Forex Harmonic Trading Techniques
If you already have some experience in trading the forex markets, you have likely come across terms like range trading, swing trading, and breakout trading. Each of these techniques have significant advantages and should absolutely used when certain market conditions dictate their superiority. But since this is not always the case, expert traders will need to find advanced technique that can be used when looking to outperform the rest of the market.
Harmonic Trading Patterns
One of the most common advanced trading techniques is the harmonic pattern, which essentially utilizes a series of Fibonacci retracements in order to identify potential areas for reversal. If you are truly looking to employ these types of strategies, I would recommend that you use the best trading software. The best options available here come from FiboGroup, which is a very well-reviewed forex broker that allows you to download Meta Trader free of cost.
Once you have your forex trading software, it is time to start learning about the various harmonic patterns that are typically used. This is an advanced and complicated topic that would fill an entire textbook, so here we will just identify some of the most commonly used and success patterns that are employed by harmonic forex traders.
The Gartly, Bat, and Butterfly
The three most commonly used patterns are the Gartly, the Bat, and the Butterfly. The Gartley pattern was the first used in terms of harmonic trading history but the others work just as well when you are looking to identify potential reversal points.
Each of these patterns can be used in both bullish and bearish contexts, so there is no demarcation that should be made in terms of the underlying market condition. The reason why harmonic patterns tend to work so well comes from the fact that they allow traders to employ very tight stop loss levels. This is beneficial because it means that you will be able to limit losses in ways that are simply not possible when using other types of trading styles.
It should be known that there are other harmonic trading patterns that are equally effective in the forex markets. We will be going into these in greater detail in future articles. But it is important to start with trading software that is capable of identifying these patterns, and at the moment there is no better option than the Meta Trader platform.