A reminder…

The following chart shows an AUD 60 min Bat pattern that I traded the other day. The ratio alignments were great, they lined up with resistance, the pattern had good structure (number of bars etc) and the RvR was good…. I know, I am sounding like a parrot here…..  but this is trading….. it’s repetitive.

 

The market spiked up and took me out at B/E, we hadn’t hit the .382 profit target yet and maybe in hindsight I should have employed the 60 degree accelerated trend line in order to bank some pips. Afterwards as I am prone to do, I kept an eye on the chart to see what transpired, and sure enough after a period of consolidation the market went my way… but without me of course….. fair enough, it happens, BUT… there was something else that was really bugging me; I just felt that there was something staring me in the face, it was almost biting me on the…..  and I just wasn’t seeing it….. and then it came to me. Now I could be talking absolute you know what here, but here it is… as I see it…..

 

In this month’s monthly meeting Scott went through in detail some examples of Type 1 and Type 2 reversals and whilst I was looking at the AUD chart, all of a sudden it dawned on me that I might be looking at a Type 2 reversal. Now, I know that I have mentioned them in previous blogs and I have even traded them but in recent times they have got somewhat sidelined (just in case “HE” reads this….. yes I know!…… slapped wrists….. but at least I’m owning up!) So I checked the ratio alignments of the consolidation and sure enough there was a perfect Gartley, and I mean perfect. I also did some Harmonic scans and there was a small 15 min Butterfly that had formed in the latter stages of the consolidation.

 

 

 

So, how to trade it? Well the Primary time frame was the 15 min on both the Gartley and the Butterfly but as far as I could see when you went down a time frame to the Proximate timeframe there wasn’t an entry trigger/RSI to get you in, but if you went down to the 1 min it was doable. I guess that on a trade like this you could have just entered a limit order with a very tight stop above the X point of the Gartley.

So there you have it….. lesson learnt.

Patience is a virtue….

I took that EURO/JPY trade early in the week, and it worked out well.

 

The way in which I managed it was to bring my stop into B/E once we hit the .236, took a piece off at .382, and then once we hit the B point I took some more off, all the while keeping my eye on the price action with the help of the 60 degree (accelerated) trend line and the 45 degree (primary) trend line.

You see I’ve been told by “He who shall be obeyed” ( based on a review of a trade that I had posted back on June 4^th were I got stopped out at B/E) that I really needed to be more aggressive in my trade management. He’s so right! It makes complete sense to keep banking points as often as the market makes them available to you. I think that I like most other traders on the planet live for the home run……… we are only human, but here’s the dilemma…. as Scott said in this month’s monthly meeting, the home runs account for about 20% of all Harmonic Trades, which means that you get your bread and butter profit from the other 80%; pretty much like any other business I guess. Therefore you’ve just got to be aggressive in your trade management and keep banking points… a bit like being in one of those game shows on TV.

Anyway back to the job in hand, this time I had split my trade into 3 parts so that on the 3^rd and final part I trailed my stop using new lows/retracement waves; meaning that once we made a new low, retraced and then hit the new low again I moved my stop just beyond the new lower high.

But as you can see here in the following chart, the market made a much larger retracement (well it was NFP day) before printing a new low…… now the question here is should I have used that larger retracement to trail my stop, or is that a trade for another day when I have split my trade into 4?

 

Should I…Shouldn’t I ???

This week… a little bit frustrating… you see there is this EURO/JPY Bat pattern on the 4hr that has been threatening to happen since Wednesday and it’s been practically begging me to take it, and boy do I want to! It’s an absolute beauty, everything about it ticks my boxes; it has great structural alignment, with Fib ratios to die for all coming in under resistance, thus offering a great place to put a stop… and the icing… great RvR. It has been teasing me ever since, stopping just short of the PRZ a couple of times and now it looks like it could be about to happen.

So what’s the problem? Well it’s Friday and I am just not comfortable taking on new positions on a Friday, OK, this one has the double whammy of being the July 4^th weekend but generally speaking I just can’t get my head around opening trades on a Friday (someone I greatly respect told me that he won’t entertain holding a position into the weekend unless he has at least 80 pips profit in the trade). To me it feels like looking into an abyss; a couple days of nothing or something crazy and only a stop loss to look forward to. Personally I like a full trading day to follow on from a new trade, don’t get me wrong I’ve no problem taking a loss it’s just how I take it… it’s still frustrating though….

I guess I just need to accept my decisions… and quit moaning!

The Bat came home to Mamma!!

I love the Bat!….. OK, so I’m fickle

I’ve posted the following chart of the EUR/JPY on a 4 hour time scale in order to give a better idea of the trend channel in which the Bat formed.

 

The next chart shows the “Beautiful Bat” structure itself which showed up on a 60 minute time frame. It reversed almost exactly off the XA-D leg at .886. There was a nice tight range of Fib ratios coming in together and I was more than happy to place my stop above the trend channel.

 

The way in which I managed this trade was to bring my stop into B/E once we had hit the .236 Fib level and then take my first bit of profit at the .382 Fib level, followed by the B point.

As you can see this one just flew and whilst I would love to say that I got the whole move I didn’t, because I only had 2 lots on…. had I had 3 lots on I would have let the 3^rd one ride, locking in profit on each wave/retracement…. with 4 lots… well that would have been party time… I would have taken the 3^rd one off at the C point and trailed the 4^th… I can dream.

 

Anyway me and the Bat… we’re feeling the love….

On a side note the Bat completed right at a support level where another structure namely a Bullish Butterfly formed on the 60 minute time frame. It reversed almost exactly off support at the 1.27 XA-D and so far it’s playing out nicely…… now how cool is that!

That Bloody Bat has got it in for me!

The last one didn’t amount to anything!

 The following charts show an Alternative Bat pattern on the CAD/JPY which I traded earlier in the week. I have posted this trade because whilst I didn’t garner any points from it and I got out at break even, I still view it as a success and I was pleased with the exercise as a whole.

 I initially liked the pattern because it ticked all the right boxes on the check list which I have got into the habit of employing every time I consider the merits of a potential trade. It had a good structure and the correct ratio alignments and I was able to place a stop just under support which gave me a good risk reward. As you can see from the following charts (sorry they are a bit rubbish but I forgot to save them at the time) the Alternative Bat was forming in a pennant and as I have learnt when a pennant forms it tends to initially break out on one side but then often reverses back into the pattern before breaking out and revealing its true direction. The 1.13 XA – D of the Alternative Bat fell just outside the pennant which was the icing on the cake.

So I took the trade and I followed my Trade Management Rules which were to take the first profit at B and bring my stop into B/E roughly half way between my entry price and B( to be exact B/E was 10 points higher but as Scott always says don’t let a winning trade become a loser… and with broker variations etc I can’t afford to be that pedantic!) . In the past I have always watched my trades like a hawk and every retracement against me, especially when I was in profit could bring me out in a cold sweat which was not helped by the fact that I was simultaneously watching the P & L move up and down. Big mistake! It made trading a thoroughly unpleasant experience because I always felt as if I had failed somehow either by leaving money on the table or giving too much back. I have tried all manner of methods to manage my trades but they just didn’t gel with me. For me as far as my trading life is concerned it needs to be “as black and white as possible with no grey areas” because otherwise I’m going to be meddling and I am lethal with the mouse in these situations!

Anyway, I followed my trading plan, and as I mentioned previously I got out at break even, and even though there were some decent points to be made which because of my method didn’t end up in my account, I still felt good about the whole process because the emotion had been removed from the situation.

I have recently heard Scott talk about there being no such thing as leaving money on the table; there’s only profits and losses…. I’ll go along into with that…..no problem….

The Bat was a no Show!

The bloody thing got lost and flew the wrong way! I admit it, I’d got my hopes up that it was going to be a “corker” of a trade and when the market clearly wasn’t playing ball I was disappointed to put mildly! It wasn’t a complete washout though because it got me thinking about how my mind and emotions work when I’m trading and what I can do to improve them.

I am realizing more and more that trading should actually be quite boring and repetitive. I cannot afford to pin my hopes on and get overly excited about individual trades / setups, which when they don’t materialize leave me feeling a little deflated and a little desperate. I then tend to rush off in order to find something / anything to trade which results in me making silly mistakes (need I say more). 

I am learning that really my job as a trader is to look for and line up as many potential Harmonic setups as possible and then sit back and wait and see what transpires. “Patience and self-discipline”, that’s my new mantra! Meanwhile whilst I am sitting there in my new Zen like state maybe I should reinforce it with a new hobby…. maybe I’ll take up knitting….. NOT! 

The following charts of the AUD/JPY highlight a bearish Gartley and the downward channel in which it had formed. I didn’t take this trade even though it ticked all the boxes in terms of its symmetry, near perfect ratio alignments (.786 XA leg, 1.618BC extension and an AB=CD) all coming together in a very nice tight configuration at the PRZ, which just happened to neatly coincide with the upper end of the downward channel. The reason that I didn’t take it was simply because I didn’t like the risk reward element. It has since reached the first profit target at B and it remains to be seen whether it continues down or reverses back up towards the upper end of the channel. If it does the latter I’d be happy to take this trade as a Bat pattern, because even though the B point is not at the ideal 50% or .382, it did fall just short of the .618 and the other required ratio alignments for the Bat, the .886XA leg, and the 2.0BC extension would make up for it by coming together in a very nice tight range just above the upper channel, the AB=CD or as is usually required in a Bat the 1.27AB=CD would come in above the other 2 ratios therefore I’d be inclined to enter above .886 with my stop above X, thus enabling me to take a low risk trade with a good risk reward.

 

 Let’s see if this Bat finds its way home! In the meantime I’ll be looking for other opportunities!

Is it a Bat?

The following chart that I’ve highlighted shows the Kiwi on a 1hr timeframe. It jumped out at me as being (fingers crossed) a potential Bat pattern, which if it played out I would be happy to trade for the following reasons:

1. The B point is at 50% which means it could potentially evolve into a Bat or a Crab but with the clear range showing good support and resistance, the Bat is the one that fits best to my mind because it comes in just under resistance at 80.87ish (XA-D of the Bat is .886 and the Crab is 1.618). The potential 1.618 AB=CD and the BC projection at 2.00 would come in around the same area, creating a very nice Harmonic PRZ.

2. The Risk verses Reward is good and I would be comfortable placing my stop above resistance.

3. Finally I like the structure of the potential pattern.

 Let’s see if it pans out….