With the harmonic scanner forex traders have a 90% accuracy in their predictions.
There are geometric patterns all around us, and that includes the financial markets.
The harmonic scanner forex is essentially a tool that is able to detect such patterns.
The fact that harmonic patterns exist in the forex market is no secret.
There are six different patterns: the cypher, the shark, the bat, the crab, the butterfly, and the Gartley.
Different pairs have different harmonic patterns, which means you may need to study all of them in order to really base a strategy on them. This is what harmonic scanner helps you to avoid.
With the harmonic scanner, forex traders are provided with a dashboard on which all the different patterns are displayed, enabling them to determine their actions on different currency pairs.
Essentially, the harmonic scanner will teach you how to trade efficiently in forex using harmonic patterns.
This will require you to learn to recognize the harmonic patterns first, however, which are often based on the Fibonacci system.
The harmonic scanner will provide you with an indicator on which market turning points are called with 90% accuracy. This will help you to develop a reversal trading strategy.
Harmonic Scanner Forex – The Combination of Fibonacci Numbers and Geometry
In harmonic trading, patterns and mathematics are combined to create a precise trading method.
Essentially, in all natural areas, patterns always repeat themselves, which is the very thing that makes them a pattern.
The harmonic scanner forex is based on the primary ratio or a derivative thereof, meaning it is either 0.618 or 1.618. Mathematically, there are complementing ratios, which are 3.618, 3.14, 2.618, 2.24, 2.0, 1.41, and 0.382.
Take any natural event or structure and you will almost always find the primary ratio.
But it is also found in man-made constructions. Because it is a natural pattern and one that is repeated in society, the primary ratio is also found in financial and forex markets.
This makes sense because they are affected by the societies and environments in which the currency is used.
With the harmonic scanner forex traders are able to find patterns of different magnitudes and lengths.
Doing so enables them to apply the ratios in order to determine what the next move will be.
Scott Carney is credited with developing this method, although many others have been able to improve on his original ideas.
Essentially, when you gain an understanding of harmonic price patterns and how these patterns are geometrical in nature, you can apply the
Fibonacci sequence on them, which should show you the exact turning points. This is quite a unique trading method because its aim is to predict where the market will move to in the future.
Harmonic Scanner Forex – Getting Entries and Stop Losses Right
Regardless of the pattern that is chosen, there is always a potential reversal zone (PRZ). Usually, there isn't an exact price.
This is due to the fact that two projections are required to form point D on the pattern. Sometimes, the different levels are in close proximity of each other, which means a trader is able to enter there.
However, if the projection zone is far wider, then it is advisable to find a secondary confirmation of the idea that the price is likely to move in a certain direction. Watching price action or finding an indicator is usually enough to do this.
It is also possible to place a stop loss outside of the most distant projection. This implies that it is unlikely that the stop loss will ever be reached unless the pattern wasn't valid and moves outside of its boundaries.
Does the Harmonic Scanner Forex Traders Use Really Work?
Harmonic trading is highly complex due to its mathematical nature, but also precise.
In order to use the method, you need a lot of practice and patience.
Doing so without a tool such as a harmonic scanner would require you to become a true expert in Fibonacci, trading, mathematics, geometry, and more.
The best-known patterns are the crab, bat, butterfly, and Gartley and you should always look out for those. Here, an entry will be made inside the PRZ as soon as there is price confirmation that a reversal will take place.
In this case, the stop loss should be placed either above a short entry or below a long entry. That said, some still place it outside of the pattern's furthest projection.