Summary Eur/Usd April & May 2015

     Was an entire year since I write here the last post, and now I living the spring of love. I hope all goes well in your life, especially in your trading. If not, this post could be helpful to you, just if you have an open mind attitude.

First a little words:

     A lot of people not listen and they closed they minds and mute the common sense. Many become very arrogant with what they believe (Trading knowledge). Around the 95% (or 75%) of the people who start trading lose all they money very fast. Around 90% of that statistic use the same tools like: Moving averages, stochastic, Macd, RSI, pivots, support and resistance, trend lines. Etc. So, if the vast majority using the same tools and lose, why you pretend be successful using those tools? You are smarter than the majority? You are faster than all of them? Anyway; I not will write about the reasons why most people lose in this business for now (maybe in the future).

     In April 2015 I trade this pattern (Chart below). At that time I chat with a lot of traders whose tell me: follow the trend (…). The trend is bearish they say.

     I never follow the trend. I don’t believe in the concept of trend or this word is not useful in my trading. Harmonic pattern provide a potential reversal zone PRZ. The level where the probability is high, that not means an infallible level to reversal; sometimes works, sometime fails. But the majority of the time works. Trend trading and breakouts trading works less of the 30% of the time. Be aware of that.

     I not take the entire move on this currency pair, I kicked out at 1.1100 using trailing stop. But I identify another interesting pattern to trade

So, I take the trade and right now I riding in a free trade (short). I follow it with trailing stop. I not use targets… Well, maybe 2 times per year.

Mexican peso was another great pattern to trade.

At this time is a risk free trade too.

I impressed with Canadian dollar.

This is my first discovery under the concept of harmonic numbers with time or period. Sacred geometry they say. But for me is Just geometry related with ancient of course. I trade this one under the idea of double bottom (Traditional technical analysis). But a day after. 144 numbers was a revelation. Maybe is coincidence. A really great coincidence to me.

Happy trading!

Frequently asked questions about trading

Many famous economist, strategist, advisers, etc. feels very comfortable saying “I don’t know” When topics have reference to expectations or about the future. Nothing is wrong with all of them, because no one can know with certainly what will happen in the future. Some of the most common questions that many people make me: Can I trade this pair? I can keep my position open? Can add another position at this level? Should I close my position?

If you ask me about the future, my answer is… I don’t know.

In this chart below the common questions are:  Can I trade this pattern? Is an opportunity? Or, can add more?

My answer: Sure, you can trade this… or wait for the 161.8% extension.In the next one… I can keep my position open? Or, is time to close this position and achieve profits?

First to all... You need to know what are you doing in advance. What is your method, strategy, system, etc. what are you use to trade? If you identify an opportunity based on your method; just trade it.In the second chart… Many times the idea of achieve profits before this vanished scream in your mind very loud and when you close the trade and the price continues to your favor; you begin to feel very uncomfortable, very uncomfortable. Now the advice of “let your profits run and cut your loses fast” sound very loud in your mind: Forget all loud noises, and focus in what you planned before enter a trade, take under consideration time… but first, if you not have a plan...     Do you want an advice? Well, my advice for you: When you find a pattern, put special attention to your risk. I repeat this one more time. I don’t know if your trade works or not. Our job as traders is reduce risk and trade based on numbers (probabilities). Harmonics are very good for me, because provide me a high probabilities trades and low risk trades.Last words: If you want to learn more about how I trade; I can offer my teaching services (very new for now), and if you want invest or open an account I can introduce some regulated firms.
Happy trading!

Emotion Storm

Hi everyone. I take this trade today, see the image below.

Why I take this one? Because the Fibonacci level of 88.6% looks really good for me, and I expect take a minimum of 30 pips, the double of my risk 15 pips, below of the recent higher low. Sometimes many newbie’s traders feel uncomfortable taking this type of trading; they learned about Fibonacci levels, but when they identify this entry, they feel a lot of fear thinking I’m wrong the price movement (high to low) unmotivated to take a buy position. They begin to forget what they learn and want to entry selling with the argument: the price is strong. They plan is drop to trash, and many of them make a mistake selling. At this time we not have the super powers to see the future so, the next happened.

At this time, the trader who’s change him plan (about to entry under Fibonacci criteria), feels like a winner, because he was right, the price movement is strong and he or she sell. In the other side the trader who’s entry buying, starts to feel very uncomfortable, like a loser, the market ever be against he or she, they make the worse decision buying… Feels terrible at this time and the emotional storms begins to increase inside the mind of he or she, whatever. The mind play tricks and is natural have that emotions, as a trader needed to control that’s emotions; trading emotionless is the right. Emotions can destroy your trading career also you trading account and your stomach. The answer of all of this is really simple. Just follow your plan. Take a loss or profit doesn’t matter.

Actually this works property; provide us more of 30 pips (my plan was earn 30 pips as a minimum. Remember?). Nothing to do if I was wrong and take a small loss, anyway 50 pips are really good for me, I just risk 16 pips in this trade. Have a great week!

Monday July 16, 2012

Hello everybody, today I share my positions and some ideas. The first one is on Eur/Gbp pair; long position  4 hour chart, because I find this harmonic pattern, and my exit around 0.7935 as first target, the ideal target can be situated around 0.8020 The yellow zone. See the chart below

The next is the Eur/Jpy 4 hour chart where I enter long based on harmonic criteria & the yellow zone, help me to define my exit. At this time I move my stop loss few pips above my entry and now I ride in the risk free trade.

I missed this beauty harmonic pattern on Kiwi dollar. I put this one trying to provide more references to understand how the harmonics are very accurate patterns. See the chart below.

Kiwi/Yen is a 1 to 1 risk reward trade… and is not the most recommendable thing but I follow my plan and move my stop to break even when the price stay near to 63.00.

The last one is Usd/Chf. I enter the trade July 13, 2012. Right now is show us AB=CD pattern (Buy). I stay in my short position waiting for the price hit the blue zone.

I hope this was helpful. Have a great week!

Long on Eur/Aud Daily timeframe

Hi folks. I identify this pattern yesterday on Eur/Aud and put my buy order at 1.2310 Is reacting good at this time. I planning to increase my position.

Our target? I draw a yellow zone. Have a great day! P. D. Remember; Is a Daily chart... very boring.

Harmonic pattern is forming on Aud/Usd. January 11.2012

Hi guys... I find this harmonic pattern on Aud/Usd. Looks good to me. Maybe we can see the price near to our PRZ the next week. For me 1.0500 level. But near to 1.0700 looks great to me. Have a great day.

Trading is boring

Hello everybody! Sure, I agree. Trading is very boring (successful trading) sometimes, but understand this; Trading is a business not a funny activity. Maybe you can find excitement times in a casino or in a horse competition. You risk money on both although. As a newbie trader; many start to trade in small timeframes charts like 30, 15, 10 and maybe 1 minute because they need action. Is really boring wait for our entry in bigger timeframes than the small ones. Maybe you identify a high probability entry in a daily chart on Eur/Usd, but you need to wait around 7 or 10 days and evaluate if you put an order or you pass the trade, the impatience ghost is calling to your door. And maybe you fail to wait for your entry and executed the order in premature time. As traders we cannot know about the future. I cannot know what happened in the future. I never predict the market, because I can’t. I just identify opportunity with low risk and high reward. I have a system to trade, and I make a plan to trade it… If my trade fails I don’t care, because my system works in the long run. Loses are part of the job. I love trade Harmonics because, I can calculate the risk to take and if I wrong, my stop loss help me to protect my money. Is a really basic rule: “Never trade without stop loss”

In the next chart I show you a simple entry in a GBP/USD. I buy the pair around 1.5390… 4 hour chart. This trade take some time before works (or fail). Why I trade this? Because I identify a bullish AB=CD Pattern (not draw here), and a Fibonacci level 88.6% And put my stop loss just below the previous lower low 1.5361. See the cart below.

The trade can works property… I don’t know. But the risk is good for me. Now taking that entry I just manage the trade. First, I move my stop loss to break even. I ride on the free risk trade. That’s my first goal. We have a congestion zone around 1.5500 and this can be obstacle to obtain our target. I don’t know. I just follow my plan and I close this position with a Stop loss or limit target.

 And… now what? Wait my friend… I put my attention at 1.5600 levels to sell the pair. That zone looks interesting for me. I’m not recommend sell to you (or buy). I just share some ideas with you. Remember: You are the only responsible for your actions. I hope this was helpful. Have a great week.

Octavio; How do you handle a position?

The most important aspect of trading is the mental state. Unfortunately many of the traders focus them efforts on searching for a foolproof method or strategy: Moving averages crosses, RSI, Momentum, etc. Some pass the time asking to others:  Where goes the trend? Did you go long or short? Bernanke have announcement today? Is it a breakout? Still others seek answers regarding the Price direction, Reading or listening popular traders, about the opinion of where the market goes. All this information will only take you more confusing and complicated than it really can be. Taking a loss is something that really bothers you, take five consecutive losing trades can be very daunting, and manages to destabilize our mental state. On the other hand, achieving a reward for reckless action is one of the most expensive mistakes in this business. In my point of view, it must change the “You overshoot” or “Successful achievement” to “be highly probable and the risk are low” In the other words: to control your losses. Be realistic, you cannot control the prices, so, the only thing you can control is… yourself.  How? Being disciplined is the answer. Some of you will say: Yeah Octavio, but what is the trend in Eur/Usd? Where do you predict the Price goes? I just answer: I don’t know dude, I do not make predictions, but dude; you asking to the wrong person, ask that to a psychic or an astrologer, with magic, witchcraft and astrology are obscure things and I tend toward the scientific.

The following graphic shows how business AB = CD pattern buying the EUR / GBP. The first is to identify the points A and B evaluate if the point C that can meet a harmonic number, in this case 61.8% Fibonacci retracement.

But I do not understand. How exactly do you do Octavio?
Ok, it is best to explain it in steps (never found someone to describe how to act and to identify opportunities, therefore, I explain here, waiting to be useful).
Step One: Find the AB = CD pattern, find this form of bolt ray. In this particular case see the price coming down surpassing 0.8708; just look at it began to show the buying opportunity, I will explain briefly why:

a)      Many traders, executed sell orders for reasons such as: He broke the support line: sell, sell because it is strong.

b)       The stochastic indicator shows a sell signal (time before this can be obvious, but that cannot see in the image above)

c)        The trend is your friend and they entry short.

d)       They make a basic mistake ... they are selling cheap, and by my side, I buy low and sell high.

The ideal in this AB = CD pattern is to have the same number of candles on AB and CD, however, in this particular case; CD has fewer candles compared to AB. Right here is necessary to emphasize a very important aspect. The market is not perfect, so do not expect to find the perfect pattern.

The second step is: Place the Fibonacci tool and identify retracements with the harmonic numbers. In the graph above, you can look 61.8% the number right at the point C.

Step Three: Assess the level of D. That is, where is the potential for reverse zone?
Step Four: Identify if there is an area of demand to support our thesis (just the yellow paint area)
Step Five: Define where put our entry

Step Six: Evaluate where put our stop loss, just where we identified our pattern can fails.
Step 7: If the risk is good, executed our order as we planned.

 

In the chart above you can see the reversal area: 127.2% which is a harmonic number. It also shows the area where I planned to take profits or set my limit order.

Step Eight: Check the position, wait for 20 pips or more and move the stop-loss order to break even (this is highly recommended for beginners, I personally determined when is the right time to move my stop-loss order, and always in the direction of my trade).

The step nine is: The closing of the position; this one can be manually, using criteria such as time, i.e., the time when the markets are not opened, or the Friday before weekend. The ideal purpose is to close the position with stop-loss or limit order.
Step # 10: Evaluate and review: Why I won? And why I lose? That is, take the necessary notes. Remember that something very valuable is the experience.

Take care friends, I hope this was helpful. And consider this: If you are losing money in the markets. Stop to trading and invest in education.