Have you ever heard of trading patterns called Gartley, Butterfly, Bat or even Crab?
If you did, then you probably come across harmonic trading as an approach to trading the markets.
Like most traders, I was enticed by this trading approach because it allows me to predict turning points in the market, have a good risk to reward ratio and draw beautiful patterns.
I went to research all I could and read every harmonic trading book out there. Then developed my own trading plan specifying how I will trade these harmonic patterns.
However, after trading it for a year I wasn’t satisfied with my performance after executing more than 100 trades. So I reflect through my trading journal and I realized that harmonic trading had these 5 problems.
Now what I’m about to share with you is solely my opinion and I could very well be wrong. If you’re offended by my thoughts, then stop reading this post and leave my website.
Are you ready?
Then let’s begin…
1) Harmonic trading is subjective
If you consider trading as a business and not a hobby, then you must have a plan for everything. You do not want to make decisions which are subjective as it will affect your thought process.
And the first problem I faced with harmonic trading was the subjectivity of drawing out my X to A leg, aka the impulse leg.
Drawing any harmonic patterns requires the identification of the impulse leg, it is the foundation of all harmonic patterns. But if you were to pull up any chart, you can see that the market consists of many impulse legs, how do you choose the right one?
This is entirely up to the trader to decide.
So what can you do?
A possible solution to consider would be to select the impulse leg that coincides with a structure support or resistance. Above you can see that both C & D are at levels where previous resistance turned support.
Thus if you were to choose an impulse leg, C & D would provide an additional confluence to your trade. Because the more confluence you have, the higher the probability of your trade.
2) Wanting the market to see your pattern
There are repeatable patterns in the market, or else how are you going to develop your trading strategy?
Patterns can be in the form of higher highs and lows, consolidation before breaking out or range bound market etc.
In order to trade profitably, I must be confident of my trading strategy that can extract an “edge” in the markets. The trading strategy has to make sense to me before I even dare to use it.
Imagine price consolidates before breaking out lower repeatedly. During the consolidation, it tells me that there are traders taking profits and traders who are long with stops below the low of the consolidation.
If the price does break out lower, those who went long will have their stops triggered, traders will short the breakout to the downside, and I can expect lower prices to come.
So with a simple pattern like consolidation before a breakout, there is logic and order behind it. However, when it comes to harmonic patterns, I can’t seem to find any logic or a story behind the pattern.
Since harmonic pattern requires me to identify an impulse leg, I would choose the impulse leg that would give me a pattern. In other words, I wanted the market to see the pattern in my head. But in reality, the market doesn’t care what I think. It moves when there’s an imbalance between buying and selling pressure, nothing else.
Choose C because it would give me a bat pattern?
Perhaps I would be more convinced if there are statistical tests that can prove Fibonacci has an edge in the markets. But statistical data I came across like Testing Fibonaccis (1/2) and Fibonacci Conclusion (2/2) says otherwise.
Now if you come across studies that show Fibonacci has an edge, please share with me as I will be glad to look at it.
3) Harmonic trading might cause you to miss big trends
It is in my personality to capture big moves in the market at the cost of lower winning percentage. When oil ramps up from $40 to $130 during the global financial crisis or the collapse of the agriculture markets in 2014. It gets me high.
However harmonic patterns are more prominent in range markets due to the way it is constructed, causing traders to miss opportunities in trending markets.
Furthermore, harmonic patterns that do appear in trending markets are usually against the trend. When you do trade harmonic patterns in this scenario, you will find yourself cutting your trades many times.
So, what can you do about it?
Since harmonic trading performs poorly in trending markets, a logical solution would be to avoid trading harmonic patterns in a trending market.
And if you want to capture big trends in the market, adopt a trend following strategy.
4) What about range markets?
A range market is when the price is contained between Support and Resistance. A range market is favorable towards harmonic trading as these patterns are more prevalent in this market condition.
However, there are still scenarios whereby harmonic patterns may not be present in a range market, causing you to miss trading opportunities.
If you want to long in a range market but there is no bullish harmonic pattern, you can simply place your bid to long at support.
Likewise, if you want to short in a range market but there is no bearish harmonic pattern, you can simply place your offer to short at resistance.
After all, you want to buy low sell high, right?
5) Your stop loss gets “hunted”
If you read most trading books or attend trading courses, they will teach you to place your stops just below the support or above the resistance. Thus it is no surprise to find stops below the low of candle wicks and high of candle wicks.
And you know what happens when your stops are placed at an obvious level? It gets hunted.
Typical stop hunt
Because when you have enough traders placing stops in close proximity, it becomes an incentive for dealers to hunt them for quick profits. When your stops below support get triggered, you will be selling to the dealers who will be buying from you. How do you overcome this problem?
I would suggest you place your stops a distance away from X to give it more breathing room to withstand a stop hunt. You can consider using 2ATR as a gauge of how far away your stops should be.
This way if you do get stopped out of the trade, you clearly know the harmonic pattern has failed.
Just like any other trading strategies whether it’s harmonic trading, price action trading, or Trend Following — there are pros & cons to it.
As a trader, you have to know the pitfalls of your trading approach and apply proper risk management.
Now here’s a question for you…
What’s your take on Harmonic Trading?
Leave a comment below and let me know your thoughts.
Always wanted to learn harmonic pattern, tried really hard to absorb it, but always get bad trades after 1 or 2 good trades.
Rayner you are 100% correct what you have mentioned above.I was thinking may be I don’t understand it properly so I try to avoid it now but you just explained it nicely.
It took me almost a year to figure how to draw these patterns, but alas I had to give it up as I wasn’t getting the consistency I was looking for.
Hope you’re doing well Kam.
I Trade based on Harmonics only and have got 80+ accuracy
Would you like to elaborate what’s Rayner’s fallacy in his approach to harmonics? 80% is an astonishing accuracy.
You need an algorithm to spot the patterns. Not with naked eyes or imagination. The algorithm should plot the patterns on the charts and once they have formed, you only look for more confluence…..
im 17/17 trades right now with harmonics
If you listen to Scott Carney, he says that the Home Run trade using Harmonics only comes along once or twice out of every 10 trades. His 1st target, which should be the target used in any of your back tests (you have not revealed what target you used in your tests, so all of this bashing of Harmonics is non-evidence based). Scott uses a modest .382 retracement of the CD leg as target and considered a successful trade. Did you do the same? If not, try doing a more valid back test using the .382 retracement of the CD leg and then let’s hear whether you still think Harmonics don’t work.
I agree with John, maybe you should try also to show properly how did you trade with harmonics and even show us the back testing process you’ve done, it seems not clear. Then we can be in Harmony :). Just my opinion.
I’m in harmony with myself and trading.
If you have back tested harmonic patterns, you could share with us your result, not only asking for. Regards.
Rayner is right price action and areas of value are king…all the rest is garbage. Sorry but that is my take on it as a trader for 28 years.
You are most welcome. Ed!
Been trading with harmonics for a while and you hit the nail…. Last couple of months when market was trending I was busy looking for reversals and missed the whole big USD trend. Have to be more aware of price actions which indicate a strong trend buildup.
If you still want to trade these patterns, you could consider setting up filters that tells you when you should be trading harmonics and when you should not.
Hope that helps!
Diversifying your trading portfolio would help with this. The assumption is that if you trade harmonics your can’t trade anything else. There is no reason you cannot have different strategies for different market conditions.
Thank you for sharing your thoughts, Chris!
All the problems you have mentioned are such basic non problems with basic solutions. First off, the subjectivity is taken out if you just use an indicator to plot the patterns. Secondly, know that Harmonics is trading trend corrections! So of course you are going to go against the trend current. It is a reversal style way of trading so if you are in a range market, trade harmonics(there are plenty of harmonics in range markets by the way). If the overall trend on the time frame is slightly bullish, just tell your indicator to only generate bullish harmonic patterns. If the overall trend is trending very strongly then find a trend trading system or look for another currency or asset that is in a range. How can you measure the strength of the trend or see whether a market is trending or ranging? Use ADX. This is simple stuff. Are you guys trolling?
No this post isn’t to troll but to share with you my experience in drawing harmonic patterns
1) I’ve never used them to draw harmonic patterns but i don’t rule out the possibility of using it to be more objective. As mentioned in my post, there will be multiple swing points to choose from, which is the one your indicator will be using? That will have to be defined by the one programming the indicator.
2) I’ve used ADX i don’t find it useful in determining the trend of a particular market and perhaps it may work for you.
Again what I’ve listed are the issues i face using harmonics in my trading. It’s something to take not of and have to either accept these issues or find a way to deal with it, as per the solutions you have given earlier.
Shadows absolutely nailed it. Just like every other patterns, look at the overall context before applying it. And from the charts posted above, it seems like you are drawing every price cluster as long as it looks like a Gartley or other harmonic patterns. And sorry to say, please do not get offended, from the article above, it sounds like you are not spending enough time and effort into this type of study and trading.
I would suggest you take a a look at @AndrewUnknown ‘s tweets on twitter. Look at how the pro applies the harmonic patterns into his analysis trading.
I believe there are better Harmonic traders out there than me.
These are some of my thoughts when I traded them back then, and I don’t deny I could be wrong.
I don’t trade these patterns anymore but thank you, I’ll have a look at his tweets and see if I can learn something new 🙂
You are focussing wayyyyy too much on the complex XABCD patterns, which (as you mentioned) will form in ranging markets only. Those patterns tend to conform better with stock movements over long windows of time. And also, the key to XABCD’s is that you must track the ticker/pair over time until it confirms the D leg. Its typically a home run, but it takes patience and best left on a watchlist with alerts set, you cant force them, they must come yo you.
Most the charts in your article had perfect harmonics though. Namely, ABC, ABCD and the three drives. Traders tend to call those moves bull flags, wedges, etc. Really, its best to just flow with the vernacular you know best and not overcomplicate things. I am not a full on harmonics trader (or guru), but I find them more useful for setting price targets, confirming trends and predicting reversals. When your in the action the measurements bog you down and an incomplete pattern will lead an aggressive trader into an oversized, risky position
This guy share his point of view regarding Fibonacci and Harmonic Patterns
Thank you for sharing.
I believe there are more than 1 ways to trade the market.
This just so happen to be my own experience trading harmonics, and i believe there are better traders out there.
Quickly point 5, only one of those trades would’ve been taken by a knowledgable harmonics trader, the first one, which would have resulted in a 2:1 target being hit, before any remaining orders being taken out at break even.
Thanks for sharing.
Yes I’m not proficient at Harmonics and I believe there are better traders than me.
i think harmonic patterns are easy all thats wanted is for the trader to identify the correct impulse leg to go with the trend
thanks for sharing, neo
Yes but how do you identify this leg, as Rayner said, there are endless impulse legs to choose
I’ve been trading harmonics since last summer, I can honestly say they’re shit. Yea they work but you have to have more analysis on the table other then key zones etc. I find them more accurate when they’re traded on 4 hr and daily time frames. I find it even more profitable trading of point C rather then D. If I see a harmonic potential I use a trading system my group developed for trend trading works amazing and the best part is that you dont get faked out. out of 100 harmonics 100 of them will have a CD leg, out of 100 harmonics 40 to 25 will break. Doesn’t it make more sense to trade off C rather then D. The trend is 100% your friend. Like you said you want something that performs better the 60-75%.
Thank you for sharing your experience. As the comments above, there are some traders who seem to do fine with it.
Ultimately we all got to find a trading approach that suits us. I’m glad you’ve found something that suits you 🙂
I hope to hear more from you in the near future.
You are right. My mentor only trades C point in harmonic pattern. C also needs to be at support or resistance level
Hi. I have also been somewhat intrigued by harmonic trading. Mostly because of how many retail traders seem to use it and praise it. For me, the main problem with harmonic patterns is what you mention under point 2 – there is no reasonable mechanism what would explain why patterns like Bat or Cypher should work. I just don’t see why price should regularly turn at specific levels predicted by some fibonacci numbers. Of course, there is one mechanism that could make these patterns work – self-fulfilling prophecy. But for such prophecy to work, the patterns should be very clear and objective. Harmonic patterns however are rather subjective, as you said. So, my conclusion is that harmonic patterns simply do not work, they are not profitable over long term, they provide no edge.
Thank you for sharing your thoughts on this.
Don’t hesitate to let me know if there’s anything, I’ll be glad to help.
I think the reason harmonic works is that people take profit at fib levels. Harmonic pattern is simply confluence of two Fib levels. Meaning higher change price reverses at D point
I agreed with some of the points mentioned above. In general, there are two types of market conditions – trending or range-bound (flat) markets.
A trending market in general results to higher chances of harmonic pattern failure. And the range-bound (or flat) markets tend to create price movements that look like a skewed “M” or “W” shapes in which harmonic patterns would stand a higher chances of profit.
How do we determine whether it will range or trend? ADX?
I simply use my eyeball to determine whether the market is in a trend or range.
If you notice that price is trapped within support & resistance, that you could safely assume it’s in a range.
One thing you have not shown us is the fact that trading is 100% probability. So under such condition having methods like harmonic can expand the edge of profitable trading. So in my opinion you are getting it wrong to slam harmonic trading while there are so many traders who know how to use those patterns and profit from them.
All I did is share my own experience with this methodology and providing solutions to overcome some of these drawbacks.
If this offends you, it’s best to leave this website immediately.
Dear Vincint harmonic patterns work 100 percent correctly all you need is to observe the exact pattern only difficulty in harmonic patterns is to look for the exact pattern like you have mentioned potential bat pattern but my eyes says its not bat its some other pattern i dont have this chart in my mt4 or i would have predicted thankyou!
Ok first off, the 2nd picture under #3, the “Losing 4 trades out of 4”,
1. No one should trade Cyphers. Cypher patterns have a 40% win rate AT BEST and should not be traded. The only people that “some how” have a good win rate on them is the people that created them or are part of their organization. I did a 1000+ hour backtest on Cypher patterns on 21 currency pairs and multiple timeframes and the BEST that I got was around 40% win rates with the average being around 33%. And it is not just me, others have come to the same conclusion as well.
2. The second pattern is not even a Gartley pattern, not even close. Just because it has an “M” shape doesn’t make it a Gartley Pattern.
3. The Third pattern which “may” be a Gartley could have been a winner depending on where your stops were placed.
Also you say “Furthermore, harmonic patterns that do appear in trending markets are usually against the trend.” That is misleading. Yes there are plenty of patterns that emerge against the trend in trending markets, but there are roughly just as many patterns that appear with the trend as well. I say this after backtesting and analyzing hundreds of thousands of patterns and live trading thousands of patterns.
I will say though, that patterns do not do fantastic when the market is trending. They are meant for when the markets are in some sort of consolidation. And I will also say you are correct with your statement that harmonic patterns miss out on the trend since we have solid targets. But we give up that trend for a higher probability of success. We bank and bank often instead of letting it go for one big trade. While you are out to make that single 500 pip trade, I could have been in 20 trades making an average of 60 pips each (thats 1200 pips).
Harmonic trading is not easy. it is simple to understand and to learn the patterns. But it is not easy. And if you are trying to take every single pattern that comes your way, you are going to fail. I know someone that trades every single pattern that comes up. And he is at best a 50% – 55% trader. I use a few other things (not indicators) to help me choose only the best patterns out there that have a higher probability of success. And for it, I get 70% – 75% win rates. Sometimes a bit higher. So it is all in how you trade them.
well said Karma
what’s kind of things to filtering out patterns ?
Harmonics on its own wont be enough… you need more tools and indicators… use harmonics to look for things like head and shoulders and double/triple tops.
Thanks for sharing Patrick, cheers
hi… are from malaysia
I’m from Singapore.
This type of trading is nothing but betting on break out will fail and reverse. 80% of the time, break out will fail. Is has nothing to do with Fibonacci. While the 50% entrancement does work a lot of time, but that’s just risk and reward. Other than that, all other Fibonacci number is just bull crap. you can draw a line at any point of the chart and on the left side of the chart , you will always find it as support or resistance. you don’t need pattern to trade profitable. its a lot better to just be able to identify current market condition correctly. is now a trend, trading range or break out?
Thanks for sharing, Andy.
im still learning the basics of harmonic trading but it seems as if harmonic trading is very profitable.when the market is descending you only go short and the opposite is true.The public secret is never to trade against the trend
Thanks for sharing, Aaron
You can not , you will not , you will never ever time a market .. period !
Rayner. Thanks for your article. It is a fresh breath of air. It can be painful for the vested though.
My view, harmonics is just another “system” just as an MA or two is. The latter much easier and no ridiculous price tags to peddle out of subjectivity with same result – Trader dependant.
Harmonic patterns = eye candy – humans love to see pictures – leading the trader further from trading price action based on why markets move: liquidity, algo’s, phases, seasons,market makers etc. (Yes, the market did not move because I painted my pattern just now)
I am reading through your guide right now.
Thanks for your open work.
Thanks for sharing your thoughts, Herbert.
Enjoy the read!
I created harmonic patterns and I agree that your points are valid but because you lack the sufficient knowledge of the framework. I have always said the patterns ARE NOT A BLACK BOX – although many internet marketers are selling as such. Harmonic patterns are my life’s work. I have made my living with these methods, consulted for a multi-billion hedge fund and regularly show my work in public for FREE! I am not here to spam rather suggest that you look at my work to understand that this process is requires execution and management skills not just identifying past patterns. Although I feel this article trolls HT a little, I WILL GLADLY TRADE HARMONIC PATTERNS LIVE WITH ANYONE IN MY ATTEMPT TO RESTORE ITS SOMEWHAT TARNISHED INTEGRITY.
Before you make up a bunch of trolling BS to attract Harmonic Traders, you should ask look at my work. As creator of the ENTIRE METHODOLOGY, your issues are manipulative and clearly show you have ZERO UNDERSTANDING of market action at all. So, why don’t we have a trading contest. MY HARMONIC PATTERNS vs whatever crap you are trying to sell. I am serious. I will trade everyone of those “flawed examples” and show you how ignorant you really are. So, put up or shut up. You want to talk smack, I will get in your face. So, trade me or remove this post. Scott Carney
I have just come across you and I love your fire sir. I have recently learned three of the most consistent traders that I have met in my short time in this world all use your trading method. I have signed up at your website and look forward to learning more!
Awesome to hear that!
Who are they?
Hello Friends, Thanks for this post, The post seems biased already, But overall i learnt somethings as well, it is true that harmonic doesnt work in a trending market, but again a trend strategy will fail miserably in range bound or consolidation markets, it all comes down to your understanding of the markets.
once you have identified the market, Then you should be aware of pull backs which definately happens, so thats what we want,pull backs and trend reversals.
I wont go into details of my conditions my harmonic should display before trading but once conditions are met, here is what i do, i take each trade with 20 to 50 pips target depending on how exhausted the market is in a trending conditoin or how genrally it is. My 20 to 40 pips target are hit several times, and we reversal traders dont target the trend, we target reversals, but they give so many small wins than losses, in general several wins with few losseskeep my blood pumped up and keeps my trading alive and not emotional, each day you can make several wins, out of 10 trades, you can win 10 or 9 trades targeting 20 pips, all the trades you gave above that failed, assuming you were trading the 4hr or daily, all would have hit Tp, That is my experince, i am not an experienced trader, i am just a few months old in the markets,
oh and Scott Carney, i would like to learn from you sometimes.
I equip my harmonic indicator with two more indicators, trend indicator and an oscilator indicator.Sucess rate is unbelievable.
So i will stick with harmonic patterns and trade 1:2 or 1:5 utmost loss to win ratio.
Thank you for sharing, Siraji
when the patterns are formed, i use bb macd and Heiken ashi smoothed for confirmation. That helps to sieve out most of the misleading patterns. works in both trending and ranging market. I’ve achieved more successes than failure
Thank you for sharing.
Hey, please can you explain or help with confirmation of a pattern if it’s valid or invalid
as i read your view on harmonic trading but i think you are missing some thing to add with each of your 5 q.
i have answers fior each of your questions ,. always use different indicators comibined with harmonic your no single trade will go wrong ..
i am using it as well i m providing signals to more than 2000++++ peoples . but in one months trading daily 3 calls our only 1 or max 2 stop loss hits but till now we are in green only .
harmonic trading is god given gift , use this weapon at right place right time … will never loose single trade .
hi I am working on bullish Shark Harmonic patterns, and I have the dataset with the sequence of 5, 4, then after long gap 17.
Can you guys explain how I should draw the pattern on this data set?
Hi Rayner, in regards to your article I only trade BAT and Cypher in my 5 Pair currency portfolio. With extensive back testing on both 15m and 1hr charts which is my 2 time frames. I have produced a great return on investment.
During any testing we always try to make the strategy fail, it’s most important when ever backtesting is to try to make it fail, a lot of people look for things when backtesting just to try to make the strategy work. Its obvious that we all want winning strategies and for them to perform well. Also over time we see changes in the markets and these need to be taken into account. When testing the harmonic patterns did your testing results include all target price levels 38.2% 50.0% 61.8% and so on, having this data provides you with the figures needed to determine which currency pair performs better for certain patterns if traded consistently over time. Again remember without missing a trade. No point getting all the data if you can’t actively manage the portfolio on a daily basis. Also some people might like to see more winning trades this would mean taking a profit at the 38.2% but again, could you sit there after taking target 1 and seeing the price sky rocket up to 61.8% or even further, but in saying that if you test the 61.8% and then sitting there when price falls short at lets say the 50% before falling down to stop you out for break even? It may produce less winning results at the 61.8% Target but overall if traded consistent bring in more of a return.
Time frame of entry on the backtesting lets say you trade between 8:00am and 5:00pm then anything else in your backtest wouldnt matter because you wont get involved in those trades. And especially if most winning trades are out of your trading time when you are sleeping, so just an example while you sleep there are 3 winning trades with price hitting the 61.8% Target and the other 7 trades which lost, all hit your stops.
Anyway in my testing results in some cases we could see 14 losing trades in a row over 5 pairs, for some people this is not good because psychologically they cant handle it, but we need to ensure over time we know it works if traded consistently. And also shows us where our best stop loss should be kept to produce less loss over a period of time. Lets just say its not ATR based stop but create your rules for each pair based on backtest and forward test. It may be a predetermined FIB Ext percentage.
Also I see you are having trouble identifying what would be classed as an impulse leg. We call them sore thumbs, anything that really stands out, understanding a price chart is important. Major and minor structure levels also helps to identify. if you perform a top down analysis this also helps to identify. When i look at your chart at the very top A and E would be X to A with minor structure between. A, C and E looks to be a perfect AB=CD Harmonic move. C also would be an important structure level where previous support was retested.
Not one strategy is the same and people see different things in the market. Building your reticular activating system to identify the signals is what we get in our back testing. As soon as wee see it it just jumps out at us. Maybe you could also adopt some other trading strategies for trend continuation and counter trend trading. This would help you when no patterns are forming and we miss opportunities. Again it still needs a plan and rules of engagement for each strategy, test test test and try to make it fail – try to find all the signals and test the crap out of it.
I hope I wasnt too bold in what I wrote. Actually while I am writing this I entered 14 trades this week, 2 wins, 3 break even, 9 losing trades for a loss of 89 pips and 2 entries which have hit target 1 on Friday bringing the week back in the green, and rolled over currently sitting at +160 hoping to see target 2 on both trades hit early next week, if not it will be break even for both, seen as stops are at break even after hitting my first targets. In my test results as mentioned I look at monthly performance and not day by day or week by week, 9 months produce returns and I expect at least 3 months with draw down. This still remains after 5 years on this strategy of trading these 2 harmonic patterns.
Thank you for taking the time to share your thoughts.
I appreciate it and believe it will help the other traders using Harmonic patterns.
I noticed in your screenshot of “4 losing trades in a row” you were trading bullish advanced patterns in an obvious bear market.
Although you are trying to give 5 pieces of advice, I’m going to give you 1 simple piece of advice that you obviously overlooked:
#1) The trend is your friend.
1. I do a lot of channeling (trend moves). I find many times a harmonic (say a bearish in a downtrend) will catch the end of a countertrend move (corrective like a w2 or w4). These are like gold!
2. I find I can ID these at turning points (at a bottom, I can see say a bearish Cypher where D is the anticipated rally). I use these as warnings should the rally reach there. If candle pattern suggests a sell/short, either exit, or look for .382/.618 Cypher targets for quick pullback trades.
If my channel suggests a w5 soon in an uptrend, I will look for a bearish harmonic to catch a top retest/failure. Otherwise, as outlined above.
Just my 2 cnts. :o)
Thanks for sharing, KB.
Harmonics make you a bad trader. Instead of focusing on execution, you focus 80% of your energies on jotting down lines on the chart, and hoping for some sort of wishful future. eventually, it is another form of very aesthetic guessing. Focus on your execution guys, you only need a lean technical analysis.
Harmonics takes a lot of studying and practice to learn it properly. For me it took 2 and a half months including 1 month full live trade to get a fine grip on Harmonics. I learned harmonics from the Youtube channel AKATheGrower by Federico Villareal. Harmonic patterns makes your life easier.
There are certain things you need to check before entering the trade.
If the price is heading towards D point doesn’t mean you should enter in a position as soon as the price hits D.
You should check if there are any warning signals like abnormally large price candle, candle exceeding and closing past potential reversal zone, or prices gaps. You should enter a trade only after confirming a trend reversal. You can confirm that by observing the D point, you might be able to find reversal formations like tweezer top/bottoms, head&shoulders, double/triple top/bottom and others.
I am a beginner in trading and I was able to understand harmonics very quickly by watching the youtube tutorial I mentioned above and I started making profits after a lot of studing and practicing. I suggest you should first learn harmonics first from Youtube videos and then read Scott Carney’s books to learn more about harmonic patterns and to learn how to effectively trade using Harmonics.
Reading Scott Carney’s books along with learnign harmonics is a must. I think it wont be difficult for an experienced guy like you to learn it if a beginner like me can easily understand it. I suggest you should check the youtube channel I mentioned above for easily understanding harmonics. I think that is the best channel for learning harmonics.
I think harmonics or advanced patterns are profitable if… I don’t know if someone had tried differentiating the bad patterns from the good ones then come up with a probability on when’s the best time to use the pattern but this would be a good idea. I’ts like backtesting the back-tested results. I know it may not make sense to you ‘cause I’m really bad at explaining. But I’ll be doing my own research, finding the optimal use of patterns, optimal tp and sl, and maybe revamping the points and conditions.
It’s like using this present knowledge of patterns as a guide. I think you can optimize the patterns.
Also you may put a “tight stop-loss” in some points (been giving me gains).
Well Rayner, I’ve been trading since two years, initially having a brief info about Harmonic Patterns, I traded with these patterns only to find some disappointing results. Then I studied each aspect in detail about Harmonic Trading from the books by Scott Carney, Only to find out that there is lot more to it than just identifying a pattern. You need more confirmations to know which patterns to trade, there are other indicators/trade management strategies/RSI BAMM techniques for one to know when a pattern is having the most significance. There are clear methods of when to go against the trend and when to go with the trend. Ofcourse if one analyse trend lines/MA with Harmonic patterns that would be a added confirmation as thts the way it should be – No trader should rely on just method for getting confirmation and one should open a trade only when you get multiple confirmation from different methods indicating the same thing. THE PROBLEM IS WE START TAKING A STRATEGY FOR GRANTED WITHOUT UNDERSTANDING THE ENTIRE PICTURE.
I have been observing for a long time, I often see harmonic pattrens that are crusty in a trend that is not too strong but this pattern usually moves below / above EMA 89 in that area I usually find a garley / bat pattern, my chyper / shark also often draws a trend channel and almost always crosses the leg of D ..
to be honest I rarely use butterfly and crab pattrens
Good to see you did so much research on Harmonics and it’s patterns, I would like to say, the patterns which you have drawn above losing trade 2 out 2 is wrong in GARTLEY D OR XD leg has to be .786 whereas you have considered some .908? If you draw correctly than you would have get decent profit which your chart shows as well.
Whereas in the same chart you have Cypher pattern in simply sideways market, I mean how you can draw harmonics in sideways market?
No offence but which HarmonicTrading book you have referred?
Whereas stop loss is concerned draw a Fibo Retracement from B to C the next Fibo number after D is your stop loss and believe me it won’t hit 95% of time 5% leave it for news based movement ( pun intended ).
We can have healthy discussion on Harmonics to understand your concerns.
The PRZ is key, as is correct positioning of SL and TP. At the supposed completion of a pattern, let the market break out of the PRZ, drop back in, and then when it goes out the second time THAT is your trade, not blindly taking it on pattern completion. FOMO is costing you. Be patient and let the trade come to you.
Harmonic patterns can exist over a long period of time and bring huge rewards
Thank you for contributing, Queen.
What i saw some of your drawings are:
1) Incorrect. Some of your drawings are incorrect Ryner, plus cypher pattern doesnt even exist in harmonic trading fyi.
2) No confirmation with price action reversal pattern (this is essential). You should combine harmonic patterns with confirmation, not to trade it blindly.
Hi. I ordered a price action trading secrets pdf file but have yet to receive it. Could you please look into it? firstname.lastname@example.org is my email address. Thank you.
Jarin here from TradingwithRayner Support Team.
Please email us at email@example.com so I can send it to you there!