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Harmonic Currency Pair Cross Index
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Harmonic Currency Pair Cross Index

  #21 (permalink)
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I had some time to grab this one. Let's see how this goes.

CD intercept to D with C Stop and Reversal Short for recovery. Target D to D extension. Entry 4365.4. Stop and Reversal 4361.7 to BE.

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  #22 (permalink)
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I had some time to grab this one. Let's see how this goes.

CD intercept to D with C Stop and Reversal Short for recovery. Target D to D extension. Entry 4365.4. Stop and Reversal 4361.7 to BE.

2300 GMT Time Delimiter for the Falcon is done. That Falcon (if you note the chart) was Short. The CD intercept to D trade was Long. Price action for the entire hour was essentially flat, closing the 2300 GMT bar very near the Open for that hour and just above the CD intercept to D entry level. The "next" session has just started at 0000 GMT with the CD intercept to D, still in tact.

This looks very similar to some of the same price behavior that I've seen in my back-testing, where the Falcon's signal diverges from the Harmonic signal. Falcon got an initial move during 2300 GMT to the downside, while the Harmonic kept extending its point "C" to the 88.6% ratio. D is now the target and so far, things are on schedule with this forward test.

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  #23 (permalink)
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I had some time to grab this one. Let's see how this goes.

CD intercept to D with C Stop and Reversal Short for recovery. Target D to D extension. Entry 4365.4. Stop and Reversal 4361.7 to BE.

Thus far, MFE has been 29+ pips. MAE has been roughly -3 pips. Point "C" came very close to resetting, which will trigger the Stop and Reversal Short.

The new (2300 to 0000 GMT) Falcon (pic below) has been established as Conforming and Long (wing tips pointing up and tail feathers pointed down) at 0100 hrs GMT, which is in about 2 minutes. Since that signal is inline with the current Harmonic, we should see some positive price action. D1 at 61.8% is still the primary target.

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  #24 (permalink)
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Stepping out for a movie (The Green Lantern). Will be back later to see how the test went.

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  #25 (permalink)
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JetTrader View Post
I had some time to grab this one. Let's see how this goes.

CD intercept to D with C Stop and Reversal Short for recovery. Target D to D extension. Entry 4365.4. Stop and Reversal 4361.7 to BE.

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Back from the movie (the Green Lantern was better than Thor by the way).

The Harmonic went invalid with the extension of point "C" which triggered the Stop and Reversal at 4361.7. Recovery trade ran down to 4344.8, for a 16.9 pip Reversal MFE. So, the Harmonic trade had a 29 pip MFE and the Reversal trade on Harmonic failure had a 16.9 pip MFE. When I'm running forward tests and capture all MFE/MAE data for Limit and Stop optimization of the signal later. Harmonic MAE was 20.6 pips and Reversal trade on Harmonic failure had an MAE of 5.7 pips. Overall MFE/MAE ratio for the entire structure was 22.95/13.15 for a 1.745 Risk Profile. Not a bad risk profile, but not a stellar one either. Overall P/L on the trade structure was 0 pips. That's how I analyze all of my test trades, both back-tests and forward-tests.

Pros:

In back-testing these CD Intercept to D trades, I've noticed that using point "C" as the Stop & Reversal to BE level, works really nicely and provides a fairly comfortable degree of break-out momentum, sufficient to cover the cost of the failed Harmonic from its entry level just above "C." So, that worked out nicely to move the equity curve back to BE on the trade.

I also like the 29 pip MFE on the initial Harmonic entry, even though point "D" was never reached. The XA range was 74.9 pips, making the Harmonic MFE 38.7% of the XA range, which fits under the 25% observed in back-testing.

Cons:

It took entirely too long to reach BE after the Stop & Reversal Short trade got triggered in the Harmonic failure. XA, AB and BC, took a little more than 1 hour to establish themselves. However, the break-even took slightly more than 2 hours. On a trade where the Harmonic ratios are established with synchronicity, back-testing has shown that either point "D" or BE is struck within a similar time-frame. That did not happen on this trade - so I don't like the timing of the sequence.

However, I think I have a good idea why BE took such a long time, but I'll have to check my historical back-test data to confirm my suspicions. The Falcon died a slow death and had another early launch before its fixed entry time. It launched 18 minutes to early and only rose 15.4 pips before suffering a broken right wing on descent to the Stop & Reversal level. The Falcon did turn into an AB=CD pattern, but in the absolute wrong direction. So, I'll take some time later to see if I may have missed anything with this particular Falcon set-up.

Overall, I'll take BE on 3 out of 10 trades any day of the week. I'll try to post more CD Intercept to D set-ups as I have time and as the come forth.

For the Newbies:

Preservation of capital is extremely important. It is not enough to simply have a good entry strategy. The way you go about preserving your capital is just as important as the way you go about taking profits. Every entry needs a backdoor. In other words, when you walk into a room, make sure you know where the exits are located. That's how you get to BE and preserve your capital. My philosophy has always been to use Stop & Reversal to BE strategies on all naked trades (when I'm not using a multi-pair strategy). This reduces the risk profile greatly and it protects your equity curve from severe downward spikes. It also provides a level of comfort with each trade you make.

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  #26 (permalink)
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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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JetTrader.
Thx for posting.

Re: the "Trajectory".

From your post #14
"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 "



I'm unable to understand if the criteria to annotate the two intersecting Trajectory lines is because you haven't actual explained that aspect fully (the reason for which is understandable, lol), or I'm just being dense ?

Forgive my ignorance but welcome any clarification/example if appropriate.

Thx
.

Every moment I wake up I realize I know nothing, and then I smile...
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  #27 (permalink)
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zt379 View Post
JetTrader.
Thx for posting.

Re: the "Trajectory".

From your post #14
"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 "



I'm unable to understand if the criteria to annotate the two intersecting Trajectory lines is because you haven't actual explained that aspect fully (the reason for which is understandable, lol), or I'm just being dense ?

Forgive my ignorance but welcome any clarification/example if appropriate.

Thx
.

I sat for a long time looking at raw data and charts until I saw it, so there's no problem in not seeing right off that bat.

Note the "Recap" pic above. The only thing that is throwing you off is the fact that you are looking at a 1 Minute Chart. Had I posted this 1 Hour Chart, you would have easily seen the reason for the annotations using the standard MT4 bar location format of "[n]":

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Both charts show the exact same thing. In the M1, I drew the H1 period separators and then annotated the chart with "1 Hour Bar on M1 Chart" to let you know where the start of each hour was located on the M1 chart. On this chart, no such annotation is necessary because you are looking directly at the H1 chart and each bar represents one full hour. So, I simply labeled bars [0] and [1], so you can know in which direction the the calculation runs in order to derive the TCD value. Subtracting High [1] from Low [0] gives the H1 Short TCD Trajectory. Subtracting High [0] from Low [1] gives the H1 Long TCD Trajectory.

The calculation for all Trajectories within the system is always directional to produce a positive integer. However, there is a unique set of Trajectories called the Alpha Class, that are also directional but that produce negative numbers. Alpha Indicators are unique because everything beyond the 1st derivative of price is by definition a Non-Contiguous Transeqential Delta (NTCD). Technically, the Alpha Class is unlimited in the number of Trajectories that can be created.

If you take the three (3) bar OHLC sequence of:

[0] 1.4406 1.4421 1.4384 1.4412
[1] 1.4433 1.4438 1.4398 1.4401
[3] 1.4411 1.4440 1.4392 1.4433

You can produce 4 primary TCD Trajectories and a total of 42 Alpha Class Trajectories with 14 of them being Transequential and 28 of them being Non-Transequential and that's just using 3 bars of data.

- Transequential means Transverse Sequence: the values being calculated are transversely opposed to each other within the OHLC stream of data and both the Source and Destination values are in sequence, meaning one follows the other in Time and can be either to the Left of source value or Right of source value. The destination value is always subtracted from the source value. So, to derive the basic Long TCD, you have to subtract the destination value High [0] from the source value Low [1]. Thus, primary TCD values run backwards in Time.

- Contiguous means exactly what the name implies: the values being calculated are contiguous bars of data.

- Delta means exactly what the name implies: the difference between the two values being calculated.

A Non-Contiguous Transequential Delta (NTCD) means: the values being calculated are not contiguous bars of data (mostly the Alpha Class of Trajectory).

So, when I do primary research, I take raw data in the sample OHLC form given above for bars [0] through [3], and I look for patterns that have high yielding Deltas. The rest is a process of synthesizing the data and isolating (or, finding) those Delta Patterns that like to repeat with regularity. Then I run statistical (historical) calculations to produce dynamic Indicators from the Delta Patterns. A Trajectory is simply a Delta with an upward or downward directional component, where its Magnitude is measured in pips (in the absolute).

The key is to find the right Delta Patterns and to synthesize the best Trajectories. After that, its all about constructing algorithms to produce indicators, signals and trade logic.

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  #28 (permalink)
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Missed this one as I was replying to a response in this thread. When I reset my screen, it was basically over.

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CD Intercept to D127 worked nicely.

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  #29 (permalink)
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And, as I was typing that missed test above, the D127 entry Short happened on a dime. Missed that one too. Can't type and post while trading these things when they move this rapidly. You really do need to be alert. Also, using tinypic to convert the files sometimes take a while when their server is slow.

The point here, is that the CD Intercept to D provides two (2) trading opportunities, when most Harmonic traders are looking for just the move from D. If the Stop & Reversal to BE is set correctly (the right distance away from C), then you can basically sit and play ping-pong with the market as long as it produces these kinds of patterns.

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  #30 (permalink)
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Assume for a moment that this last CD Intercept to D had failed. So, imagine point D never being reached, just like yesterday. The Entry into the CD to D was near the Green Arrow at about 4401. Had that failed, the Stop & Reversal to BE entry to the Short was near the Red Arrow at C, which was 4394. So, the initial risk on the CD Intercept to D, was 7 pips. BE was 4384 (assume a wide 3 pip spread). The market ran down to 22 pips below the Stop & Reversal to BE Short entry level. About 15 pips more than what was needed to BE, if the CD Intercept to D Long entry had indeed failed.

So, we can see here, how taking advantage of both the structure of Harmonic Patterns, plus knowing something about the Magnitude of the time-frame in which those Harmonic Patterns are forming, allows for relatively low risk trades that have a high probability for BE, if the Standard Harmonic Pattern fails. In this case, it did not fail, but I'm using this move from D127 down to below BE (22 pips below Stop & Reversal to BE Short Entry) as an example.

This is one of the other reasons why I have come to appreciate Harmonic set-ups. The very nature of the Harmonic ratios shows you when the market is Contracting and Expanding. It can't contract forever - else, there would be no market to trade. Using that information coupled with an understanding of Magnitude per time-frame, you can simple Stop & Reverse with limited risk, repeatedly, until the market decides what it wants to do - as long as you select the right Entry level for the CD Intercept to D.

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