NinjaTrader Indicator Suite Be Smart, Know Your Odds Importance of Structure Getting A Harmonic Plan

3 Traders Toys! Facts on Patterns Dreaming Big Hurts? Think Not of What You See

HARMONICMAG
Forex, Futures, and Stocks Issue 3

What Do ...
1+ Million Patterns
Tell Us?

NinjaTrader 7 Tools
Versatile Indicators and Market Analyzer for NT7!

3 Tech Toys for Traders

8 Tips For Your Trading Plan!

These tips should be part of every trader’s plan of action.

For everything you need with Harmonics - FXGroundworks.com

 Introduction
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Issue 03 - Stocks, Futures and Forex

Issue 03 - Stocks, FUtures & Forex

FXGroundworks is not only a website that alerts
traders to the highest quality and most reliable
patterns. We also teach you how to use these
tools to their full potential through our mentoring
and individual trade plan creation process with
each student. Updates; questions and answers
Market Analyzer
can also be provided in real time through our
online community.
7 Get alerts for any stock,
future contract or currency

NinjaTrader 7 Harmonic Suite

4 See what is new with our latest release of our
NinjaTrader 7 indicator suite
Know Your Odds
9
contents
How well do you know your
odds?

NT7 Harmonic Suite Introduction............ 04-05 “Think Not of What You See”....................... 14-15
See what is new with our latest release of our NinjaTrader 7 Words of wisdom shared from Benoit Mandelbrot
indicator suite.

Harmonics and our Indicators................... 06-07 The First Few Steps in Dreaming Big...... 16-17
Some words of wisdom around the harmonic approach when As a trader, these first few steps are going to be critical if
combined with our newly released NinjaTrader 7 indicators you’re dreaming of hitting it big and will be an obstacle in
with screenshots. your trading you’ll have to get past.
Structure

Be Smart Know Your Odds........................... 08-09 3 Traders’ Toys.................................................... 18-19 12 Learn the power of
previous patterns
See what is new in the market for traders with these 3 tech
When you know your odds, you can maximize your potential.
toys
This article is all about knowing your odds with harmonics.

8 Trading Plan Tips To Use Now............... 20-21

Facts on Patterns............................................... 10-11 You’re not going to improve your trading by winging it. Let’s
Facts surrounding the 4 major harmonic patterns, Gartley, Bat, talk about trading plans specifically around harmonics.
Butterfly, Crab
1+ Million Patterns Tell Us?........................... 20-21
The Importance of Structure...................... 12-13 When it comes down to the structure ratings and risk vs
Not all harmonic patterns are the same; but we’re diving rewards on these patterns, what can the past tell us?
deeper into the internal and external structure of the harmonic 3 Tech Toys
patterns. See what’s new in
technology for traders.
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Issue 03 - Stocks, Futures and Forex

Issue 03 - Stocks, FUtures & Forex

Harmonic Pattern Indicator

NinjaTrader 7 Harmonic Suite

Ratio Guidelines to
Any Time-frame increase speed of Exact ratios
Any Instrument drawing Clear PRZ’s

http://www.fxgroundworks.com/NinjaTrader-Harmonic-indicators/
Seperate XA/BC Leg
ratios and colors

Sonar for NT7

(Included in the
Package)

Passive Sonar Waves Clear pattern points Hurst for NT7

for future frequency (Included in the
projections Package)

Market Analyzer:
The market analyzer allows us to scan any market for all of the
harmonic patterns on one screen.
Forex, Futures or Stocks - Any instrument; Any timeframe; Total Flexibility

A new partnership has been the good trade from the ordinary.
forged between NinjaTrader and
FXGroundworks.com that sees a win- One of the many things that was
win for both companies. taken into consideration when
partnering with NinjaTrader was
FXGroundworks.com will remain with the fact they connect to 3rd party
their MT4 tools, but this does bring an brokers who allow stock and future
exciting path with our NT7 tools as well trading. It is a high performance
for our existing and future clients. end-to-end trading platform for both
discretionary and systems traders.
New development has been applied
to both software platforms so that the NinjaTrader excels in the area of
invaluable structure tool is applied in trade management...join us with
stocks, forex and futures. It sorts out NinjaTrader on FXGroundworks.com Harmonic Market Analyzer
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Issue
Issue03

Harmonics and

Issue 03 - Stocks, FUtures & Forex

Just one of many
03--Stocks,
Stocks,Futures

our Indicators instant benefits:

Futuresand

New tools have been Save you hours of

andForex
Forex

released for NinjaTrader time each month by

which you can get at: scanning the entire
FXGroundworks.com market for patterns
The original works of HM Gartley on your behalf.
indicated that the B point for a Gartley Bat - AA - 15M Chart Crab - 3M - 1Hour
pattern can be a 0.382 retracement, Stocks. Futures.
through to a 0.618 retracement. Forex.
Gartleys are one of the pairs that are
not as favorable to trade as the Bat,
Butterfly or Crab, chiefly because it
prefers to set up in a channel rather Generally prices for stocks or
than a range and channels may not forex will move with news events
appear as frequently as ranges. Plus or at times where emotions are
it’s harder to get a decent risk versus high, making risk much greater.
reward when trading the Gartley Conversely in slow moving
pattern. markets it is foolhardy to risk
Market Analyzer for NinjaTrader by FXGroundworks.com large portions of money on a
The success / failure for traders position that is just not in our
trading the forex or stock market For the novice playmaker to throw For traders who trade the forex or stock favor.
relies on two approaches. One, the caution to the wind and bet on a pair markets, harmonic patterns give these
attitude of gambling or chance, that of aces to beat a full house without traders an ‘edge’. Like the avid gambler, So is the art of trading just that –
price will go the hopeful trader’s way. knowing what cards have been thrown, traders who try to predict where price an art, or is it just blind luck? In
The other, where the trader takes is akin to watching an impatient news might go or who rely on a series of points our opinion it must come down
an objective, statistically probable trader jump into the sea of writhing where linear candlesticks cross or merge, to an art; a technical, consistent
calculated approach, that price will go Japanese candlesticks that makes up the have a more difficult time when trading, systematic technique and a way
their way. markets. than the trader who takes notice of where of measuring and calculating our
price has been before by using harmonic method - rather than a hit-and-
Patience plays a great part in Without a calculated approach to what miss approach that doesn’t give
patterns.
determining which of these the opponent might hold in their hand, us good odds of succeeding.
approaches one takes. Like playing the gambling instinct of the card player The probable points where humans
cards, or when trading stocks or forex, takes over. However, for those skilled have noted the change in attitude of the Coupled with managing risk,
it is generally better to observe the in the art of counting cards, those card masses suddenly become clear when the harmonic pattern trading now
situation and strategically figure out players have a distinct advantage in trader uses the harmonic pattern points becomes an attractive trading
what likelihood one has in getting a knowing the odds are higher of being to measure their opportunity of taking a approach. Get educated with
successful outcome. right, if they have an ‘edge’ such as successful trade. FXGroundworks.com.
page page
6 counting cards. 7
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Issue 03 - Stocks, FUtures & Forex

BE SMART
It does us no good to dive into the the market and all her idiosyncrasies?
Potential Reversal Zone as soon as
price hits the PRZ. We need not only For people new to trading, using
to wait for the right trade to emerge, automated trading tools is like trying

KNOW YOUR ODDS

we need to wait for it to slow down, to ride a rodeo bull - most of the time
if price is being strongly pushed up you’re going to get tossed off unless
or down by news. you follow the rules. So for the
newbies, it’s best to learn harmonic
Harmonic Pattern trading gives us pattern trading for at least six months,
a really good look at what we have before launching an auto-trader.
in our hand. It can tell us at what
point the pattern formed, where For seasoned traders, knowing that
price retraced and by what ratio, the market can be hard-hitting one
and it can tell us to within a certain day and tough the next, is a good
amount of pips, where we should start. An auto-trader then can be
get into the pair. very useful once all your usual
checking methodologies (such as
It is also important to know news announcements, economic
If you learned how to play poker as to play every pattern that forms. It where to place our stops. Risk releases and other considerations are
a youngster, you will have realized is necessary to weed out the poorer management is a key factor in exercised) with the parameters for
that the way to become proficient patterns and to take the patterns succeeding as a trader. Like poker, the auto-trader set to respond as you
at the game is to play the highly with a good structure rating. This will the riskier the hand, the less likely want them to; move stops to break-
probable hands and to ditch the skew the percentage of a winning we will succeed. even; take first profit target. Then you
hands that don’t favor you. For trade in your favor. Making sure you can close out trades at a fixed profit
instance a pair of Aces is a stronger stick to the other rules of harmonic Never think the market is yours for position; or let the profits run and
hand than a pair of 8’s. pattern trading, you can now become the picking. Understand that it can have the market tell you when you
a proficient trader with a much better and will knock you around, just need to get out.
So in that scenario, you would be look at where you think a pair might like poker can, if you take a risky
more likely to want to try for three turn. chance. Learn to be unemotional,
or four of a kind, or a full house. If even clinical about a trade and take
the next allotment of cards brings In harmonic pattern trading, we play a fatalistic approach about losing -
you four Aces, you are going to be the turns. We don’t play the individual write the risk off when you take a
in with a highly probable chance legs – we play the percentages and trade, then you’ll be a happy trader.
of winning. However if you end we will get it right, on average, 70%
with a pair of 8’s only, then there of the time. If news influences the Is an auto-trader right for you?
is a high chance of losing and you pair and the trade goes against you
The sixty-four thousand dollar
would not want to play on with that – get out for a small loss. Don’t try
question. Is an auto-trader right
hand – folding and withdrawing to wait out the market and hope it
from that round would be a sensible turns. There’ve been a lot of accounts
for you? There are many things to Follow us on facebook
consider:
approach. donated to the brokers using this
thinking. Are you new to trading or have you
So it is with trading harmonic
been trading long enough to know
page patterns. You are not always going Of course, like poker, patience pays. page
8 9
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A successful The “B” point of the harmonic pattern
can be quite low on some of the Bat

Harmonic Bat
patterns. A successful harmonic bat pattern
can be very beneficial due to the low “B” point.

Pattern... However; it can also give you a very high risk vs

reward. Try maintaining a consistent rvr instead of
using the B point as a target in increasing your win ratio.

The Harmonic
However the principles are still the
same for trading the patterns, we need to
maximize our chances by taking high quality
patterns with decent structure ratings. Crab gives
The Harmonic Crab pattern has the highest success
rate according to our research however they are rarer us a different
perspective
than the others and require traders to learn when to take
them and whether they’re likely to hit their targets.

The Butterfly But does that make it reliable? Does

it make us squirm with pleasure at the

is one of the
profits?

The Butterfly has a high % of an initial reversal

frequent rate, so while it is prolific it is not necessarily the

most lucrative. We tested 232,394 Butterfly patterns

Patterns... and the results came in at 208,606 successful patterns

with failed patterns only 23,788. That’s still pretty impressive!

Again, a very popular pattern according to

the markets, but is it useful to trade? And of course the
Gartleys are found in channels rather than
ranges. The weakness of this pattern can be
Harmonic Gartley
found in the CD leg, with the small length of the CD
leg being the key reason this pattern fails more than to round us out
any of the others.
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The Importance

Issue 03 - Stocks, FUtures & Forex

of Structure
Uses over 1.2 million patterns to
provide a higher statistical edge.
When we talk about structure; what Importance of 30 bars: the structure ranking. One of the most
are we discussing? Simply put unique is we compare each pattern in
the structure is going to be made Let’s have a look to see what a poor
the alert system with over 1.2million
up of two specific areas of your internal structure of a pattern looks
other harmonic patterns.
chart which can further help us like today:
determine if we have probability. When we do not apply any structure
rules we can see 1,200 patterns per day.
The first area of interest are all the But if you were setup with our structure
candlestick bars that make up the filters and wanted to see the best of the
entire pattern. This is what we best patterns, you would be alerted to the
call the internal structure of the top 1-2% of all harmonic patterns.
pattern. All of the bars outside of
the pattern that do not make up the Combine A Risk vs Reward Filter
pattern itself are called the external
structure. When taking trades, you will want to be
sure to take patterns where they have
When we look at how we rank the the potential of hitting a target which is
patterns we want to look at both twice as big as your risk. If your average
the internal and external structures This pattern has a poor structure. winner is twice as big as your average
and come up with a way to One way we can tell is that it’s losing trade then you only need to be right 33%. If you set your filters to have a
determine how high the probability less than 30 bars. If you looked at high structure rating, and a higher than 2:1 reward, then you are looking at a very
is that the pattern works out. a pattern that had more than 30 respectable pattern to trade.
bars you can see that the structure
ranking has gone up.
See more examples on youtube
The bar count is about 1 in 20
The Patterns In This Study Rank 70% or higher.
Our unique and proprietary way of ranking the structure of each harmonic
different things we look for with
pattern allows for traders like yourself to see only the most highly probable
patterns.
page page
12 13
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Issue 03 - Stocks, Futures and Forex

Issue 03 - Stocks, FUtures & Forex

mathematics. a different kind of geometry to

“Think not When relating fractal patterns and

linear indicators to the markets, we
the normal division, subtraction,
multiplication and addition. They

of what you then have to ask ourselves, how can

give different levels of percentages
and ratios.
see - but mathematics work in rough markets
that are ‘outside’ our ability to consign These then are the formulas we

what it takes them to mathematical formulas? Can

we use fractal patterns to understand
can use in the markets - the non-
linear formulas and not the linear

to produce a bit more of where price has been

and where it might go?
formulas or Expert Advisors that
many of the indicators used in the

what you see” There are indeed formulas

world of trading today, exist.

(discovered by Mandelbrot in the

1970’s) that can describe flowers,
plants, clouds. These are different
kinds of formulas and they give you

Think not of what you see - but what

it takes to produce what you see -
“Benoit Mandelbrot”.

This philosophy can be applied to through our bodies. We see it in the

the trading markets. The markets structure that makes up our lungs;
are an endless repetition of human our heart; our brain. We see it in the
behaviour - humans (or machines animal kingdom.
operated by humans) buying and Mandelbrot said in his words of
selling currencies or stocks at certain geometrical fractals and mathematics
points where those humans think that “in mathematics, smoothness
they have the best opportunity to was everything”. He said that to
make money. change the way we looked at things
Following Mandelbrot’s philosophy, it that were not linear, we had to “open
takes endless repetition in anything up roughness for investigation”.
we do, to give rise to one of the So it is with the markets. They are
defining characteristics of a fractal anything but smooth - they are
pattern. We see self-similarity in ‘rough’ - and generally in more ways
everything, from our fingerprints than one.
(which are individually crafted for
each and every human who exists Mandelbrot also said, “The patterns
on earth) to a stalk of broccoli; a in nature were outside the concept
page cauliflower floweret, to the moon, of mathematics”; nature is not page
14 to the arteries that transport blood man-made like the smoothness of 15
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Issue 03 - Stocks, FUtures & Forex

many times in one day, with over once we make sense of that, we
Riding out the stress of Retracements
three trillion dollars traded daily - can then cope with the fact that
One of the most emotional parts of trading a phenomenal feat, unheard of in retracements will always occur.
is watching your pair retrace, either working Gann’s time. It’s up to us to ignore the fear of
itself toward your stop or cutting some of missing out, the fear of losing our
your profits. So how do we survive the emotional roller coaster of Therefore it’s necessary to recognize hard-won pips, the fear of being
retracements? that we can always expect price wrong and it’s up to us to keep our
to move around, not descending losses within our budget and make
The first step is recognizing that there is a retracement. The second step or ascending in a straight line but the most of our profits. When we
is realizing our emotional self and that self is fearful that price will go in an ordered chaotic method and do set up our trading plan and we
against us.

William Delbert (WD) Gann,

one of the recorded greatest The FIrst FEW STEPs IN
dreaming
traders in technical trading
grew up a Christian on cotton land.
At the tender age of 24 in 1902,
he made his first trade in cotton
futures and became a devotee of
trading.

BIG
Have A Little Faith In Yourself

Studying many forms and movement

of the markets, he concluded that the
market was moved by ‘vibrations’. He
as a
claimed that he could forecast the

Trader...?
market’s movement with mathematics.
Opinions are divided over the relevance
or the accuracy of his analysis. So be
that as it may, how do we make the
most of Gann’s theories to help us with
controlling our emotions?

By considering the Gann principle

“As long as you’re alive (whether we believe his work do control our emotions and not
flinch every time the pair we’re
you’re going to live to was accurate or not), where geometrical Follow us for trading retraces, we know we are
accomplish your own mathematics and vibrations move the market, we
goals and dreams or can start to understand that pullbacks, reversals
big ideas and finally on the right track.
you will be used to or movement in the market are natural and those big advice. We need to have a little faith
accomplish some- movements are non-linear. The in ourselves, a little faith in our
one else’s goals and market does not and cannot move harmonic method, a little faith in
page dreams.” in a straight line. Humans move the our trading plan and a whole lot of page
16 17
market, entering and exiting trades patience.
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Issue 03 - Stocks, FUtures & Forex

the slow periods of trading when you
better graphic cards on the market want to open up those movies and pass
for anyone who is looking for a some time with a full cinema screen
multi-monitor setup with value. design with integrated 7W speakers.
It will set you back about $400 Attach a few of these to 770 graphics
but will let you run up to four cards and you’re going to have some
simultaneous screens through screens that will spoil you for many hours.
two dual-link DVI ports, one HDMI As at the release of this magazine these
and a single Display Port interface. screens are in pre-release.
You will also need a 450W power
supply to handle this beast.

COOL TOY #3
Mouse :
Razer Naga Epic

$999 - UM95 34UM95 34-Inch Screen LED

3 Toys for Traders Cool Toy #2

34-Inch LG Screen
PC’s, screens, laptops....how much It doesn’t mean you have to have
equipment is too much for a trader? four screens to be successful. It does
The question should be....how many mean though, that you should have
screens can one pair of eyes watch a backup system. Whichever way
at any one time without going cross- you trade and whatever equipment
eyed? you trade with, the important part is
to make enough profit from trading
We’re talking about the self- to be able to buy the equipment you Having a large and wide screen
employed retail trader here, not the need and appreciate. A few things monitor like this is great for charting.
trader who works for the corporate that can enhance your trading is If you run multiple platforms or use
financial sector or a large broking having technology that is sufficient This mouse is fantastic if you’re a fan
docking and undocking modules
house. We’re talking about the one for your needs, like: of hot keys. Program each number
you’re going to have enough screen
who can travel the world light, trade for a different action on most trading
space across 34 inches to do what
from any part of the world that has a
sound internet connection and can
COOL TOY #1 ever you wish. The monitor itself platforms to have instant buy or sell
market orders. Heck you can even have
please him or herself how hard they Graphics Card : supports an ultra QHD (3440x1440)
a button programmed that moves your
work on any given day. You may be GeForce GTX 770 resolution and provides dual-link
stop to breakeven. This does depend on
functionality which will let you view
in the category of trader who keeps At the time of publishing this your platforms but most can handle it.
two seperate outputs at the same
page
it simple and trades off their laptop. magazine this was one of the Retails for around $100USD. page
time. This monitor is also great for
18 19
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Issue 03 - Stocks, Futures and Forex

Issue 03 - Stocks, FUtures & Forex

Make
1Million+ Get alerted to the highest probability trades by
8
looking at the patterns with high structure scores.
a
Harmonic
Tradi
trading On average; every day we scan 1,200 alerts and only

Patterns
the top few of these have a structure score over 70%.
plan and
make sure
you...
PATTERN STATISTICS:
5 Min 15 Min 30 Min 60 Min 240 Min Daily
Always plan # of Patterns
Bullish Bearish Bullish Bearish Bullish Bearish Bullish Bearish Bullish Bearish Bullish Bearish
your goals as a Gartley Pattern 95,165 96,685 33,191 33,903 16,387 16,711 8,534 8,449 1,948 1,896 369 287
ng
FXGroundworks >70% Structure 1,017 1,837 1,066 505 132 18
percentage Bat Pattern 53,339 53,419 19,193 19,303 9,433 9,837 5,075 5,131 1,112 1,231 180 193
FXGroundworks >70% Structure 4,115 2,999 1,490 938 264 41
Scale into your Butterfly Pattern 80,043 80,775 27,340 29,059 14,056 14,419 7,317 7,277 1,821 1,866 293 374
FXGroundworks >70% Structure 11,593 5,032 2,818 1,610 490 91
positions to maximize
plaN

Crab Pattern 9,017 9,506 3,537 3,637 1,848 1,896 897 835 175 199 19 20
successful trades FXGroundworks >70% Structure 230 167 87 55 28 2
5-0 Pattern 2,640 3,919 889 1,257 425 571 238 306 76 87 9 11
1,259 458 238 165 53 7
Don’t aim high and expose FXGroundworks >70% Structure

Three Drives Pattern 2,920 5,486 978 1,786 428 813 231 411 86 129 11 44
your trade to increased risk to FXGroundworks >70% Structure 152 65 31 13 7 1
AB=CD Pattern 39,517 39,909 13,129 13,086 5,743 5,947 2,838 2,967 765 764 136 157
achieve a dollar percent FXGroundworks >70% Structure 1,909 591 282 164 52 12

Have a personal, consistent

TI

approach (should not be

uncomfortable or unnatural) INTERESTING FACTS:
PS

Know that your own plan is a reflection

High probability patterns (Structure Ratings On average we filter out 1,200 patterns a day
of your personality and your approach to risk over 70%) do not happen often. Set your alerts to provide you with 32 patterns per day which
TO

and risk management via the web, email or sms and watch for them. meet the minimum risk vs reward of 2:1 and
structure rating of 70%.
Should be well thought through to minimize risk The Gartley is the most common pattern but
doesn’t always give you the highest probability You can expect to see on average 229 patterns
US

Should become second nature when executing per week hit the structure score of at least 70%
The high probability patterns that occur on the and a risk vs reward of 2:1.
trades Gartley are only half of 1% on a 5 minute chart
but much improved on larger timeframes
E

Should not be trading ‘on the fly’ and changing planning 2:1 3:1 4:1
# of Patterns per week
strategies as you go RVR RVR RVR
The most frequent longer term trades with high
NO

70% Structure Rating 26 14 4

probability are on the bat patterns 75% Structure Rating 28 7 5
Without a trading plan, traders are more than likely trading by 80% Structure Rating 29 18 3
the seat of their pants. Trading plans are essential so that traders Three Drive Patterns and Crab patterns are the 85% Structure Rating 29 12 4
W

most rare; especially longer term higher prob- 90% Structure Rating 17 14 2
can consistently follow a set of guidelines and not deviate from ability trades 95% Structure Rating 6 6 1
those rules, thereby setting themselves up for failure. 100% Structure Rating 2 2 0
Total 137 73 19
Bearish Three Drive patterns appear to happen
Looking to create a plan along side one of our mentors? It’s highly almost twice as often as Bullish Three Drive The following chart data excludes 5 minute patterns as most harmonic trad-
ers longer term will trade larger timeframe patterns
recommended after going through the education to start working on patterns
page these individual plans that are created with each student. page
20 21
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HarmonicMag - Issue 03
Tel: 866 501 5499
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page Email: [email protected]

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