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... )

     

Mid week 28th June 2018

Trade War US vs China may impact to other territory such as Bond purchasing. China said they will lower their purchasing plan and it mean less demand to USD.

One Fed voter also said there is high chance only one more hike rate on 2018.

With this informations USD sentiment looked weak and the best potential pairs is GBPUSD or USDJPY.

Sentiment : BUY GBPUSD SELL USDJPY

Syncing with market sentiment

8 years trading currency, I just discover how important to keep intact with global news economy. Everybody said price is really matter. No need to analyze news and fundamental analysis. Everything already reflected at price. Boy I have never been so wrong.

I am not saying technical is not important. In fact it is now more needed than ever. Sentiment drive market, technical is telling us when it is time to reverse.

Trading can be illustrated with driving. Technical trading is like driving with map. It give you direction from point A to B. While news is like you keep hearing the radio and using road sign.

With map only you never know what happened at road ahead. There maybe broken bridge, accident, falling tree, close road, etc. With radio and road sign only you may not know the fastest route to destination, where is your position now, and if getting lost, it is hard to return to the right track.

Combined with this two you will have the best navigation system. If there is accident ahead you can take alternative road and reach destination faster than taking usual road.

Problem with using only technical analysis is when it is profitable and everybody using the same technique, market maker and big money will easily stop hunting our position. With fundamental trading, other big institutional will support the position as they usually dont care about retail traders.

Technical alone is not bad. There are sucessful traders out there using technical only. But for me it is very frustrating not knowing why certain price jump with no reason at all.

Driving is no way as difficult as trading. There is no money risk involved. But if we can keep syncing with market even if we lose money, we know why. Not just price.

June 25th Week Analysis

EUR big bounce and other "risks" pairs like AUD and CAD may be  short lived since Trump will execute next tariff import to EUR automobile.

Trade on focus is EURJPY and CADJPY. Expect a rebound from CADJPY and short
EURJPY.

If no major event next week market expect to move in range except EURJPY.

Mid Week Analysis

ECB give possibilities of holding the rate at mid 2019 which is another pressure to EUR along with Holland downgrade revised forecast. Bad news for EUR but not very big impact.

Trade War execution and continuation to another 200 billion more tariff by Trump will hurt global economic and mostly AUD which is down heavily in last 3 days. RBA meeting policy have no clear answer about rate hiking but with this situation very unlikely they want to hike the rate.

Oil is clearly pummeled by Trade War in the last few months. CAD as oil-based currency also suffer from the downtrend and there maybe some move after OPEC meeting this week.

GBP also keep going down mostly anticipating the BOE statement which is also not very promising due to Brexit problem.

Safe haven JPY shines against all other currency. If economic turn gloom and uncertain, look for this currency as the savior. But with BOJ policy still in status quo and deflation threat, the currency should be keep strong except against USD

NZD upcoming GDP report with lower forecast will reflect how AUD economic doing. if result is better than expected then there should be some bounce with AUD.

Summary:

Pairs in focus:

EURGBP
EUR is still in worse shape than GBP. short EURGBP

AUDCAD
CAD may get a surprise at OPEC meeting against AUD that still very week. short AUDCAD

CHFJPY
Both are safe have currency and should be bounce later. Though CHF is dragged by EUR weakness but oversold CHF. long CHFJPY





   

Economic Event May 18 - 22

Tariff War between US and China will impact currency sentiment.

AUD
This week RBA Meeting Policy may discuss about tariff war as AUD and China sent move hand to hand. Last week AUD drop could be sign of market pricing already but I think there will be more south move before RBA meeting date anticipating cut rate or QE plan.

Trading plan :
Short AUDJPY
Yen may strengthen with the uncertain tariff war

EUR
Last week EUR hit hard after Draghi speaks of continuing QE and downgrade GDP forecast. EUR could be a continuation of downward but comparing to AUD, EUR was more market price in and more Draghi speak next week.

Trading plan :
No clue yet, but EURJPY should be a good choice

NZD
I have no clue with this currency but I think will move synergy with AUD though not as violent.

Trading plan :
No clue yet

GBP
News filled with Brexit event and slightly bad exonomic news last week. The cable also hit by ECB news. If Brexit plan work smooth should pump up the currency as less dependency with EUR zone.

Trading plan:
Wait for EURGBP breakout at chart more incline to break downward

JPY
BOJ last statement no major policy change meaning JPY is a good bet against other weak pair. Also USDJPY with the tariff war frenzy may attract trader with this safe haven.

Trading plan:
More incline to buy JPY at pivot key.

CAD
Oil currency with upcoming FOMC Meeting may pump up this looney after beating down last week. Tariff war also weigh down this currency but price in last week can drive up the market

Trading plan:
Slightly buy sentiment

CHF
Didnt hear big policy incoming

XAU
Should go down more with strong USD

USD
Probably strengthen more

Summary :
Next week if no major surprise AUD and EUR are the hot stuff. Keep updating the news and sync with market sentiment while entering trade with technical confluence and avoid buying weak currency plus discipline money management will be the key to survive in this business.


   

Exploit the Advantage of Big Leverage Margin

After months of no posts, I would like to share the experimental result I have done recently. The experiment and result is based on my own trading result and I am sure this is not the first time I did the research.

I find it simple to profit almost 100% per day if you have the guts to high leverage trading. I am doing day trades as usual. The difference is now I let my profit run and cut my losses small. Very small that almost all the trades are losses or break even. The trade system running normally but no profit taking activated. No direction either. It can buy then sell, or sell then sell etc. There is no restriction of which direction to take. It trades a lot and 70% of the trades is close break even or small losses. After 2 opened positions running in profit zone for some minutes, I double the trades. The new trade may trade different direction or the same doesn't matter. The rules still implied. If it is negative or break even then close. Then it took some losses again. Then I double the position again until all trades need 80% of available margin.

After quite a while all open positions is in one direction of trading. I can add 2 more lots to make it full margin and that's what I did. Now all the trades are profitable and make 90% of the initial equity.
And I did it in just 2 hours of trading in 3 days. All 3 days has reached the objective.

Here is the requirement to trade like this:

1. High leverage margin / low margin requirement per trade.
2. Wide range directional trading instrument like Asia market index.
3. Sufficient trading capital.
4. Big guts

And that is what my trading imagination. The truth is.....I blow up 3 accounts in three consecutive days. Demo accounts though but still it is interesting findings. I only need less than 30 lots to blow up 10k accounts by doing the exact opposite that I write above.

This is how trading played the human mind. It will beat you over and over until you crazy.
Let profit run, price will return and give you nothing. 
Next time you let losses run and it end up blow up the account.
and the cycle return...



" Boxing is unnatural act...that everything in boxing is backwards.
   Sometimes...best way to deliver a punch is step back. "

                                                                              Frankie
                                                                       from Million Dollar Baby


* change boxing to trading and punch to trade