X, A, B and C-points shouldbe pivots. This means that they should be turning points of the market. They should be extremes for some predefined number of candles, with predefined smallest/largest number of candles for the smallest/largest leg allowed, and the price range(either in pips or in % of previous movement) before and after the extreme should also be predefined. For example, on your chart X-point is not placed on the turning point of the market. XA leg is a downside movement on this chart. Consiquently we should have an upside movement before X-point. How large this movement should be depends on your backtested rules. As for the pattern, it is a bit simpler: B-point should be the highest point between A and C points. C point should be the lowest point between A and your potential D-point. And again, you should know in advances not only the retracements of each side but also the number of candles each of them contain. For, example My rules say that B and C cannot belong to one candle. And so on....
lac1n
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Alexander, thanks a lot for informing me about the this pattern. Now, i'm watching your videos and learn the patterns better. If you have a time, can you please watch the youtube.com/watch?v=uHLmYNVm8Uw&index=6&list=LL3BD0A_JBEI3OxY_VYdU2sA because i learn the bat pattern from here and also this ratios backtested by owner. And when i watch your video tutorials about the gartley, bat and cypher here youtube.com/watch?v=1zUSS_km79A&feature=youtu.be there is no another candle upper or downside of the B point. But if we try to find like that, we found 10-11 pattern in a year. Ahh, really hard to decide :) I need to try backtests really a lot of time...
Thanks a lot dear
Alexander_Nikitin
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Well, it's not about the ratios but mostly about the structure of the legs. There's are two large approaches for xabcd retracements: advanced formations and harmonic patterns. For me advanced formations are better because they are traded with limit orders. You can set and forget. But harmonic approach presupposes drawing the PRZ and looking for priceaction there. So you need to stick to your monitor in order not miss the termination bar. Not very convinient for me. Each of the uses their own ratios. Advanced bat formation: B=0.5xa-0.618xa, C=0.382ab-1ab, D=0.886xa. Harmonic bat pattern: B=0.382-0.618xa, C=0.382-0.886ab, D=0.886xa+1.618(1.272)ab=cd+2(2.168)bc inversion. As you see D-point is a confluence of three fib levels. PRZ is the zone bordered by these lines. Termination bar is the first bar that crosses all of them.
lac1n
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Your comment is really so important for me. Thanks a lot Alexander, i'll try to find and learn harmonic ones also.
Alexander_Nikitin
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Yes you need to do backtest. Many people are trying to trade having only theoretical knowledge. But they miss the fact that our perceptions are different. I see the pattern this way and you see it another way. Perception is very dependent on beliefs we have installed during our lives. So there're two ways for training: 1) you find the strategy that fits your beliefs 2) you change your beliefs to fit the strategy. Second is faster (3-5 years). As for the first.... There're thousand of strategies. You will need to check them all to find the best suiting you. The process of cheking usually takes about 6 months of backtest+3 month of demo trading. 9 Months total. If you multiply it by thousand of strategies.... Well, the second is better. But you need to know the techniques for changing your beliefs. That's why you need to spend more time working on your psychology rather than trading.
lac1n
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Exactly yes, i have long way to learn this kind of cases but i can. Thanks a lot for your comments and kind feedback.