Hello - and welcome to this site which is an introduction on how to trade harmonic patterns on the forex markets.
Harmonic pattern trading is a trading technique for forex, stocks, commodities etc - which is over 70% successful in identifying price reversals. They identify the best times for buying low, and selling high with high probability and low risk.
It's a rules-based method that provides an excellent structure and discipline required for consistent, successful trading.
As a result, more and more people trade forex harmonic patterns nowadays - it's become a burning hot topic in forex trading circles.
Now, I'm not an originator of harmonic methods by any means - but I'm happy to "add fuel to the fire" by promoting and explaining the harmonics methods I've learnt from the experts.
My harmonics mentors are primarily Chris Hall (www.FxGroundworks.com) and Scott Carney (HarmonicTrader.com).
If you're looking for a consistent trading method that puts the odds in your favour - then read on - you're in the right place to get started, with no obligation.
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There are several reasons to trade harmonics ....
It's all about getting a trading edge. By "trading edge" I mean - a consistent method that puts the odds in your favour. So that you know you can genuinely make more money than you lose.
There are only certain times when probability is on your side - and they are identified by the harmonic patterns. It's only during those times you have a distinct trading edge. Fortunately, hundreds of patterns occur every day on forex, so there are always plenty to choose from.
Harmonic patterns work by identifying potential high-probability, low-risk reversal trades. They enable you to get into a new trend earlier - and that provides an opportunity for lower risk and higher profit.
Harmonics have been used by professionals for over 75 years - but they have not always been readily accessible to everyone. Until recent years.
Trading harmonic patterns is a good way to get an edge in trading.
More importantly perhaps, harmonics identify a logical place to put a stop-loss - and where to take profits. Objectively.
That allows you to calculate your risk/reward ratio (RvR) before entering a trade.
This is the way Harmonics helps control risk, and set a target for taking profit. It's a process which is mechanical, objective and without guesswork or emotion. And it ensures you stay in the game in the long run and remain profitable.
Now I'm not saying Harmonics is the proverbial "Holy Grail" of trading methods.
But if there really needs to be a trading holy grail - then a good candidate would have to be "consistency". All traders want consistent results - and that comes through being consistent yourself.
"Traders who are consistently successful are consistent as a natural expression of who they are. They don't have to try to be consistent; they are consistent." (Mark Douglas - Trading in the Zone)
If you trade harmonic patterns, you will become more consistent in your trading.
To trade harmonic patterns means you're really playing out a pattern identification numbers game. A game in which you trade the probabilities over a series of trades, and where assumptions, bias, expectations, intuitions and emotions about individual trades are taken out of the equation.
No-one can know the outcome of any individual trade.
Typically over 400 harmonic patterns occur every day in forex markets alone. Although you will not want to trade all of them by any means.
The trick is to pick out the best quality trades. Those are the ones with a sensible risk-reward ratio (greater than or equal 1:2 in my case) as the main criteria.
There's a psychological angle too.
Although no-one can tell if any particular individual trade will work out, we do know that harmonic patterns are over 70% successful generally. That's from accumulated experience of harmonics over the last 75 years or so.
Clearly that doesn't mean 7 out of every 10 trades are guaranteed to be winners - It's possible to get a string of 4 or more losers in a series of 10 trades, of course. Although over a series of 1000 trades, say, you can expect something in the region of 700 will be winners.
The bottom line is - over a large number of trades, we can reasonably expect there to be more winners than losers - over twice more winners than losers in fact.
If you trade harmonic patterns, you'll find trading altogether simpler than most traders who use the usual indicators, moving averages, oscillators and the classic chart patterns (flags, triangles, penants, head and shoulders etc).
The "Encyclopedia of Chart Patterns" has over 1000 pages listing more than 50 classic chart patterns. Who can remember them all? And who can remember how to trade them?
By the way, Harmonic Patterns are absolutely nothing to do with the classic chart patterns you find in the usual technical analysis books and courses - e.g. Head and Shoulders, Flags, Pennants, Triangles, Cup and Handle etc. Find out the differences here
Whether or not you eventually switch to trade harmonics exclusively, or use harmonics to supplement your existing trading strategy is, of course, your choice. Either way if you can trade harmonic patterns, you'll have an effective trading strategy, with a sure way to get the odds in your favour.
It's not absolutely necessary to pay for subscriptions to "members only" sites, or purchase expensive training classes or buy costly software to get started.
Although it's definitely a good idea to join a harmonics trading community and find a mentor, if you want to speed up the learning curve to trade harmonic patterns.
I recommend you start with the following pages first, to get a good overview of harmonic trading and introduction to the major harmonic patterns.
Have you joined a Harmonics Trading Community yet? I strongly recommend you do. You'll speed up your harmonics learning curve. You can share experiences with other harmonics traders. Learn from expert mentorship. Have access to a wealth of recorded webinars, educational videos and other downloadable resources.
Click here [Trading Community Info] for my personal recommendations. I joined them myself - so I'll see you there! - Paul.
Learn how Adaptive Position Sizing can grow your account balance - exponentially.
Real-time harmonic alerts to pc and email. Free harmonics education videos and harmonic software. Harmonic traders chat room.
Over 15 hours of educational lessons narrated and presented by the originator of Harmonic Trading, Scott Carney.