Introducing Myself, Forex, High Probability Set Ups, Risk/Wealth Management, Harmonics and ElliotWave Theory

Hello all,

I would like to introduce myself. Please excuse format as this is my firs post :) I am the CEO of a PAMM service, managing wealth/risk for a handful of private investors. I use a combination of Fundamental data releases and technical price patterns to look for value and time my entries and exits in the FOREX market. I specialize in ElliotWave Theory and Harmonic Patterns and have even collaborated in the development of pattern recognition software which I use to this day when analyzing price action, looking for high probability setups. I typically look for swing trades where they expected move takes place over 2-3 days to a week and most of my trade ideas will have this time frame in mind, but the methods I plan to share takes advantage of the fractal nature of the financial markets and can be used to analyze and identify long term trade set ups and even day trades. One of the beauties of my method is you will know exactly where your entry, stop, and targets should be for the highest probability of success. This will allow you to allocate a specific % of your capital into each trade knowing exactly what you are risking and what your potential payoff will be before you ever enter the trade, which is extremely important when managing risk.

Due to the high levels of manipulation in the media with shows such as Mad Money and other mediums in which financial data is released to the public, I never try to find direction in a markets from these fundamental data releases or they establishment media. For every buyer in the market their must be a seller. These programs are designed to bring in buyers or sellers off the street to drum up the large volume needed by the banking elite and major institutions to dump or load up on large positions betting against the street (dumb money as they call it). This often causes price to move in they opposite direction as the data would suggest. With that said, I find the number 1 factor which can ruin a technical setup from completing and hitting targets is a fundamental change in the market. Knowing this I do use this data as a timing tool, often avoiding trading these pairs all together during moments of high volume/volatility brought on by a fundamental change, big event on the financial calendar or media hype. The good news is as these major institution load up and unload positions price patterns occur and these patterns can be used to determine direction in the market allowing the trader to trade with the institutions ( smart money) like a small car drafting behind a big truck.. It's a case of do as they do and not as they say.

In future posts I will share detailed trade ideas similar to a signal service letting my readers know exactly where and when I plan to enter and exit trades, as well as share my knowledge so my readers can find their own trades based on the methods I have learned over the years. However being able to find and trade these set ups is not enough to be a consistently profitable trader. In fact it is possible to be stopped out in over 50% of your trades and still be profitable, this is why risk management and being able to analyze risk:reward before you enter the trade to fully exploit a technical set up is the most important skill a trader can have. Managing you risk correctly will allow you to make great profits when a trade goes in your favor hitting targets while allowing you to stay in the game when they inevitable trade or two goes against you. The setups I trade always offer more than 1:2 risk:reward and have a probability of hitting targets over 70% of the time.

 Below is a current example of the kind of set up I look for and a brief explanation on why this is an appealing entry point for me.  In later posts I will go into detail on how I would identify and trade this set up as well as how I would assess the risk:reward and decide how much of my account to allocate to this trade. 

AUD/JPY 4hr chart...

AUD/JPY Daily chart..

Expect profit taking and a continuation of the pairs higher time frame down trend as seen on the daily chart as price hits the Bull Targets based on the bullish Green Swan harmonic pattern and the median pitchfork line which is projected from the last major swing on the daily chart. On the 4hr chart we have a confluence of completed bearish harmonic patterns, the large bright red Dragon harmonic pattern and the smaller dark red bat harmonic pattern. I would look to enter the short at the start of this week around the 78% Fibonacci retrace of the X-A leg of the bat pattern (it opened this week right at they 78% retracement so I will be entering the trade once the European market opens). I will place my stop @ 88.15, this is where both patterns will become invalid and my reasoning for entering the trade will be made invalid. My first Target Price is 80.01 offering 6:1 reward:risk ratio, second TP @ 75.01 offering 10.5:1 reward:risk ratio. I will choose my position size by dividing the pip distance between my entry and stop and dividing by 3% of my capital. This way if I am stopped out I will only lose 3% of my capital. I will close 2/3 of my position at the first target and lower my stop to a couple pips below where i entered the trade. Doing this will ensure I have locked in some profits. I will then have 1/3 of my original position still in the trade but I have taken the risk off the table by moving my stop down. At this point I wait patiently for price to either hit my stop or the second target which will take me all the way out of the trade, full close.

Another trade idea for the start of this week is a short in USDJPY. As you can see in the 4hr chart below price has just completed a confluence of bearish shark harmonic pattern and a bearish ascending triangle pattern made up of 5 Elliotwaves (numbered green) which is about to break out and continue its major trend down. bearish price/momentum divergence displayed with the pink line on they awesome oscillator which is expected as the 5th wave completes right before price breaks out.. We also have an AB=CD pattern I have displayed in light blue. I am going to short at the start of the euro market with my stop @ 115.21, choosing position size by dividing 3% of my capital by the pip distance between my entry and stop. My first target at 112.125 offering a 1:2.1 risk:reward ratio where i will close 2/3rds of my original position. After first target is hit I will drop my stop down a few pips below my entry to lock in profits and let the price continue lower to my second tp @ 110.235 offering 1:3.9 risk:reward ratio where I will fully close out of my position.

USDJPY 4 hour chart:

I hope this post has given you some insight into my trading style and some of my technique as well as a couple high probability trade ideas with a great risk:reward ratio that are ready to be taken advantage of this week! This is my first time writing this kind of blog and I didn't want to bog it down by filling it with endless details, there is soo much to cover and it cannot all be covered in one post. Hopefully over the next few posts I can get deeper into my theories and continue to share great trade ideas.

Thank You,
Forex_Shark