Trading Performance for Oct 2010

As it turns out, it was a great month in Oct 2010!


The profit netted for this month is 307 pips.


Below is the breakdown for the trades done:

Of the 18 trades done, 12 were profitable, 1 a break even and 5 were losses. In this case, the success rate for this month is 72%, which I would consider it to be decent. Then again, I will still say that there is still room for improvement.


It is important to note that when it comes to trading, we should be putting more emphasis on our trading performance and not the monetary aspects. Once we are consistent in our performance, we will start to see the money rolling in as the secondary product of our trading performance.


In my instance, it was the draw of the money which first started me in trading. But, as a result of the focus on money, I had previously suffered a lot of losses. Having done some reflections and sort of had enough of a bad trading performance, I has since sought to improve my trading performance and I am glad to say that Harmonic Trading has offered me such a great opportunity and a great improvement in my trading. The performance tracking has shown this vast improvement which gave me a pleasant surprise too! :)


Note: As the trades are entered in 2 batches, profits are shown in 2 batches. Similarly, if a trade has its stop loss triggered before any trade protection can be done, the loss will also be reflected in 2 batches to reflect a more accurate trading performance.


                          

28 Oct 10 - Bullish Gartley Pattern on AUD/JPY - H1 Chart

This is an interesting trade to note and it is a nice example to show that harmonic patterns offer very nice trading opportunities if the trade is managed properly and even if the pattern does not offer a profitable trade, another opportunity will come again to present us another chance.

In this case, I entered this pair on 2 different lots where one trade was done on the M15 chart and the other on a H1 chart. It turned out that I was able to take a small profit on the 1st batch done on the M15 chart while I took a loss on the 2nd batch and the rest of the 2nd lot as a result of a" loosely employed" trade management. This turned out to be a nice learning experience as it served to remind me that if a trade is not as profitable, there will be another opportunity and it is not for us to decide what Mr Market wants to give us.

Interestingly though, the bullish Gartley pattern did reverse, but weakly and later presented another bullish move in the form of a bullish Crab pattern. It should noted that for a 0.618 retracement at point B, the completion of point D could be at 0.786 (Gartley) retracement of XA or at 1.618 (Crab) extension of XA. In this case the market present 2 opportunities!

Having said these, this is definitely one of those trades which enforces the maxim that strict trade management should never be overlook!

Attached are 2 charts which show the bullish Gartley pattern and the bullish Crab pattern.

Trade Details (M15 Chart Entry)

• Date: 28 Oct 10
• Time: GMT 14:45
• Entry Price: 79.158
• S/L: 78.800 (35.8 pips)
• T/P: 79.650 (49.2 pips)

The 1st Batch was closed on 28 Oct 10, GMT 15:44 at 79.322, netting a profit of 16.4 pips while the 2nd Batch was close when the stop loss was triggered on 29 Oct 10, GMT 01:14, losing 35.8 pips.

Trade Details (H1 Chart Entry)

• Date: 28 Oct 10
• Time: GMT 16:02
• Entry Price: 79.257
• S/L: 78.800 (45.7 pips)
• T/P: 79.650 (39.3 pips)

The whole lot of this trade was stop out at a loss of 45.7 pips on 29 Oct 10, GMT 01:14.

Reflection

It is definitely a great learning experience as I realised some mistakes and faults committed in this trade:

1. Price has broke and closed below the rising trend line after the reversal, whic could have prompted me to take the small profits and be happy with them.
2. The risk/reward for the H1 entry was not a promising one and one which is not very profitable and thus it should have been avoided in the first place.

Therefore, trading is a long term journey where we have to space out and limit our risk exposure. It was once mentioned by Warren Buffett that if we want to trade well, a loss got to taken in perspective in terms of a percentage of what we are willing to risk in a given trade. In the event if a loss is sustained, it should be viewed as a percentage and not in monetary terms and this is where we stay emotionally detached and unassociated and begin to look forward and move on cos in the world of trading, there will never a 100% win rate.

28 Oct 10 - Bullish Bat Pattern on EUR/USD - H1 Chart (Learning Example)

A nice bullish Bat pattern was seen completed on this pair, but I have missed out on the move.


Having observed such a nice pattern, I have decided to put it up for learning purposes to show the mechanics of Harmonic Trading.

The following validated the signal to go long for this pair:

• The primary trend for this pair is currently still an up trend.
• A confluence of 3 harmonic ratios - 0.886 XA @  1.37406 (defining limit for a Bat pattern), 1.27 AB=CD @ 1.37609 and 2.618 BC @ 1.37878 (max BC projection allowed for a Bat pattern).

Update - 30 Oct 10, SGT 01:45 am

As it turned out, this was a very nice trade which hit both the target objectives at 0.382 and 0.618 AD. In comparison, this is a great trade as compared to the other trade which I have done on the AUD/JPY.

Attached is the chart which shows how this trade turned out.

26 Oct 10 - Bearish Bat Pattern on GBP/USD - H1 Chart

After my trade on the AUD/USD was protected and having closed the 1st Batch on it, I was free to take on another trade and GBP/USD in this case provided me with another opportunity.


In the case of this pair, a bearish Bat pattern was completed with the following validating the pattern:

• A 0.50 XA retracement which points to a Bat pattern.
• A confluence of 3 harmonic ratios - 0.886 XA @ 1.58512, 1.27 AB=CD @ 1.58422 and 2.0 BC @ 1.58534.

Similar observation is seen on this pair where the price move is considered to be sluggish and thus, the mindset for managing this trade is to be delayed as test and retest of the PRZ is to be expected.

Trade Details

• Date: 26 Oct 10
• Time: GMT 14:00
• Entry Price: 1.58316
• S/L: 1.59000 (68.4 pips)
• T/P: 1.57740 (87.6 pips)

Trade Progress


The 1st Batch was closed on 27 Oct 10, GMT 07:08 at 1.57982, netting a profit of 33.4 pips.


The 2nd Batch was closed when the protective stop was triggered on 27 Oct 10, GMT 09:02, netting a profit of 10.6 pips.

25 Oct 10 - Bearish Butterfly Pattern on AUD/USD - H1 Chart

This week started with the market making very little move while the JPY pairs seem to be choppy.


A little risky to trade this week as prices swing up and down with a lack of direction until today.


Earlier at the start of this week, AUD/USD set itself up for a sell when a bearish Butterfly pattern was completed.


Signals validating a short for this pair were:

• A 0.786 retracement at B point which clearly pointed to a potential Buttefly pattern.
• A confluence of 2 harmonic ratios at the completion of point D - 1.27 XA @ 0.99307, 1.618 AB=CD @ 0.99245 and 2.0 BC @ 0.99491.
• Price action which clearly showed that price was unable to hold above the PRZ.
• Bearish Engulfing Pattern which happened 2 bars before the T-Bar completion.

Trade Details:

• Date: 25 Oct 10
• Time: GMT 17:00
• Entry Price: 0.99104
• S/L: 0.99750 (64.6 pips)
• T/P: 0.98300 (80.4 pips) - 0.618 AD Swing

Trade Progress


The 1st Batch was closed on 26 Oct 10, GMT 07:57 at 0.98875, netting a profit of 22.9 pips when price moved near the 0.382 retracement level of AD swing.


The 2nd Batch hit the target objective on 26 Oct 10, GMT 17:58, netting a profit of 80.4 pips.




Note:


It should be noted in this case that trade management was purposely managed at a slower pace as usual as the following were noticed:

• Price was forming lower highs and lower lows, signifying that a downward move might be in play despite a lack of a very decisive move.
• Price was still respecting a falling trend line.

Reflection


Though the trade turned out to be a "home run" move and I was out only at the 0.618 AD swing, I still think that this was a nice trade. Then again, as a result of a sluggish move at the start of this week, I was not very comfortable to push my target objective lower anyway. Such incidents will occur frequently in trading and we should just look forward as there will be many trades to come and a miss on this move is okay.

22 Oct 10 - Bullish Gartley Pattern on NZD/USD - H1 Chart

A short term counter trend trade was set up this morning to go long on this pair on the completion of a bullish Gartley pattern. The reason why I would consider this a counter trend trade was for partly due to the completion of slightly stretched bearish Butterfly pattern seen on the D1 chart. With this in mind, trade management for this trade would be of a defensive stance where I will look to lock in small profits on my 1st batch while aiming at max the 0.618 retracement level of the AD swing no matter how promising the trade looks.


Attached is the D1 chart of NZDUSD which shows the completion of the bearish Butterfly pattern and thus this trade I am in is considered a counter trend trade. (It should be noted that once this pattern is completed, a bearish outlook is maintained for this pair and once a sell signal comes in, I will be more willing to sell this pair with a larger target profit in mind.)

Signals observed to go long:

1. A confluence of 3 harmonic ratios which points to a Gartley pattern completion - 0.786 XA @ 0.74562, AB=CD @ 0.74475 and 1.618 BC @ 0.74442.
2. A support seen on D1 Chart @ 0.74284.

Trade Details:

• Date: 21 Oct 10
• Time: GMT 22:19 (Exact entry trigger would have been at GMT 19:00 candle but I missed it and entered was price was still within range)
• Entry Price: 0.74675
• S/L: 0.74630 (37.5 pips)
• T/P: 0.75154 (47.9 pips) - 0.618 AD Swing

Trade Update:


1st Batch was closed on 22 Oct 10, GMT 05:00 at 0.74995, netting a profit of 32 pips while the 2nd batch was set to break.


2nd Batch was closed on 22 Oct 10, GMT 06:41 at 0.74877, netting a profit of 20.2 pips. The protective stop was triggered in this case.

20 Oct 10 - Bullish Butterfly Pattern on AUD/USD - H1 Chart

A nice bullish Butterfly pattern completion was observed before the opening of the Asian session this morning.


Upon the complete test of the entire PRZ, a long position was executed.


The following signals were observed prior to the trade entry:

• A confluence of 3 Fibonacci ratios - 1.27 XA @ 0.97017, 1.618 BC @ 0.97020 and 1.27 alternate AB=CD @ 0.97001. These values were significant as they were formed near the psychological value of 0.97000.
• Minimum Fibonacci Time Projection of close to 0.382 was seen which gave me more confidence in this trade.
• A morning star formation was seen at the T-Bar close.

 Trade Details:

• Date: 19 Oct 10
• Time: GMT 22:00
• Entry Price: 0.97114
• S/L: 0.96500 (61.4 pips)
• T/P: 1st Target: 0.97911 (79.7 pips) - 0.382 AD Swing, 2nd Target: 0.98716 (160.2 pips) - 0.618 AD Swing

Trade Update - 21 Oct 10, SGT 23:59

1st Target Objective - Instead of waiting for the price to be triggered, the 1st batch was closed on 20 Oct 10, GMT 11:14 with a profit of 53.7 pips.

2nd Target Objective - 2nd batch target objective was triggered on 20 Oct 10, GMT 15:27 with a profit of 160.2 pips (See attached chart).


Note: In addition to this nice move, the move mentioned on GBP/USD earlier also turned out to be a nice move as seen in the chart attached at the bottom.

Note: A similar pattern completion was also observed on the GBP/USD, but since I was already taking the AUD/USD pair, the attached chart is another learning example which happened to be quite a nice trade too.

Since I am not an advocate of over trading, I have included the following chart to illustrate the beauty of Harmonic Trading. It is interesting to note that for most of the harmonic pattern completion, they usually offer a nice tradable opportunity, but it should be noted that not all harmonic patterns will offer a "home run".

Classic Bearish Crab Pattern on GBP/USD and Bullish Deep Crab Pattern on USD/CAD

Since most trades have run and while I monitor for a setup to form, I thought it would be nice to recap on the 2 nice moves made on 2 currency pairs on Friday last week.


The first would have been the GBP/USD which formed a bearish Crab pattern after which a nice reversal occurred. An interesting to note as seen on the RSI (Relative Strength Index), price took a nose dive after the RSI corrected a bit and headed south there.

The second in place would have been the USD/CAD which happened to be a trade I missed out as I was trading the USD/JPY.

As can be seen in the attached charts, once a nice reversal is in play after the completion of the harmonic pattern, the reversals will share the following characteristics:

1. A strong decisive move in the direction of the reversal.
2. A steep trend line.
3. No sideways movement of price action.

Then again, these are one of the "home run" trades which we will catch, but this does not mean that we will expect every trade triggered after a harmonic pattern completion will give us such results every time.

14 Oct 10 - Bullish Deep Crab Pattern on USD/CAD - H1 Chart - Learning Example

As mentioned earlier, once the market starts to move, patterns will start to appear quite frequently. And since, I was trading the USD/JPY setup, I was not willing to add on another trade and thus this pair is posted as a learning example as this is a nice example of another harmonic pattern in play.


In fact, if I was not in the USD/JPY trade, this is a trade which I will definitely take as the setup was seen forming near a support seen on the D1 chart. This will give the PRZ a great significance as a potential support.


Factors validating the pattern are as follow:

1. 0.886 XA retracment which is exclusive to Deep Crab patterns which will point to a PRZ at 1.618 XA.
2. A confluence of 3 harmonic ratios - 1.618 XA @ 0.99815, 2.24 BC @ 0.99785 and alternate 1.27 AB=CD @ 1.00029 (which serves as a complementary ratio).

Follow up - 15 Oct 10


Following up on the learning example, this pair actually found a support and bounced from its support and reversed beautifully. Although it did take a little longer to hit the target objective, it was still a nice trade as compared to the trade which I have taken on the USD/JPY. For the second objective, the result is still pending.

14 Oct 10 - Bullish Deep Crab Pattern on USD/JPY - H1 Chart

It has been a slow week to start with the market only making some moves from late Wednesday onwards. An interesting to note is when I am trading with the Harmonic Trading methodology, when the market is choppy or indecisive as in the case of a currency war reported in the news earlier this week, there were no clear patterns forming. Therefore, when harmonic patterns are not observed or failed midway through their formation, it is usually a warning signal to stay away from trading and wait for the market to settle down. When the market is settled, interestingly, patterns will start to emerge and this I where I will gear up for the signals.


After closing my earlier trade on NZD/JPY, another nice harmonic pattern setup was seen on the USD/JPY and in this case, it was the bullish Deep Crab pattern.


As seen in the attached chart, the following validated the setup and setup an entry to go long on this pair:

1. 0.886 AB retracement which signaled a potential Deep Crab pattern which in this case, we will be looking for the PRZ to be forming in the 1.618 XA retracement region.
2. A confluence of 3 harmonic ratios - 1.618 XA @ 81.035, 3.14 BC @ 80.924 and 1.27 AB=CD @ 81.112 (which serves as a complementary ratio).
3. A hammer candlestick formation which tested the entire PRZ which turned out the be the setup bar (T-Bar).

Trade Details

• Date: 14 Oct 10
• Time: GMT 10:42
• Entry Price: 81.146
• S/L: 80.800 (34.6 pips)
• T/P: 81.786 (64.0 pips) - 0.618 of AD swing

Trade Update


When price moved up after the reversal, the first batch of trade was scaled out at 81.479 which is the 0.382 retracement of AD swing, netting a profit of 33.3 pips at GMT 13:19.


The second batch was set to break even while aiming for the target objective at 0.618 retracement of AD swing.


Final Update - 15 Oct 10


The second batch was closed on 15 Oct 10 at GMT 01:08 when the protective stop was triggered at 81.398, netting a profit of 25.2 pips.

13 Oct 10 - Bearish Gartley Pattern on NZD/JPY - H1 Chart - Follow up

This is a follow up to the trade done on NZD/JPY done on 13 Oct 10.


After the completion of the bearish Gartley pattern, price took a dive. On hindsight, the move down was particularly steep as the pattern occurred at the upper band of the descending channel and price failed to break above the upper band.


The trade was closed with a profit of 26.9 pips for the first batch and broke even on the second batch as price retraced back up before resuming its down trend.


It is important to note that with strict trade management, there will be days where a trade will be taken out at a small profit before continuing its move and in such instances, we will have to accept it and move on.


In the case of this trade, the second batch was taken out at a break even when price retraced back up and it would not be wise if we choose to stick on and let the trade run as the price action may violate the PRZ and then resume its upward move and in this case, we will probably end with with a loss instead of a profit. On hindsight, this is definitely a nice and there is probably a sense of "loss profit" since the trade was not able to capitalise on this move. Then again, if the trade were to breach the PRZ and move in a fashion similar to one of the GBP/JPY trades posted earlier (as seen in the following chart attached).

 I believe we will all agree that a break even is definitely better than a loss triggered. In addition, there will be plenty of opportunities and we will just have to wait for the setups to form patiently.


Attached is the chart of the price action after the reversal at the PRZ.

13 Oct 10 - Bearish Gartley Pattern on NZD/JPY - H1 Chart

A completion of a bearish Gartley Pattern was seen on the NZD/JPY on the H1 chart where the D point exceeded the 0.786 XA retracement level by approximately 20 pips and reversed. The reversal was validated by a bearish engulfing pattern following a shooting star formation which confirmed the top.


A trade was executed when price action failed to hold above the PRZ.


Signals to go short were based on the following:

1. A confluence of 3 harmonic ratios were seen - 0.786 XA @ 62.282, 1.27 BC @ 62.260 and AB=CD @ 62.280.
2. Candlestick formation as mentioned earlier.
3. Fibonacci Time Projection at 1.41 which the price made a reversal.
4. Price was reversing at the upper band of a descending channel which serves as a added confidence (Refer attached H4 Chart).

Once the price close below the PRZ, a short was trigger on the open of the next candle.


Trade Details

• Date: 13 Oct 10
• Time: GT 19:22
• Entry Price: 62.239
• S/L: 62.540 (30.1 pips)
• T/P: 61.550 (68.9 pips - 0.618 AD Swing)
• Risk/Reward Ratio: 1:2.289

13 Oct 10 - Potential Bearish Gartley Pattern on USD/CAD - H1 Chart

The primary trend for this pair is currently down and the pair has been seen trending nicely in a falling channel.


Currently, the pair has completed its XAB move and the CD leg formation is the process.


Based on the retracement at point B, the expected pattern upon its completion is a bearish Gartley pattern.


The PRZ is as seen in the attached chart. Upon a test of the entire zone, a short can be executed in the direction of the primary trend with a more ambitious target since the trade will be done in the direction of the primary. If price fails to test the PRZ and declines ahead of it, the pattern will be invalidated.

13 Oct 10, SGT 12:04


The potential bearish Gartley is invalidated as the point C was breached and price has continue to move in the predominant trend.


Therefore, we will have to wait for another pattern to form.

12 Oct 10 - Failed Bullish Butterfly Pattern on GBP/JPY - M15 Chart

Earlier today, there was a bullish Butterfly pattern which completed on the M15 chart which was a setup to go long on this pair.

Setup seen which prompted an entry to go long was:

1. A confluence of 3 Fibonacci ratios were seen at the point D completion - the 1.27 XA @ 129.797, 2.0 BC @ 129.813 and the alternate 1.27 AB=CD @ 129.802.
2. Price tested and reversed at the PRZ.
3. The close above the PRZ was the signal to go long.
4. In addition, the morning star formation was also a setup to go long.
5. Pattern completion was seen after the Fibonacci Time Projection of 0.382 which is the minimum for a pattern completion.

Trade Details

• Date: 12 Oct 10
• Time: GMT 09:45
• Entry Price: 129.952
• S/L: 129.400 (55.2 pips)
• T/P: 131.000 (104.8 pips)

As indicated by the arrow in the attached chart, the arrow was the setup to go long.

As it turned out, the primary down trend was predominant and that trade was manually at GMT 12:34 when the lowest point of the PRZ was violated resulting in a loss of 40.5 pips.


A few signals were noted that could have signaled a trade failure:

1. Sideways movement of price action.
2. A retest of the PRZ.
3. A lack of decisive move up since a reversal will usually possess a steep trend line and a decisive move up.

I had wanted to hold on to the trade earlier as I was seeing the price action forming higher lows and higher highs. Therefore a lesson learnt is to respect the earlier signals seen.


Similarly, some flexibility could have come into play after the harmonic meltdown as the PRZ could have acted as a potential resistance for a down trend in this case after price action violated it as a result of a strong primary down trend and a short could have been executed when price went back to retest the PRZ which was acting as a resistance.


Attached is the chart which shows the possible entry when price moved back to test the resistance at the PRZ.

In this case, the T/P could have been set at the lower band of the falling channel which is in line with the 3.618 extreme BC projection.