Gartley pattern Reward Risk ratio
By now you should have already read what the Gartley pattern is -> Gartley pattern definition, and about the importance of the pattern location and the power that comes with it -> Gartley pattern and Elliot Wave theory
Where to Enter, where to Exit and where to place the Stop Loss, these are next Typical questions traders do ask.
Attached next 2 pictures present a logical Entry, Exit, Stop Loss price levels for the Gartley pattern and Reward:Risk ratios calculated for them.
As you probably already know, in theory, Gartley pattern should be a correction (corrective move), which with high probabilty, would bo followed by an impulse move. The minimum range of this impulse, should be the previous highs (which in this case would be Gartley pattern point A).
Here we go even further: the Gartley pattern in the proper location should forecast the start of the strong impulse wave (Wave3 in EWA/Elliott Wave theory). Such a move should be able to easily reach the 161.8% of the initial impulse move (Gartley pattern XA swing). Therefore we place the Exit at 161.8% of XA swing measured from point D.
Note that the spread was excluded from the Reward Risk equations.
Aiming for such Risk Reward ratio, you know immediatelly what should be your Success Ratio to be profitable (growing equity curve). The following pictures will present combined Reward:Risk information with the required Gartley pattern trading Success ratio to simulate the potential equity curve.
... PICS to be added tomorrow
Last edited by kor4x; 01-04-2013 at 09:06 AM.
Pictures of equity curve
Originally Posted by kor4x
Thank you for a great website! Did you ever get round to posting the remaining pictures?