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  1. #1
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    A Word on Harmonic Trading

    A Word on Harmonic Trading

    Dear Trader/Investors/Users

    Hello

    We are going to start a thread to talk a little on harmonic trading and its important tips and rules.

    so, lets get it started and learn more how to trade harmonics.

    Thanks to all
    News Desk

  2. #2
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    A word on Harmonic Trading

    A word on Harmonic Trading

    Without any additional explanation on Elliot or Harmonic pattern trading and its preliminaries, we will be directly getting started about its applications in Forex market by traders.
    Harmonic Trading is a method which recognizes areas having potential of price reversal possibilities, using certain price and time patterns in addition to the Fibonacci ratios (Potential Reversal Zone).

    One of the most important relation between Harmonic Trading and Elliot analysis is establishing different market moves on Fibonacci levels.
    Analysts try to recognize the waves, which has great potential to generate large amount of returns (it is worth the time), to trade at the end of the previous final wave and the beginning of the next new wave.

    Based on this method, by tracing out time and price Fibonacci levels, they try to trade within the zones which has the most reversal potential.
    In fact, our target is to recognize the end of the corrections and the motive waves.
    In this section, 6 patterns will be discussed, out of which 4 of them are about recognizing the end of the corrections and 2 are about how to realize end of the motive moves.

    We have two general method to trade:



    1. Recognizing the end cycles and five waves
    2. Recognizing the end of ABC Patterns or Zigzag which is known as AB=CD in Harmonic trading.


    In Brief:

    As you know moves/waves are divided into two types, motive and correction or Side-way, that trends are the main directions of the market, while corrections are unlike the trends (main directions).

    A motive wave is usually composed of 5 sub-moves out of which 3 of them are in line with trend (1, 2 and 3) and two others are against the trend (2, 4).




    Usually correction waves are made of 3 smaller waves or sometimes 5, which are known as complex pattern.



    In three wave model as shown above, waves A, C are in the main direction and wave B is contrary to the correction. Note that waves A, C are in the direction of short term trend, then they are motive (leading) and 5 waves which their structure are the same as Motive patterns.

    AB=CD pattern, Gartley and Bat patterns and 3 Drive help us to find out the end of the corrections, in fact, we will analyze these 4 patterns in corrections (trade with the main trend).
    Crab and Butterfly Patterns are used to recognize the end of the motive waves (waves 3 and 5).
    Last edited by PCMNewsdesk; 10-08-2014 at 01:59 PM.

  3. #3
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    4 Tips before going through the Patterns

    Key Tip 1:
    In case the structure and Elliot counting is hard to achieve, Fibonacci patterns contribute us very well on the charts to trade correctly. The strength of Fibonacci patterns is as much as that could be traded individually. But definitely, when Elliot and a Fibonacci pattern give us a unit signal, that signal will be more reliable, and would have more chance of success.

    Key Tip 2:
    Remember that Fibonacci patterns are mainly a kind of Elliot patterns and that is its high strength. Preferably, we use these kind of patterns when they are in the same direction of Elliot counting.

    Key Tip 3:
    In the account having a considerable fund, the main focus should be on “first no loss, then take profit”. Therefore, only and only those positions which have the highest probability and success rate should be taken.

    Key Tip 4:
    Remember that, impatience and rush are the most dangerous characteristics to have in Forex market.
    One of the most privileged structures which is formed within the corrections is Zigzag, that is exactly similar to the standard AB=CD pattern.


    Last edited by PCMNewsdesk; 10-13-2014 at 09:27 AM.

  4. #4
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    The Pattern Dimension:

    This is made of three waves, waves AB and CD are leading (5 wave) and wave BC (3 wave) is correction. Wave CD should exceeds wave AB.

    Key Tip:
    The ideal situation for the corrections is 5-3-5 structure.

    Key Tip:
    if wave AB is three wave, the correction will be 3-3-5 which is part of complex waves.

    Golden Tip
    :
    Most of the times this pattern appears in wave 2, 4 and B in order to correct the previous trend.

    The Price Dimension:


    Wave AB retraces a maximum of 88.6% of wave AB

    Key Tip:
    Ideally the price is better to be between 61.8% (more important) to 78.6%.
    Ideally wave CD is equal to AB (Projection 100 from point C)

    Key Tip:
    100 and 161.8 price projection of AB leg from point C highlights two standard and maximum for us. According to the table which will be presented in the supplementary section, you can calculate likely end of wave CD from correction wave BC. (Complementary role)

    Key Tip:
    Ideally leg CD retraces 161.8% of BC (extension of BC)

    The Time Dimension:


    CD is equal to 100, 127 or 162 percent time Fibonacci of AB. (By applying ATP technique from point C)



    Key Tip:
    100 and 162 time projection AB of point C defines time standard and maximum cluster.
    The above image shows a beautiful Zigzag pattern, which has been completed an intraday five wave Elliot cycle and harmonically an AB=CD pattern has been formed. It has been placed in the possible price and time cluster which has been discussed previously, then the Momentum Dimension has issued going long.
    Last edited by PCMNewsdesk; 10-13-2014 at 09:34 AM.

  5. #5
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    The Pattern Dimension:


    AB=CD Pattern two way is one AB=CD patterns which is consisted of two identical short term moves against a long term trend. This pattern is similar to letters Z and S.

    Key Tip:
    AB and CD is a correction and they could have Zigzag structure.

    Key Tip:
    BC is considered as a leading move, which could turn out a five wave cycle.

    Golden Tip:
    This pattern is often composed within wave 2 and 4, in the other word, AB builds up wave 2. BC builds up wave 3 or 1 of 3, and CD builds up wave 4 or 2 of 3.

    The Price Dimension:


    In this pattern, firstly AB is formed in a direction, then a rebound against the first move from point B begins and eventually AB is stopped on any Fibo Extension levels.
    The main move again starts from this level and advances in the direction of AB and with the same distance (100 projection of AB of point C) to CD on one of the Fibo levels BC is formed, so that AB=CD.

    Key Tip:
    The only difference of this pattern with regular and broad AB=CD pattern is hidden within the length of BC which point C I this pattern gets out from the range of AB.

  6. #6
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    The Time Dimension:

    Generally, AB and CD should be equal having a consistent slope.

    Key Tip:
    The duration of formation of each one is so much important that should be composed within a similar period of time. In the other word, these two legs should have coincidence, in addition to price symmetric (100 time projection AB of point C).

    Key Tip:
    in addition to 100% from time projection, 161.8% time level is also important.



    The following tips is shown on the above image:


    1. The formation of two way AB=CD which BC has been ended on 161.8% extension of AB and CD has been ended on 100% projection of AB of point C and 50% retracement of BC.
    2. In terms of time, AB has been ended between 100 and 161.8 time projection since the end of point C.
    3. In terms of Elliot, as shown on the image, this pattern has been formed within wave 2 and 4 of a wave with a degree larger than 3.
    Last edited by PCMNewsdesk; 10-13-2014 at 09:37 AM.

  7. #7
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    Multi fabulous and deserves
    Asked permission in the translation of the Arab members

  8. Thanks PCMNewsdesk thanked for this post
  9. #8
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    The Pattern Dimension:

    Another one of the harmonic patterns which is frequently formed within the Elliot wave especially in corrections, Is the powerful pattern of Gartley.

    This pattern comes after AB=CD pattern as it is the second most frequently formed pattern. According to where it is started, it could lead to move along with or against the dominant trend. Based on this, it falls into two group: The continuing and the reversal Gartley.



  10. #9
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    Key Tip: Note that generally Gartley pattern is a reversal one, but here it is divided to two categories as its reversal goes either with the trend or against the trend:

    A. The Continuing Gartley:

    Usually, this pattern is formed within the corrections like wave 2, 4, C or E and leads to extending the trend in the direction of impulse waves (3, 5).

    Key Tip:
    This pattern also starts within the correction of the impulse and the correction waves. It means if we had a complete five wave and then a correction thereafter, you could find this pattern inside the structure of the 5 wave and correction cycle.

    Key Tip:
    You should have the Elliot situation realized first and then take the trades with high probability which needs skill that results from training hard and getting experience. This will come to a real experience if you face with the real and live conditions and having several patterns realized.

    B. The Reversal Gartley

    Structurally, the Reversal Gartley is similar to the continuing Gartley, having just one difference that this type of Gartley is formed within the internal structure and causes the price against the dominant trend of the market.

    Key Tip:
    The dominant trend of a move is determined by its leading (Impulse) waves. According to this, the correction waves happen against the dominant trend of the market.
    Inside these leading (impulse) and correction waves, compliant and opposing moves to the trend could be found too (waves with lower degree or minor waves).

    Supposedly, in a wave 4 an ABC pattern is being formed that itself is a 5 wave and wave B is moving like a Zigzag correction (ABC or ABCDE) which the Gartley pattern could be found out inside the structure to catch the wave C of 4 that is against the dominant trend.

  11. #10
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    The Price Dimension:

    AB could just retrace as much as 61.8% wave of XA.

    Key Tip:
    If the price retraced lower or higher than the ratio, the pattern could not be the Gartley.
    BC could rebound 38.2%-88.6% of AB (retracement of AB).

    Key Tip:
    Ideally, it retraces to 61.8%.
    CD moves as much as 161.8% to 113% of BC (BC extension).

    Key Tip:
    In the Gartley pattern, CD could and should not exceed 161.8% of BC. Ideally, it rebounds at 161.8% of the related wave.
    In this pattern the whole ABCD correction retraces as much as 78.6% of XA (retracement of XA).

    The Time Dimension:


    AB is equal to 100% time Fibo level of CD (ATP of AB from C).
    AD is equal to 61.8%-161.8% time Fibo retracement of XA (TCR from point X and A)



  12. ARIONFORXtarder
 

 
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