Using Harmonics In Forex Trading
Harmonic trading has become very popular among Forex traders over the last 10 years or so. This trading system popularity grew mostly for two reasons:
- High accuracy level
- Clear and defined trading rules that allows programming trading algorithms
The trend of moving from discretionary trading to automation trading provided huge boost to harmonic patterns and their popularity among Forex scalpers and day trader, mainly due to the high volatility and frequent direction changes found in smaller time frames that and offer multiple opportunities in various underlines.
Unlike the stock market that tends to be more trendy, the Forex market’s volatility offers much more trading opportunities for reversal patterns like harmonic patterns and that attracts short term traders, which are the majority of FX traders, that use this very accurate trading strategy to generate constant income by exploiting these.opportunities.
Although the popularity of harmonic patterns grew mostly due to short term traders, harmonic patterns serve also swing traders, like me, each week, as you can see easily see in my newsletters (subscribe here), from $GBPAUD example in the picture below and from the video clip at the end of this post
Clear and defined trading rules
Although harmonics may intimidate a technical trader that see them for the first sight, everyone who knows how to use the Fibonacci tools will be able to learn harmonics basics within couple of hours.
As mentioned above, their greatest advantage (beside the accuracy level) is the clear and defined trading rules that harmonic patterns offer, that allows any trader to follow them and know when to enter a trade, when to exit and when to take profits.
Let’s take the basic AB=CD pattern for example:
This is another recent example of a trade setup sent to the Elite Zone members (Sign up) for Gold ($XAUUSD) — Bullish AB=CD pattern.
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