It has been a while since I’ve posted to my blog. With the new year I’ve decided to focus more on learning to trade rather than writing about the journey. Yes, I do believe that blogging my experience does help, but with a full time salaried job (meaning my hours can be hectic) and a family with young kids I have to manage my time a little more precisely. Which is why most of my communication on trades have been through tweets (@BNGESG) or my blog post come at odd hours (ie late Fri night)-if they come at all. Enough of that, too much and it’ll sound like a confessional.
On to the important stuff: I’ve been learning fractal/harmonic trading over the past several weeks, combo of books, internet, & tweets from @FractalHIS & @tbg4321. I’ve found that the futures have a better schedule that works with mine and that harmonic pattern trading fits a little better with how I want to manage trades (set a target and walk away). Granted, I’m still learning this “voodoo” trading, but its starting to make sense. Hopefully by this time next year I’ll see the matrix.
For those unfamiliar, harmonic trading uses chart patterns to identify price targets that are potential areas for reversals in trends. From what I’ve read and tried (on paper trades), the idea is to enter long or short around these potential reversal zones (PRZ) for a high probability position. Set an entry limit order with a stop a few ticks beyond the entry and then also put in an exit order before the next target. The following is an example of a pattern, called ABCD:
A is the start of the pattern, moving to B, then C, and then D. Each target is a measured move using fib retracements. I use fib arcs because they incorporate time with price levels. I’m not sure if folks use retracements (horizontal levels) but I do as well, trying to see where multiple points of interest converge. The first leg AB makes a retracement leg, BC, which has a length that is a percent of the previous leg—that percent is a fib number. In the case of this example, leg BC is a 61.8% retrace or leg AB. The last leg CD, has yet to be completed, however, using fib numbers, the next target for a PRZ is 2.24% since the previous level of 1.618% was breached. By understanding, and trusting, in the fib levels you can see how these PRZs can be useful in entries and exits.
Btw, that was a chart on the S&P futures (ES_F). I’m watching for a PRZ around 1341 area and a 78.6% retrace back to 1170s to close the shorts in my trading account (TVIX & SDS…unfortunate bagholding) and get in long with my retirement accts (currently cash & bonds).
I was planning to go into more detail about my charting from last night and into today’s opening, but its been a long week and I’m flat out worn out. The gist is that I had a target for the completion of a pattern (which was the exit for my paper trade) but it didn’t execute because the pattern reversed just a few ticks before my target (target was 1309.25, think it reversed 1310). Turns out I measured the pattern wrong—if I did it correctly it would’ve been dead on & I would’ve been closed at 3am (while I was sleeping). Interestingly enough, at about 5AM I saw another pattern was forming suggesting a retry of my target, completing around the open so I let the position sit and, obviously, it hit after the economic data was released before the bell. Before harmonics I would have said BS if someone told me that at 5AM the market would make a 10 pt move in just a few hours. Here’s links to my tweets from last night:
https://twitter.com/bngesg/status/162747980527575040
https://twitter.com/bngesg/status/162749804898828288
https://twitter.com/bngesg/status/162765593316044800
Here’s the end result:
View my other posts/give me some advice at http://part-timepennystocktrader.blogspot.com/. Follow me on twitter @BNGESG.
On to the important stuff: I’ve been learning fractal/harmonic trading over the past several weeks, combo of books, internet, & tweets from @FractalHIS & @tbg4321. I’ve found that the futures have a better schedule that works with mine and that harmonic pattern trading fits a little better with how I want to manage trades (set a target and walk away). Granted, I’m still learning this “voodoo” trading, but its starting to make sense. Hopefully by this time next year I’ll see the matrix.
For those unfamiliar, harmonic trading uses chart patterns to identify price targets that are potential areas for reversals in trends. From what I’ve read and tried (on paper trades), the idea is to enter long or short around these potential reversal zones (PRZ) for a high probability position. Set an entry limit order with a stop a few ticks beyond the entry and then also put in an exit order before the next target. The following is an example of a pattern, called ABCD:
A is the start of the pattern, moving to B, then C, and then D. Each target is a measured move using fib retracements. I use fib arcs because they incorporate time with price levels. I’m not sure if folks use retracements (horizontal levels) but I do as well, trying to see where multiple points of interest converge. The first leg AB makes a retracement leg, BC, which has a length that is a percent of the previous leg—that percent is a fib number. In the case of this example, leg BC is a 61.8% retrace or leg AB. The last leg CD, has yet to be completed, however, using fib numbers, the next target for a PRZ is 2.24% since the previous level of 1.618% was breached. By understanding, and trusting, in the fib levels you can see how these PRZs can be useful in entries and exits.
Btw, that was a chart on the S&P futures (ES_F). I’m watching for a PRZ around 1341 area and a 78.6% retrace back to 1170s to close the shorts in my trading account (TVIX & SDS…unfortunate bagholding) and get in long with my retirement accts (currently cash & bonds).
I was planning to go into more detail about my charting from last night and into today’s opening, but its been a long week and I’m flat out worn out. The gist is that I had a target for the completion of a pattern (which was the exit for my paper trade) but it didn’t execute because the pattern reversed just a few ticks before my target (target was 1309.25, think it reversed 1310). Turns out I measured the pattern wrong—if I did it correctly it would’ve been dead on & I would’ve been closed at 3am (while I was sleeping). Interestingly enough, at about 5AM I saw another pattern was forming suggesting a retry of my target, completing around the open so I let the position sit and, obviously, it hit after the economic data was released before the bell. Before harmonics I would have said BS if someone told me that at 5AM the market would make a 10 pt move in just a few hours. Here’s links to my tweets from last night:
https://twitter.com/bngesg/status/162747980527575040
https://twitter.com/bngesg/status/162749804898828288
https://twitter.com/bngesg/status/162765593316044800
Here’s the end result:
View my other posts/give me some advice at http://part-timepennystocktrader.blogspot.com/. Follow me on twitter @BNGESG.
