Mates, recently I've been posting advanced patterns mostly. Now it's time to post harmonic patterns as well and explain the possible ways to trade them. Here's the crab pattern. I am already in and below are the rules for the strategy that I have created.
Step#1 Identify a harmonic pattern placing D at the XA retracement/extension level of the PRZ. Step#2 Draw the target levels stretcing fibs from the A to the D and enable -0.382 level to calculate the equal distance between the D and target#1 and the D and stop level. Step#3 Draw the blue rectangle between the D and Stop level. Step#4 Entry technique: Wait for one of the following candlestick reversal patterns to appear inside of the blue rectangle: a) hammer/shooting star b) pin bar c) bearish/bullish engulfing d) dark cloud cover/piercing patterns. They should appear on the top of a peak or the bottom of a valley. Avoid the formations within sideways movements. Only enter if the candlestick pattern closes inside of the rectangle. if it goes below it then wait for price to come back inside of the rectangle and form another candlestick pattern. As the initial distance from the D to the target 1 equals to the D to the stop level and you enter only beyond the D thus you will ALWAYS have a positive reward to risk ratio. Step#5 Trade management: Unlike harmonic patterns in this strategy no target adjustment is needed. When target one is attained then close half of your position and place the stop of remaining half to the D. Thus you will garantee some profits because your entry was beyond the D. Step#6 Exit technique: Simply wait for priceaction to hit one of your levels: either stop or target
The strategy is 49,6% accurate this means that small losses will appear pretty often. But when targets are attained they are great thus the equity curve recovers the drawdown pretty fast. To tell the truth none of my strategies gives the same smooth movement of the equity curve.
Best Regards, Alexander Nikitin, a professional trader and a programmer.