market specifically at 127.0 of the XA leg, which is Point "D" of the Standard Harmonic.

So, even though the Standard Harmonic turned out not be perfectly aligned with all the ratios that you hear people talking about in various places, I have another weapon in the Conforming TCD Falcon Pattern, and hourly Magnitude, to help me make a wise entry decision. The move up was roughly 36.5 pips in height, so there was plenty enough room to make such a trade while risking no more than 10 pips or so - something above the 161.8 extension level.

So, here is an example of where you have something that is Harmonic-like (depending on who you read and which version of the truth about ratios you follow) being backed-up by a completely different kind of pattern altogether, that just happened to once again, coincide with the Standard Harmonic(like) Pattern.

I think this is a good example of the kind of synergy that I was talking about earlier. On that same exact chart, in the last hour delimited by the last vertical yellow and blue lines, another Standard Harmonic Pattern emerges (a Bearish Bat) with its point "D" landing just minutes before the close of that same day (Friday). That Bat had an MFE of 41.4 pips (Short) before the next TCD Short Trajectory that extended into 22 June 11, terminating at its Low of $1.42653. So, these patterns are all around us in FX. They are literally all over the place. Find the right one's and learn how to use them to your trading advantage.

There is another strategy that I'm currently developing for trading Standard Harmonics, that is not in the public domain as far as I know (I have not seen anyone talking about it) and any Newbie, if they really began to study Harmonic Patterns, could discover some really interesting ways to create their own hybrid way of using Harmonics on their own. But, it will take some creative outside the boxing thinking.

I hope this helps a bit, feelnot.

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  #16 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

A quick pic recap on what a Trajectory is and what it looks like on a chart, using specifically the TCD Trajectory. The rest is a mathematical aggregation of historical TCDs and their behavior over time. That's pretty much all there is to the basic Transequential Contigous Delta (TCD). I have many other TCD and Non-Contiguous Transequential Delta indicators in use in my trading system. However, this is the basic idea behind Delta Trading.

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  #17 (permalink)
Market Wizard
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Pattern Failures and Volatility

The two charts below show that pattern need to be seen in their context.

$EURUSD had already reached its daily range target prior to the US session. The US session was extremely narrow range and stayed within the noise bands. This is a favourable setting for countertrades, and all harmonic setups are by definition countertrade setups.

Nevertheless, the crab pattern was preceded by a failed butterfly pattern. This is a bit the curse of pattern analysis:

A crab often is a failed butterfly, which itself could be a failed Gartley pattern. Only hindsight allows to qualify the pattern. There is a similarity with divergences. A triple divergence is a failed doulbe divergence.

Attached Thumbnails
Harmonic Currency Pair Cross Index-eurusd-1-min-17_06_2011.jpg   Harmonic Currency Pair Cross Index-eurusd-3-min-17_06_2011.jpg  
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  #18 (permalink)
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Big Mike's Avatar
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I've never heard of the crab pattern. lol, good stuff.

If the Dragon sees a Butterfly above it's Head and Shoulders, it might step on a Crab.


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  #19 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
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If the entire context of the market were truly shown, then by definition the entire historicity of price action from inception would need to be displayed on screen. That would mean showing a chart containing all price action to date. Of course, such a chart would have little meaning to an intra-day trader, because the intra-day trader needs to remain on the leading edge of the market, as opposed to its trailing edge.

The Daily Range is the market's Magnitude and most people use ATR to determine it. The problem with using ATR and Pivot Points (alone) to determine Magnitude, is that they have no facility for determining when the break-out of a range has the highest probability, or where that break-out will likely move the market beyond the previous session's Daily Range. There are a myriad of examples where the EURUSD reaches the Daily U.S. ATR prior to the start of the U.S. session and then either bored a hole through the bottom or top of that same range. This happens on a frequent basis. If one has placed an Entry Order Short at the top of that assumed range, then one gets stopped out rather abruptly - the same holds true for the bottom of said range when the hole being bored is to the downside.

Magnitude, common derived by ATR, is a non-directional indicator that gives "secondary" directional information by the rate of ATR exhaustion or the lack thereof. To say that the a pair has reached its "U.S. daily range," is to say that it has reached 100% of its normative Magnitude for the U.S. session. But, what happens when the Daily ATR reaches 100% prior to the start of the U.S. session with price near the Daily upper band, while the Weekly ATR is just rising above 30% and the Monthly ATR is just rising above 20%. How safe a bet is it to conclude that when price reaches the upper band for the next session, that a Short trade is the right position to establish.

Therefore, one dimensional Magnitude indicators have a hard time providing full context. Thus, a new kind of Magnitude indicator is needed. One that is designed to be a multi-dimensional probe on the markets true price action, taking inputs that go beyond the mere High [0] - Low [0]. That is, if the goal is to optimize the Magnitude indicator from the outset.

In my research, I have found that Harmonic trades can be made both with and against the trend. However, I always hesitate when using the word "trend." I use the term "trend" very loosely. In fact, I only use the term because that's the term that most traders are familiar with. My research tells me that trends don't really exist in the way that most people expect them to.

The classic definition used by many for the existence of a trend, is that Lower Lows coupled with Lower Highs, equal a Down Trend, with the inverse revealing the Up Trend. But, for the intra-day trader, the question is always: Which trend?

The problem with this and any definition of "trend" is that you can't know that a Lower Low was coupled with a Lower High, until both events have already occurred. So, by definition, the information one gets from the "trend" is always lagging. Second, we often times here of traders "Trading the Trend." Well, if you stop to think about it, it really is not possible to trade something that has not happened yet. So, physically, logically and mathematically, it is impossible to "trade a trend." The best we can do, is to Trade a Trend Projection. And, the only thing that we can actually observe is the Historical Trend Performance. Once the correct language is used, then the trader can see the need to begin some serious Historical Trend Analysis.

Observing historical trend performance leads to conducting historical trend analysis, so that one can trade a trend projection. However, once the trade is entered, the question then becomes: How do I know whether or not there will be Trend Continuation. How have I qualified and quantified that decision as a trader.

If the empirical evidence (research/testing/evaluation) shows that when I enter a position with the Historical Trend, under X conditions, N number of pips will result Y% of the time and I have derived a mathematical probability of Z% certainty; then I am no longer taking a shot in the dark about my entry based on the Historical Trend. However, if I am trading Historical Trends without that kind of mathematical understanding, then I'm more than likely guessing about my next move, predicated on what I believe might happen, not what I know is probabilistically determined has having empirical significance and/or definition.

The trend is your friend, right up to the point where it stops trending. Then it becomes the trend trader's worst nightmare as whiplash becomes the trend trader's reality.

The whole point of my current research into Harmonics, is to find the missing link between failed patterns and successful patterns. That's the only thing I am focused on right now. What was the TCD Falcon condition when the Standard Harmonic failed and is there a causal link between the two. That is where my research has taken me and that's the question that I hope to find an answer to eventually.

Right now, I am seeing lots of probable causes, but none that I can definitively conclude as being the absolute causal link. For example: My Nesting Falcon (Non-Conforming Falcon) tends to consistently coincide with the Standard AB=CD pattern and it routinely negates the reversal move that comes from the AB=CD pattern, which typically turns it into a Three-Drives pattern. I have several years of M1 data that demonstrates this coincidence, almost to the point where I am ready to stop calling it a "coincidence" in favor of calling it a Principle of the Market, at least on the M1 time-frame.

I've also carried a long standing philosophy of intentionally not doing with the crowd is doing. So, while most are attempting to trade the point "D," I'm focused on finding ways to enter at point "C" with lower risk, riding the CD leg to a defined point at "D" and then making the determination what to do with the net positive position from there. This would effectively negate most all of the failed Standard Harmonic Patterns after point "C." If the "C" to "D" trade fails, then "Trend Continuation" has a very high probability, if the Standard Harmonic Pattern is conforming. Therefore, a Stop with a Reversal Entry Order just above point "C" - has a higher probability for returning lost capital at a minimum.

All of this is predicated on the understanding of Trajectory, as opposed to reliance on Historical Trends. Trajectories, give me historical and empirical Magnitude, Timing and Direction, which means that I can then calculate historical and empirical Probability. I can do similar calculations with Historical Trend data, but the margin of error is far greater for any give trade entry and the density probability for a successful outcome to a specified target is significantly lower (depending on how big the target).

Last edited by JetTrader; June 21st, 2011 at 06:00 PM.
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Edmonton, Canada
Posts: 187 since Apr 2011
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Big Mike View Post
I've never heard of the crab pattern. lol, good stuff.

If the Dragon sees a Butterfly above it's Head and Shoulders, it might step on a Crab.


They seem to be all over the place, Mike. I need to get back to work, but I'll try to post some leading edge charts showing the entry using the CD intercept to point "D" that I referred to above. There does not appear to be too much activity or interest in this thread, so I may or may not do that.

Last edited by JetTrader; June 21st, 2011 at 06:02 PM.
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