Chapter 17, Part IV. 3-Drive pattern and harmony in classical patterns. Page 4

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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Chart #2 | 60-min EUR/USD 3-Drives “Sell” pattern and Pipruit stop placement
Pipruit: Now we should calculate our position value. As we’ve said our stop is 40 pips roughly. Since an average account is about 5000\$, we need a potential loss no more than 100\$. Hence our trading volume will be 0.25 standard lots.

Now is the most difficult question. Where to take profit? First, as I remember, we need take profit that equals potential risk - 40 pips.

Chart #3 | 60-min EUR/USD 3-Drives “Sell” pattern and Pipruit exits
So I will take 40 pips profit at 1.4290 and then move stop on the rest of position to breakeven. Since we’ve said that most common target that this pattern reaches is the low between second and third drives – probably I will take second profit there.

But, looking in rearview that is of cause much simpler than act in real-time, I can say that probably it has made sense to keep second half of position a bit longer. We have nasty black bars down, especially near 0.618 Fib support. It could tell us that probably it will not hold. Then we see acceleration gap near 0.886 Fib support and the same nasty bar just before that…

You teach me to think in probabilities and that we never know if it will be reversal 3-Drives or just retracement after that. So, from that standpoint my action looks logical. Probably when I’ll get more experience – I will be able to grab more profit, but now we should act simply but surely.​
Commander in Pips: You’re done well, and do not be ashamed with the smaller profit than it could have been. I think that you will not care about it, when you will start the second glass on the plane to Hawaii.
Pipruit: I hope that this will happen sometime.​
Commander in Pips: Sure it will. But now let’s move to the second part of this chapter – compounding of harmonic patterns and using them in trading classical patterns.