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Thread: Entry Rules

  1. #1
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    Entry Rules

    Hi,

    I'm trying to use the Scott Carney entry rules to trade harmonic patterns. In his book he wrote that we have to wait for the price to touch all the Fibonacci levels before we enter the trade. I usually have a nice area of confluence, but price only reaches the first level and then reverses. So I miss all those profitable entries. And if I wait for the price to touch all the Fibonacci levels, then the trade is almost always a losing trade.

    What are the rules to enter a trade? Is it enough if price touches only one level in the PRZ?

  2. #2
    Wizard
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    you should see confluence of Fibonacci measurements, Fibo lines close to each other, and the entry place is around there. Aggressive traders will take the entry exactly the the cluster without waiting for reaction/confirmation, others will wait for something they use before the entry.
    We will move your post to Gartley entries thread.
    haytch likes this.

  3. #3
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    Thank you very much for your explain about harmonic pattern

  4. #4
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    Interesting article about entry criteria during Harmonic trading:

    Harmonic Trading Entry Criteria

    Kor do you apply rules like these?

  5. #5
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    Thank you for your replies!

    I've been testing Harmonic patterns for some time and I'm far from being successful. I really want to trade only the patterns with the three projection target really close together, and I want all the projections to be correct. if XA projection and BC projection are ok, but AB = x*CD is not right, I don't trade the pattern. But even in those cases, my success rate is really low.

    If you have some entry confirmation method which helps to increase the odds or you want to find one, then it would be nice to discuss about this here.

  6. #6
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    @dvarrin:
    1.what is your success ratio?
    2.what is the R:R that you aim to get?
    3.did you check what would be you success ratio if you would trade all harmonics, and not only these "ideal" (as you described)

  7. #7
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    Quote Originally Posted by kor4x View Post
    @dvarrin:
    1.what is your success ratio?
    2.what is the R:R that you aim to get?
    3.did you check what would be you success ratio if you would trade all harmonics, and not only these "ideal" (as you described)
    Hi kor4x,

    My success ratio is really bad, less than 25%. and profitable trades give a really low profit. Often I'm stopped out because price is making a new high or low around the PRZ. Also, about the R:R, I don't know which target to look for. Scott Carney explained that the first profit target is the B point, but for a Gartley pattern, if D is at 0.786% of XA and B at 0.618%, it is not tradable even with 1:1.

    I have lots of problems finding a way to confirm a PRZ and where to put the stoploss level.

  8. #8
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    why "and profitable trades give a really low profit."?

    "Often I'm stopped out because price is making a new high or low around the PRZ." what can you do to avoid it?

    "Scott Carney explained that the first profit target is the B point, but for a Gartley pattern, if D is at 0.786% of XA and B at 0.618%, it is not tradable even with 1:1." so what is your conclusion on this?

    btw: your problems are not only yours, most HT traders have exactly same issues...

  9. #9
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    why "and profitable trades give a really low profit."?
    Because I often close the trade at B if I see dangerous price action.

    "Often I'm stopped out because price is making a new high or low around the PRZ." what can you do to avoid it?
    I've to use a greater stoploss. Well for Gartley we can use X as a stoploss level, but for a butterfly, that's more difficult to define a good stoploss.

    "Scott Carney explained that the first profit target is the B point, but for a Gartley pattern, if D is at 0.786% of XA and B at 0.618%, it is not tradable even with 1:1." so what is your conclusion on this?

    I would say we should target point A as the first profit target, because Gartley pattern is like wave 1 & 2 or wave 3 & 4 or larger a & b waves and price should at least come close to A before reversing. For a butterfly, that's ok to target B, because from 127% of XA, there is some room until B is reached.

    btw: your problems are not only yours, most HT traders have exactly same issues...

    I would like to become successful trading harmonic patterns. In all statistics we can see that harmonic patterns are close to 80% success rate, and I'm so far from it.

    My main problem remains to determine if the price should touch all the levels in the PRZ to be able to trade the pattern or if it is ok if it is touching only one level.

  10. #10
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    I would like to share with you a possible indicator we could use to better locate if/when price is likely to reverse at the PRZ. We use an oscillator such as Stochastic or Williams %R with different periods (3, 5, 10, 15, 20, 25, 30, 35, 40). if all curves are reaching the oversold or overbought area and are grouped together, there is a better chance of a reversal at it helps to locate the real extreme point. I have to test this idea more, but it could be interesting.

    On the first picture, there is a Gartley occuring at the top of a rising channel on USDJPY M15.

    Entry Rules-usdjpy1.jpg

    On the second picture, I zoomed the PRZ (the 3 horizontal lines are the different fibonacci levels of projection, extention and retracement of the pattern) and below there is the Williams %R indicator displayed with different periods.

    Look at the PRZ how all the curves crosses below the overbought area. this a sign that price will likely fall from there. Later this level was tested, but never crossed in the opposite direction.

    This indicator tend to capture the very extreme top or bottom before a reversal. This is quite helpfull to avoid to be stopped out.

    Entry Rules-usdjpy2.jpg
    Last edited by dvarrin; 05-07-2013 at 07:13 AM.
    morpheus_fx likes this.

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