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# Chapter 17, Part II. Harmonic Numbers and AB=CD pattern. Page 8

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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1. ### Sive Morten Special Consultant to the FPA

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Trading AB=CD and other harmonic patterns

Pipruit: Finally I’ll see some real market examples. I’m so tired from all that theory.​

Commander in Pips: Not only examples. Here you will meet with money management for the first time in our school.

Also I have to say that the trading approach to AB=CD pattern spreads over all the other patterns, because there is no difference due what exactly pattern we open the trade. Pattern itself just shows us the direction to enter – Buy or Sell, but money management will be quite the same. So here we will show how to trade harmonic patterns, and will stop on this in details in later parts, when we will speak about other harmonic patterns, although we will need particularly necessity to do that.

Pipruit: I see. ​

Commander in Pips:So, as we’ve said AB=CD pattern could appear and, hence, be traded at any time frame and any market, including Forex. Our approach to trading harmonic patterns is based on two principles:

1. Reduce risk as soon as it become possible;

2. Book profit – remember that we trade to make profit and not to catch huge moves or prove that you’re right about current environment.

3. We will risk max with 2% of all assets in single trade. Suppose that we have 5000 USD account.
And here how we can do this:

Chart #5 | EUR/USD 60-min

Here we see excellent example of AB=CD “Buy” pattern, it has nice harmony in time and steepness of AB and CD leg. Target of this AB=CD is 1.4486. Hence, knowing harmonic number of 35-40 pips we should place stop below 1.4486-0.0037 = 1.4449, because we assume that market will pass this distance below target of AB=CD occasionally. If it will do this, then something is wrong and it will tell us about potential acceleration to the downside.