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Harmonic Currency Pair Cross Index
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Harmonic Currency Pair Cross Index

  #41 (permalink)
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zt379 View Post
Lets see how this goes.
Not withsatnding the stop and reverse aspect.
C to D, ( Gartley retracement levels are new to me so apologies if they are not quite on the mark)

PS: Not getting the Gartley numbers right, sorry.
see 3 rd chart magenta dashed lines to D (786 retracement ?)

To be honest with you (my dirty little secret about Harmonics) - I really don't care all that much about the ratios, with the exception of one and that's point B. Basically, if price is going to evolve into a Standard Harmonic, then we've all seen that movie before. So, really, the ratio that matters most to me is B. If I see B setting up shop at 38.2, 50 or 61.8 of XA and then a reversal in price of at least a 38.2 C ratio - then I'm pretty much convinced that I'm dealing with a Standard Harmonic of some kind. What kind? I don't really care, quite honestly.

I just want C to plant it self somewhere before 78.6 of the AB leg and then launch like a bat out of a dark cave on its way to D. Bread and butter type stuff. And, on the M1, you can see this stuff happening all the time. The XA tends to govern how big your CD and ultimately your DP (where, P = projection) will be.

So, I look for a minimum XA of 25 pips and a minimum B ratio of 38.2. Often times, you will find that B likes to hang out around the 61.8 ratio. When B starts growing bigger than 61.8, it can still remain "Harmonic" and post something like a 78.6, or even slightly bigger, but often times it will invalidate the Standard Harmonic and slide-off into a basic AB=CD, or possibly a Three-Drives scenario. This is why I wait for price to reverse off of B and post at least a C of 38.2.

After B sets-up shop, price is already Consolidating and it can't stay there forever. That's the really neat part. Consolidation to zero is not realistic in currency pairs. It has to go back to Expansion, sooner rather than later. That Expansion will typically come in a Standard Harmonic move from C to D, or the Standard Harmonic will be invalidated when C is driven through the level at point A.

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  #42 (permalink)
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An example of merged Harmonic Patterns where the CD of one patterns evolves into the XA of another pattern. A very 'harmonious' affair, I would say. Beautiful symmetry. Nice lines. Nice slopes. Nice price behavior. On the second Standard Harmonic, point C was not very traditional at all. This is why I said above that I primarily care about whether or not point B is harmonizing. If I get a good harmonic ratio on B, then the rest seems to fall into place.

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  #43 (permalink)
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Triplets Mrs. Armacost, triplets. (of course, in the movie she had "twins").

A triple convergence in the Standard Harmonic Pattern. Again, you can see that point C, was very non-traditional in that it almost reaches 100% retracement. There are some who say you should not trade that because it does not fit a precise set of ratios. My experience has been that such precision in the ratios is not really necessary, as long as the Harmonic Pattern has a good point B ratio. The quality, or reliability of the pattern seems to anchor around the quality of point B. Here we three connected Standard Harmonic Patterns with three (3) not so traditional placements for the C ratio.

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  #44 (permalink)
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Hang around these things long enough and you get the big score. Looks like the third one yielded the biggest net gain thus far. This is what I meant by no Contraction lasting forever. Sooner or later, she's going to move away from the pattern's structure and out into the open where she can breath.
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  #45 (permalink)
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zt379 View Post
lol...thanks for the feedback.
Attached is a last chart I did for today, just to round it off.
I didn't mean to interupt your thread with posting my charts, especially as I'm new to these "winged" patterns.

No, not at all - feel free. No one else is participating in the thread, so feel free. What I do is mostly non-traditional and that's not for everybody, so I understand. Actually, I sort of like it that way because I have less to respond to. It is easier to chat with 1 individual than it is with 100.


zt379 View Post
I guess all I'm doing here is basic Gartley patterns.

In all honesty, all I care about is whether or not the concept is sound. What I found out quickly, after studying these patterns, is that to a lesser extent people have some of the same problems that they do with Elliot Waves. What I mean by that, is people bring varying interpretations not to the patterns themselves, but to which ratios are the "most reliable." What I'm discovering for my self is that for the most part, the ratios don't have to be spot-on every single time to yield harmonic price behavior. The last three pics that I posted here demonstrates that idea to some extent.

We just had three consecutive coincidental Harmonic Patterns emerge, one directly connected to the other. Yet, each point C, was very unconventionally positioned. But, that did not stop the price behavior from showing harmonic tendencies. So, I don't fit the mold as a traditional trader and it stands to reason that I would probably bring a flexible attitude for what I expect price to do, when encountering some of these less than "standard" harmonic ratios.

All I really care about is enough movement in price, such that I can extract from that move enough pips to keep my revenue model happy. I don't care about anything else, quite frankly. So, if the market wants to use a point C of 78.6, or something slightly bigger, just as long as C does not move beyond point A, I'm ok with that - I'll go with the Ratio Flow of the Market and beat the others to the punch at D.

So, yes - you should study the basics on Gartley 222 and all the others, but I think that you will find that the most important thing with these Harmonic Patterns is the pattern itself quite frankly. I've always been a Pattern Trader. I've created my own Delta Patterns and I've been trading those for years. But, after completing my system, I took the time to finally study the Harmonic Patterns and I really liked what I saw.

a) They are leading edge signals
b) They offer very good RR ratios
c) They are uniquely set-up to offer assistance with break-even strategies
d) The are easy to spot on a chart with the naked eye
e) The offer high availability if you use the right chart and search within the correct time delimiter
f) There is more than one way to trade each pattern
g) They provide good early warning about their existence

There seems to be good reason to like'em.


zt379 View Post
It's not taking on board your level of sophistication with calculations.

Really not doing anything sophisticated with the Harmonic Patterns. There really isn't much you can do in that regard, as the ratios are all calculated by the Fibonacci tool, or the indicator, if you are using an indicator to draw the lines and paint the ratios on screen. I'm just using a simple ZigZag tool to quickly spot the swing-highs and swing-lows at a specific interval. Other than that, I'm just trying to find creative, non-traditional ways of trading the Harmonic Patterns, such as the CD Intercept to D, and the BC Intercept to C with Scaling.

These things are very easy to learn and to execute, that getting creative with them is not difficult at all and well worth the time spent.


zt379 View Post
I would be interested in seeing if any understandong of if/when a D holds or is extended.

Which is why I prefer to trade CD. Will D be 61.8 or 161.8 of XA? I mean, these are the kinds of questions that one trading CD does not have to answer. Just pick an XA of sufficient length, wait for B to nail itself to the wall on a good Harmonic ratio and take advantage of the evolution of the pattern. Everybody is waiting around for D to materialize.

Here is yet another great example:

The CD Intercept to D, stalled and D never made it beyond 50% of XA. Someone waiting on D to materialize would never be in the trade, while entering the CD Intercept gets stopped out. Well, because no currency pair can Consolidate forever and because AB and CD are typically Consolidation legs that are contained within XA, if price turns back inside of the CD leg, then it has effectively "trapped itself" into a range that is significantly smaller than the patterns original XA range. Therefore, the likelihood for price Expansion is increasing, while the likelihood for continued price Consolidation is decreasing. Furthermore, once price turns back inside of the CD range (on a failure of C to expand), it does so very near two significant market levels: A and C.

This is what provides the Expansion catalyst once the level at C and then A gets broken. Price tends to have a more than sufficient run beyond C and A, to recovery any losses on the CD intercept and to even go on to net a small profit in many cases.

If I'm entering with a set-up that has an increasing probability for Break Even and a good chance of a small net gain, even on a failed initial entry, then I really can't ask for risk reduction than that. So, if the CD Intercept moves to a nicely positioned point D, then I win. But, if the CD Intercept fails, it does so in a part of the pattern that leads to market Expansion beyond C and A, so I can break even and possibly take smaller profits.

In this chart example, the CD Intercept risk was about 7 pips, yet the Stop and Reversal to BE was easily handled by market Expansion after tight Contraction and eventually led to 34 pips, which provided a 27 pip cushion on a failed trade. And, that's the point. This was a failed trade (CD Intercept died), yet the real conversation is about a 27 net positive pip cushion after the failure.

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zt379 View Post
I understand and appreciate your comments regards the many combinations of time deliniters.

I'm glad you get that as the various wide open combinations is a lot to research, evaluate and test.

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  #46 (permalink)
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I want to come back to you on your recent posts. thx.

In the mean time here is a chart of today.
Its a Momentum chart (not time based)

The chart incorporates your harmonic patterns (for CD trades) which you mention in terms of harmonic patterns moving into one another and also to see how/if they build each other (smaller building larger).
I had a sense that they might, but got bogged down with discounting patterns which didn't meet the ratio requirements.
(which you mentioned don't need to be so rigid, thx).
I have repeated the A,B each time a C fails (or rather each time a CD fails and A is taken out)
and started to build a larger pattern.(just trying things out)
Thx

Every moment I wake up I realize I know nothing, and then I smile...
Attached Thumbnails
Harmonic Currency Pair Cross Index-jt_b_6e-09-11-4-momentum-24_06_2011.jpg  

Last edited by zt379; June 24th, 2011 at 07:42 PM.
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  #47 (permalink)
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zt379 View Post
Its a Momentum chart (not time based)

Interesting. I had not thought of using Momentum charts before, but then again, I've been too busy with all the things I wanted to study using standard Price charts. Tick charts would also be interesting to look at, but are useless on charting applications that have persistent connectivity issues. For example - many Metatrader platforms routinely shut down multiple times overnight and since the ticks are not normally stored as data by Metatrader, you end up getting gaps in the chart that destroy their usefulness. So, over time, the chart becomes more and more useless.

I have not tried (nor had the need to try) Ninja Trader, but the charts I keep seeing posted on this sight look pretty good. I have not seen this many Ninja Trader users on other forums. I guess, I've always just drifted to Metatrader whenever I did research - sort of like a habit, I guess. Thanks for showing the Momentum charts and how they display the patterns.


zt379 View Post
The chart incorporates your harmonic patterns (for CD trades) which you mention in terms of harmonic patterns moving into one another and also to see how/if they build each other (smaller building larger).
I had a sense that they might, but got bogged down with discounting patterns which didn't meet the ratio requirements. (which you mentioned don't need to be so rigid, thx).

It really is easy to get bogged down with precise ratios, which is why I basically use "B" as my guide. A 38.2, 50.0 or 61.8, seem to end up giving in price behaving with enough subsequent harmonic quality, that the CD Intercept entry makes sense. But, again - I'm still learning the best way for me to Intercept D, so the rules of thumb that I've created are subject to better interpretation.



zt379 View Post
I have repeated the A,B each time a C fails (or rather each time a CD fails and A is taken out)
and started to build a larger pattern. (just trying things out)
Thx

Yep - that's the general idea for me at least. Explore, explore, explore.

One additional rule that I added today, was to make the 'Stop & Reverse to BE' recursive after the initial CD Intercept fails the first time. So, after the first CD Intercept trade fails, it will always fail at point A, triggering the Stop & Reverse to BE #1. Well, when the first CD Intercept fails and Stop & Reverse to BE #1 is triggered, use an Entry Order (or, to hide your orders as an active trader, you can simply enter the order manually) to set another Stop & Reverse to BE #2 at the original CD Intercept entry level. If Stop & Reverse to BE #1 fails, it must fail at Stop & Reverse to BE #2. At that point, use another Stop & Reverse to BE #3 at the original Stop & Reverse to BE #1 entry level.

I call this the Break-Even Loop and I simply use it recursively until the market decides that it wants to move. It operates on the principle that the recursion is taking place near a price level where price has already been Contracting through several harmonic cycles and that Contraction cannot last forever. So, here's a good tip: Enter CD Intercept trades as close to the start of a new larger bar as possible and know that bar's historical Magnitude. It is a Non-Directional recovery strategy. Just make sure the Risk for the trade fits within the historical Magnitude for the "next bar."

I've never had more than three (3) recursions, which means I've never seen the market remain in place beyond Stop & Reverse to BE #3. Most of the best Harmonic Patterns that I have found, have had their XA, AB and BC, established in about 1 hour. The historical H1 Magnitude for the currency pair is typically far greater than the XA range of the Harmonic and much larger than the Risk Range assumed upon entry into the CD Intercept trade. Note that the Risk Range of the CD Intercept trade = CD Intercept entry level - Stop & Reverse to BE level. That allows me the ability to withstand and absorb the temporary abuse from the market should it get range bound between the CD Intercept entry level and the Stop & Reverse to BE level.

If my CD Intercept trade risk is 7 pips (just as an example), and I want to risk no more than 21 pips on this one Harmonic structure, then I know in advance that I can go up to Stop & Reverse to BE #3, before moving on to the next Harmonic structure. For now, until I learn better, that is how I am approaching the matter of finding the backdoor to BE.

I don't like losing capital. I know that eventually it is part of the business, but I spent tons of time on BE strategies to make certain that the market has to flip through some fairly uncommon historical hoops before I lose a single dime. In other words, I'm going to do everything I can to make the market work hard to break its historical price behavioral pattern, before it costs me capital.

The development of good BE skills relative to the signal you trade, is just as important as anything else in trading, my opinion. Every trade needs a backdoor exit - just in case. There is absolutely nothing wrong with breaking even on a trade - nothing at all to be ashamed of.

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  #48 (permalink)
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Hey thanks for the answer JetTrader and all these additional posts. They are really helpful! Also sorry I didn't mean to reply so late.

JetTrader View Post
So, here's a good tip: Enter CD Intercept trades as close to the start of a new larger bar as possible and know that bar's historical Magnitude. It is a Non-Directional recovery strategy. Just make sure the Risk for the trade fits within the historical Magnitude for the "next bar."

That is a clever idea

The stuff that you are researching now, do you plan to put that into your signal engine? As I understand it you have some code that can detect your older patterns which are a little different I guess. You do it through excel right? So it detects it through the OHLC data. Not graphical right? Sorry just wondering how you get code to detect what you are searching for

Also, say if you have some type of signal that you get that has say 75% hit rate but a drawdown on the other 25% so you close the position. How would you best use multiple time frames to help you out? Would that be something you recommend?


Last edited by feelnot; June 25th, 2011 at 10:14 PM.
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  #49 (permalink)
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JetTrader, I've been going through your post history on multiple forums to learn as much knowledge as I can from you. I did not understand much at first but I'm beginning to understand more and more. And the more I learn the more I can learn from your posts, so I find myself re-reading what I've already covered to understand what I couldn't before. So it's a continuous circle for me

I'm looking to change this from just reading material to knowledge I can actually use to research my way into higher probability trades. That will come but I am first going to read all of your posts.

I read a lot about Tactical TCDs from your 2010 posts and noticed that you have 2 other main TCD types. I see you've also mentioned it in this thread. So I wanted to say there is interest here for sure!

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  #50 (permalink)
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Hey feelnot how you doing?
I am the same but since starting my degree finding the time to go through all the TN7 and 7th sig stuff is painful as a lot of people do not seem to appreciate anything original, have a lot of the things printed out and filed for when I have some spare time, have you seen the signal bender thread? It has some of the better info there, however there is a lot of things on other forums that have been deleted or are just being hidden as I never found some of it while trawling it was someone else who pointed it out to me.
All the best

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