Guide to Precision Harmonic Pattern Trading

Subtitle: Mastering Turning Point Strategy for Financial Trading

Author: Young Ho Seo

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About the EBook

Harmonic Pattern trading uses the direct pattern recognition from the price chart to predict the potential turning point of the financial market. Although the history of the harmonic pattern goes back to the Gartley’s book “Profits in the Stock Market” in 1935, Harmonic Pattern trading became popular in last few decades. In comparison to many contemporary predictive techniques, there are far less literature available to study this technique in several different scientific angles. Most of harmonic pattern trader focuses on the visual aspect of the pattern keeping very small attention on the precision aspect. In this book, we want to introduce the brand new precision concept, Pattern Completion Interval and Potential Continuation Zone, for harmonic pattern trading. In the first few chapters of this book, we will illustrate the concept and the operating mechanism behind these new techniques. After that, we will focus on how to manage your order and risk with Harmonic pattern. We will illustrate how to apply this precision concept for both market order and pending order setup for your practical trading. At the end of the book, we describe the rolling ball effect and we show how it can affect your turning point strategy. In the final chapter, we introduce Mutual Pattern Turning Point Strategy for your practical trading. Then we show you three essential but powerful steps to trade with turning point strategy. Please note that we use our own custom ratio sets for harmonic patterns presented in this book because our backtesting and forward testing results indicates that they perform better than the original patterns. The studies presented in this book are the results after the intensive computerized research using Harmonic Patterns. If you want to dig deeper on rolling ball effect and other mutual patterns for turning point prediction, you can also read our book: Scientific Guide to Price Action and Pattern Trading.

Table of Contents

  • 1. Introduction to Harmonic Pattern 7
  • 2. The Concept behind the Pattern Completion Interval (PCI) 14
  • 3. Pattern Completion Interval for Harmonic Pattern 22
  • 4. Trading Setup with Pattern Completion Interval 29
  • 5. Potential Reversal Zone (PRZ) and Potential Continuation Zone (PCZ) 38
  • 6. Managing Reward/Risk Ratio with Real Time Market Data 48
  • 7. Insignificant Turning Point, Local Turning Point and Global Turning Point 58
  • 8. Market Order and Risk Management 62
  • 9. Pending Order and Risk Management 68
  • 10. Practical Trading Management 77
  • 10.1 Various Risks in Trading and Investment 77
  • 10.2 Position Sizing Techniques 83
  • 10.3 Reward/Risk Ratio in your trading 87
  • 10.4 Breakeven Success Rate 88
  • 10.5 Know your profit goal before your trading 90
  • 10.6 Compounding Profits 94
  • 10.7 Trading Performance and Cost Metrics 94
  • 11. Rolling Ball Effect and Harmonic Pattern Trading 99
  • 12. Young’s Mutual Pattern Turing Point Strategy 108
  • 13. References 124