Few commercial concepts have gained popularity as harmonious models. In fact, retailers use different models of harmonious forex strategies to find the perfect trade.There is a reason why merchants like them. They have a clear configuration and give a forex harmonic pattern point of entry and exit. In addition, the risk / return ratio is one of the best.
The Forex market, as we know it today, is a strange trading venue. The idea is very simple. Traders buy or sell a currency pair.
If they are right with the address, they have an advantage. The difference between the starting price and the exit price is the profit.
But this simple concept is very difficult in the long run. Constant profitability has high costs. Operators must find an advantage to win the market permanently. For some, this advantage is an exchange system based on technical indicators.For others, it’s a fundamental analysis and how economies around the world are changing.
However, among other traders, some business theories dominate their actions. Elliott’s theory of waves is one of them. The forex strategy of harmonic models is another.
Coincidentally, the two theories appeared at the same time. In the early 20th century, Ralph Elliott laid the foundation stone for Elliotts’ theory of waves.Harold Gartley (the father of harmonic models) was born in Newark, New Jersey in 1899. His book “Profits in the Stock Market” unveiled the first harmonic models used by Forex traders in 1935.
This may or may not be a coincidence, but the two great theories developed at about the same time. Both also watched the stock market. And they involve human behaviorThis article will show you the strength of harmonic models and how harmonic models of forex strategies affect today’s operators.
Definition of harmonic patterns
Gartley’s contributions to technical analysis were impressive. Therefore, MTA (Market Technicians Associations) have recognized his work. For this reason, we can say that harmonic trade today with H.M. Gartley.
Gartley’s employer changed on time. It’s normal. It’s also happened with Elliott’s Wave Theory.
If you look at how the Forex market is evolving today, you have an answer to the question of why trends are changing. First of all, it’s another market. Second, he has different actors. And finally, it is mainly traded by robots.
However, these models are time-tested. The strength of a model recognition approach is the way traders integrate the results into a trading system. The metals trade offers great opportunities. Any harmonic analysis starts with an uptrend or a downtrend. This is the A-B segment.
This represents a significant trend movement. Or impulsive phase. The market makes little or no setbacks. However, at the end of the A-B segment, the market succeeds. Traders try to turn the tide. This small counter-trend promotion is the B-C segment.
Operators with experience in harmonic models easily recognize the B-C segment. You can see the previous swing in Trend A-B. Leg B-C must break it.
But that’s not enough for an exchange. The price action B-C says a lot about a possible reversal. However, it is simply the result of operators covering positions after a sustained trend.
Gartley recommended a 33% to 50% retracement of the B-C segment before a transaction. As a result, most harmonic models of forex strategies use such setbacks.Obviously, no harmonic operator will use the system without loss of stop. And beyond that, a harmonic scanner reasonable risk-return relationship.The end of point B gives the stop loss, while 1: 3 or even more represents an adequate risk / return ratio.