Three Stages of Harmonic Trading

Harmonic Trading utilizes an enormous array of effective Fibonacci alignment combinations to define patterns. However, Harmonic Trading does not stop at the identification of valid patterns. Although it is the important first step in defining potential trading opportunities, specific rules and guidelines are required to maximize the management of a position. There is more to profiting from the patterns than just proper identification. The other aspects of trade execution and position management are equally as important to maximize profit potential and to reduce risk exposure:

1. Trade Identification. Regardless of what type of trading system is utilized, the initial step is identifying a potential opportunity. Harmonic Trading techniques utilize historically proven and repetitive price patterns that capitalize on overbought and oversold signals generated by the market’s technical price action. A good portion of this material is dedicated to identifying and differentiating harmonic price patterns as quantified by Fibonacci ratio alignments. Understanding the differences among the various harmonic patterns is essential to capitalize on specific trading opportunities.