Treat Indicator Creatively

Strange how most of the time I entered the trade and it immediately become profitable. I used TDI-RT indicator that usually triggered by crossover. But it is very much too simple. Trading is not that simple. I used TDI as exhaustion indicator and looked for other divergences. 

From time to time we treat indicator like a holy grail. Use it blatantly without thinking. If it do this then we buy. If it crossover we sell, and so on. There is no such thing. I give you example with TDI above. Crossover at the top of the band, is good indication for a sell. But what happen next, price is continue to go up which is normal at the trending market. Lazy traders will think the indicator is a failure but actually we need to see it with different way. So many times if TDI crosses at the extreme area, price will give a push a little bit more before reversal. Like what happen above. So next time if we see setup like this, we can wait for last push before entering. And then the second crossover is working. We also need to check other indicator for confirmation like RSI, ADR and ADX.

Most of the time spend from trading is not the trade itself. It is to observe the price structure and watch like an eagle at critical zone. Trading is a waiting and patience game. In two weeks, I almost hit 10 percent profit which is over target. I only trade with 0.1 lot and the result is incredible. The P/L curve is up smooth. There is some manageable losses. Some trades reverse back after being stopped out. It is all normal. More than 2 months training and the trades are more precise and higher win ratio. Everything is good so far. Never ending learning in trading to achieve a greater full life.

Preemptive Reaction, Ready for The Worst..

I am not a psychologist or psychiatric. But probably this post may help your trading result.

Trading like other thing in life, we must prepare for the worst. In any cases, we must have our self conscious mind always ON. Trader's weakness is boredom. No Action when market is in sleep mode. Our habit to have activity while working is not applicable in Swing Trading. The most consuming time for Swing Trading is not analyzing, scanning, reading news, finding pattern, new trading ideas, or other trading related stuff. The most time spending is waiting.... be patient...one of the hardest challenge for Trader.

While waiting the trading signal, we must keep our subconscious mind ready. Before the trade happened we must ready for the worst. What will happen if after waiting for hours even days and the trade is a losing trade? What will you do? That must be answered before you take the trades. Sometimes trader after a waiting game their mind will be weakened. When the trade goes the opposite way, we are not prepared, then our emotion will take over the action. This is most traders will experienced. Not preparing for the worst.

5% Goal Achieved

Unrealistic target is easier than consistent profit with Demo Account. Some trade is not stick with the plan but mostly with very little draw down.

Very quiet week till now. It is not that hard to trade with logic and rational. Demo account with discipline trade and losing is better than Crazy profit but reckless trade.

So many trading idea that I actually surprise after how many years sidelining technical analysis. All idea is new, fresh and have potential to succeed.

No Pattern from Friday

I think the urge to trade every day is a bad habit. With discretion system, we sometimes are tempted to trade. The good thing of Harmonic Pattern is we are forced not to trade if there are no pattern emerged, like what happened in the last 2 days.

 Maybe there are better trading system out there that you can trade every day and probably will give a better result than the current system. But the problem is can you handle the system? Not every day is a good time to trade. Like sailing in a storm and big waves, sometimes the best answer is to wait until the weather is fine.

Once again, it is not how to find the best system out there but how to find the best system that suits us in a long term consistently. A time like this is a good time to find better ideas around the trading system.

Diversification is The Key

Today I made couple mistakes, Trades too soon without pivot confirmation. But even with bad trades because of diversification I can end up with slight profit. Without the mistakes I should made more profit though.

I believe maintaining mental health is very important for trading Forex. But if we keep losing trade every day, what will happen? There are few things that will happen:

1. We may miss great setup that can cover losses because losing can snap confidence.
2. We stop trading to tweak the system, While it is good, too many tweaking also can make us miss opportunity. What happen if the change is worse? More mental breakdown incoming. Over analyze also not good for brain health.
3. Rage trading, This is the most dangerous one. We add lots to recoup the losses and if this happen, sooner or later we will bust the account.

And more outcome will happen and mostly is not good for the trading job. So what we do is we have to keep the winner day in day out. We trade every pairs that trigger the signal. If you have 60% winning ratio system then every 10 pairs traded, 6 will become the winner. If we trade at least 5 pairs a day, then surely almost every day will become profitable. Although even Goldman Sachs have losing days, so expect there will be losing day. But if we can start strong, few losses won't affect our trading health.

Forex is unique. It is different with other instruments. If we trade index or stocks, most of the time market will have one direction only. But Forex is interconnected with each other. If we trade stocks or index, if the trigger is to buy while market is on a red day, that will be contradict with each other. A very strong bearish day for Stocks Market will actually drive some pairs up. If war happened, then JPY will go strong. Ii is called pairs for a reason. If we buy stocks then we hope the market index is green because high chance our stocks will in sync. But Forex is we can shot any signal we want and some of them should be profitable.   

Repeated Pattern Over and Over

I am in the phase that more winning than losing even sometimes I was not confidence with the trade. The trade I took is like profiting all the time, it looks like miracle.

Never in my trading life have this feeling. Trades that easier to become profitable than losing. It is like the price path is already self-fulfilling. Even most of my doubt trade mostly become profitable. Confluence is working. The more confluence the higher the success chance. I used to think technical is just random bullshit to make more people drawn to get slaughtered. Well, the truth forex is so big that price doesn't care what you did. There is no people out there marking retail traders. Stop Loss hunt is just the way Big Bank to get better price.

The strategy I applied looked complex at first but actually it does make sense.

Harmonic Pattern is the first trigger. It means there is Zone filled with Fibonacci Confluence.

Weekly Pivot is added to more confluence at the harmonic zone.

RSI and ADX measure the power of sentiment. Strong ADX meaning there is more fuel to drive market extension. RSI is to estimate if market already exhaust. Divergence ADX and Overdrive RSI is a high success chance to trade.

ADR is used as filter and estimates mileage of the daily price running.

Currency Strength also another view to trade or not. Strongest and Weakest Currency of the day is not good for counter-trend. Easy to identify the Power of Pairs.

I think the more understanding you are with market, the more success we will get. Forex is just one big Ferris Wheel fueled by Greed and Fear.

Another Super Setup ADX Divergence and RSI

H4 Pattern emerge. Yen is still the weakest today. Then Weakening ADX at Rising Price. Wait for RSI overbought then BOOM!! Price Reverse.

Patience pays off. Long term JPY currency weakness is the only defect with this setup. Harmonic Pattern works most of the time. Problem is we have to wait for another confirmation or else, the setup usually get stopped out all the time.

Lesson and Analysis:
Better wait from the overweak/overstrong pairs to develop more confirmation to enter the market. The strategy still intact. Patience when no pattern emerged like today. Wait for better entry and let the market do its work.

Things to do:
Currency Strength as a filter. Wait for better entry for extreme pairs, like ADX divergence and RSI. Lower lot for less probability trade to avoid from miss the train.

Conclusion:
Harmonic Pattern is a very powerful tools to trade, but it is very complex and needed to trade with other things. The key is manage lot number. Enter small lot for worse price and bigger lot for best price. The worse price may become profitable and if not it only hurt a little to equity.

  

Do Not Fight The Super Strong Trend

I already doubt to trade GBPJPY at the first place. The volatility and directional power in this pairs is very dangerous. I take my chance at red rectangle setup. It is way beyond the R100 and candle looks stall. The downside is ADX is keep rising near the super strong threshold and the RSI not yet enter the overbought zone.

On another note the harmonic pattern is not really in a Right Ratio. But I saw many times the defected pattern still turned out to become profitable.

Next setup is at R138 line and also a sweet spot AB=CD pattern shown by the white line. Price retrace a bit from here then after US CPI news it continued the direction.

Lesson learnt: Don't fight the Strong ADX and A Defected Pattern should not be traded at the first place.

The positive side is if I closed all trade right now I am still in a small profit or losses. This is the power of Pattern and DIversification. Quite forgiving for mistakes and I also now treat my demo account even more careful than my real account now. I have a major perspective shift and mindset of what trading is. Sometimes demo account is more important than real account. It can act as a benchmark for my psychology condition. If I trade real and demo accounts at the same time, the difference between both account will tell if I am mentally prepared for trading.

Super Reversal Setup with ADX and RSI

First Trigger : Harmonic Pattern
ADX < 40 : OK
RSI < 70 : WAIT!!

Second Trigger : R38 Pivot Point
ADX Divergence : OK
RSI > 70 : TRADE!!

The logic behind the entry :

After Harmonic Pattern emerged, the RSI is not strong enough indicates market is not overbought yet. Although ADX is not over 40 meaning trend is not strong to go upward. There is not enough momentum to drive the market down yet. Other thing is the price already near R38 which can become a magnet. Trade at R38 spot is good enough as long as ADX is not rising above 40. The better setup is if ADX getting weaker. If ADX is rising we need to wait until RSI reach overbought area.

What happened next is ADX getting weaker while price going up. This indicate the bullish is getting weak. Then price hit the R38 and RSI hit the overbought zone. What happened is we get FOUR CONFIRMATIONS to SHORT!
1. Harmonic Pattern
2. Pivot Point
3. Overbought RSI
4. ADX Divergence

Conclusion:
Lagging indicator like ADX and RSI or MACD or Stochastic can be useful as confirmation to measure the market driving power. But to enter a trade, I need a leading indicator like Fibo and Pivot Point. There is an amazing great feeling to enter the market at best price or when market started to reverse. This is not a counter-trend trading. It is similar to wait price to pullback. Enter the market late is very painful, especially watching the market reverse and leave us in a bad entry.

Although with my current setup trade already profitable most of the time, I need a better filter to categorized trade signals. The trade above considered as strong setup with four good confirmations. Not every day we can find Weaker ADX with Over RSI at the same spot. But when it happened, you already know it will be a good trade.

Harmonic Pattern alone is not enough to enter a trade. The Pattern indicates that price is ready to change direction. But sometimes there is not enough momentum yet to turn the market around. Market is very efficient and to make price move with extreme curve is not healthy, Just like cars if we keep drifting and accelerate like a racer is wasting resources. We need to wait until the wind is getting weaker to set sail to the back. The ADX and RSI is the main tools to feel the weather.

Just Believe in Pattern

Confluence Example

Pairs: AUDJPY
Pattern : Bearish Max Butterfly
Pivot : Weekly R100
Fibonacci : 61.8
Candle Reversal : Evening Star
RSI : Overbought (Not very reliable)

Trade Signal : Sell
Target 1 : R78
Target 2 : R61

The trade is Technical vs Sentiment. It looks like trading fighting the trend. Harmonic Patterns usually are an uncomfortable trade. Rarely happened sentiment and technical in sync with each other.

After trading the pattern for a while, the winning ratio is less than 50%. Aspire trader usually avoid this strategy. They have to endure many losses in a row which will happen very often. What will happen next is trader will change their strategy over and over. The longer time frame the more valid the pattern, in my opinion. Patience is the key. Price will move wherever they want to move. But with patience and discipline, overtime the gain will come.

Trading is a game of probability. Market sentiment also very important. We must have basic fundamental understanding of each Pairs. Combining the technical and sentiment is the art. I think trading is different kind of intelligence. Brain, experience, logic, risk appetite, emotion, all combined.
Don't aim for 100% profit in one week. Be reasonable. Build the equity slowly. If you want to get rich faster, use other people money. Don't over trade. Don't use trading for adrenaline rush. It should be boring. Performance must based on good trade management. Not how much profit to make. Do it over and over and over and we can get the freedom we dream of.


   

Pattern Trader Confluence and Score System

Harmonic Pattern is not just a trading signal for me. It is also to limit the trading too. No Pattern No Trade.

I believe to become a consistent trader we need a systematic trading as good as possible. So many trading course out there just give us technique or strategy separately. If market do this then it is a buy, and vice versa. There is robot solution using EA but I think swing trader no need for that. A good systematic trading for me is a step by step analysis with score sheet to decide the trade. It is also should provide people without trading knowledge to trade accordingly. Even trading job already free from 9 to 5 job, it is still a labor work. It will be best if we can outsource the job to others with even have never trading before. In fact it is better to give the job to theirs who never trade as it give no bias with market condition right now. The job for the boss is to keep close with market sentiment by updating news all the time. You don't want to sell NZD when Central Bank just announced rate rising even if the signal screaming loudly to sell. This is what bosses do. They are not doing a labor work. They create ideas and strategy to keep the business run.

The methods should give consist confluence confirmation in a score sheet. For example Pivot Point, ADR, RSI, Candle Reversal and so on. The confluence should be objective. Support Resistance is subjective and need experience. The methods should give same score with different trader albeit same trades. The Trader (or worker) should work mechanically and the performance of their job IS NOT BASED on how much they PROFIT, but how GOOD THEY FOLLOW THE RULES. Loser trader will have better bonus if they follow rules more intact than their colleague who profiting. Luck will run out but Consistency will still survive over time.

The System Trading should be have at least 1 profit in 5 trades in a row. The biggest weakness for me and other trading too is to keep changing the rules and strategy. It is my bad habit for me. As long I consistent to hit Profit Target at least 1 out of 5 I will not change. With the positive expectancy, profit will cover the losses over time. So far even with low 20% winning ratio I haven't achieved it. But it still surprised me that last week I still book profit with 7 losses in a row in last trades. For me too many losses in a row will degrade the trading morale.

Next week I will tweak some rules that I think will have better result. Thanks for reading and have a good weekend and trade.

 

Why Swing Trade the Harmonic Pattern Make Sense Part 2

Harmonic Pattern is a not every day signals for higher time frame. I am not using lower time frame because of bad results and I give up day trading anyway.

Harmonic Pattern in a trending or volatile day always give so many counter trend signals especially in lower TF. If you trade it blindly, high chance you will lose more than profit as you trade against the market sentiment.

Harmonic Pattern rarely give a comfortable trades. It feels like we buy when price going down and vice versa. And if it goes wrong, you got stopped out very quickly.

So with all advantages, then why Harmonic Pattern is a good choice for trading? One simple answer is because it forced you to be disciplined and methodical. In another word because it change My Trading!!

With Harmonic Pattern, no overtrading. No Pattern No Trade. Simple

With Harmonic when market not moving, very few signals and most of it not valid. Another no overtrading.

With Harmonic no need to trade every day. No Pattern No Trade.

With big RR of profit and losses, you can sustain many losses even with 30% winning ratio you still make money.

Confluence with other pattern like Channel and Pivot Points to filter pattern. We can create methodical trading system that even beginners can trade.

Harmonic works usually 2 or 3 days after big events or big moves. So no urge to chase the market. Keep calm and be patient. Another good ease of mind.

Combined with fundamental analysis we can create a powerful technique to trade when the big banks accumulating positions. The best feeling when we can enter early of the trade.

Swing Trading means waiting for days for the trade to reach TP. We can manage the accounts with lots adjusting. Big SL means small lots. I believe swing trading will avoid the stop hunter and algos since the target is too far away.

Harmonic is combination of fibonacci confluence. Adding with another confluence like sentiment, pivot, and trend will boost the success rate to another level.

In conclusion, Harmonic is not a stand alone indicator. It is the essential but cannot be used alone. So far it works for me. Big pips target, no stress trading with small lots, and focus not how much money we make but more at trading rules and percentage.

Next time I will update more and more awesome setup like I did when shorting EJ on Monday and long Gold yesterday. It is all based on so many confluence in one trade that me myself don't have other choice but to trade the setups.


  

Why Swing Trade the Harmonic Pattern Make Sense Part 1

I have been focusing with Harmonic Pattern for a while now with good result. You can google Harmonic Pattern to know more about it. This is not another education trading post like millions similar posts out there.

The last 11 years I have been trading the market with ups and downs. From 2011 up until now I only exploit broker weakness to make money. It is not the real trader did but it works so no complaint. But weakness can be fixed. I have been out of market for a while because fewer and fewer brokers can be cheated. So in the last couple months I dig trading forums to find the best trading style that really match with my personality.

First exploration I looked for sentiment trading. My trading based is the news and economic events. Analyzing the anticipating economic calendar, key person speech, forecast, Trump, etc. And it's really work. I think that's how big banks do. Problem is it doesn't have systematic trading method that I need. Where is the TP and SL? What price I enter? Everything are discretionary trade and sometimes impulse trade. I know it doesn't suits my trading style. Yes, it is very profitable if you can enter early and then ride the sentiment. But doing it manually is very exhausting and labor worked. Right now I am developing an auto trade with keyword at headline news. Still in very early phase but I think it may work.

Next stop was Pivotal Trading. Another method that really really great. Quite complex but very profitable. And I will use it for confirmation with my current trading style. Pivot trading alone can be very profitable but it have weakness. Actually no weakness in pivot trading. The weakness is with the retail trader. It is very popular threads at forex forum and more and more retail trader use it. It is free and the results is incredible. It's like a Holy Grail of trading and all good things may come to an end.

I believe if so many traders doing the same thing, sooner or later it will become the prey of algo trading and big boy. I know it is just my opinion. Retail traders always become the lowest food chain in market. If we gather at same place all the time, the predator will notice then eat us alive. It is in human nature that no technique is save for a long term. The profit also can be diminished since everybody take profit at the same spot. So while it is still good I don't think it will last for a long time. It will work again when weak traders leave this method.

Last thing is Harmonic Pattern. It is a whole new perspective of trading. I have a very different perspective of Harmonic Pattern. Others maybe thing it is just another technical analysis that using fibonacci and waves to enter the trade. It is not.

Let me share my insight of this technique....

( to be continued... )