CHARTISM

Understanding the Ratios’ Tab of the Harmonic Indicator

Kriss, Passionate Developer, Trader

CEO of AzurItec sas – Founder of Ninja-Addons.com

Here is a video where we present you the different settings that you can change to fine tune the Pattern Recognition of the Harmonic Indicator.

From the tab called “Ratios”, you’ll find a pictogram that represents the pattern as well as some settings that you can change from there.

We’ve decided to not allow you to change the ratios of the pattern because otherwise it would not be Harmonic pattern anymore, but custom 5 points patterns. And because we want to stay consistent with theory, each pattern is set with its own ratios, that can be found in the Harmonic trading literature, and also displayed on each pictogram.

However, you have the ability to set an error margin for each pivot, so that the algo do not eliminate too much potential patterns due too strict rules. This is because even if it happens occasionally, it is very rare that a pivot reacts at the exact same Fibonacci level, so we would end up with almost no Harmonic pattern on our chart.

Of course, you can set the error margin to 0, and that way you’ll see patterns with exact ratios, relatively to the Harmonic Theory.

For each pattern, you can set :

  • The error margin for the pivot detection
  • The overlap margin which is applied to the PRZ which stands for Potential Reversal Zone.
  • The validation parameter. An important thing to understand is that when prices enter in the PRZ, it doesn’t necessarily mean that the pattern is valid. Prices could continue and break the invalidation line. The breakout of the PRZ can be validated when the price breaks the level, OR when the close of the bar breaks the PRZ level. This is in order to avoid false signals.
  • The invalidation line. You can decide to invalidate the pattern when the close of the bar breaks the invalidation line, OR when a single exchange, a single tick breaks it.

These settings are the same for each pattern, except for just one which is the ABCD pattern. In order to limit the number of pattern detected, you can set the parameter Max Bars which will invalidate patterns that are too big by counting the number of bars between the A and C pivots.

Important notice : If you change the parameters in the Ratios tab, you’ll have to reload the chart, since the values are used in the construction of the patterns, and the algo has to process its calculation again on all the bars loaded on your chart. These settings are mandatory, because they represent the constructions of the patterns.

Also note that these settings can be changed directly from the Indicator Window, like for a standard indicator.
From this window, you can configure each pattern parameters as well as the swing trends parameters. This is exactly the same as the parameters from the Toolbar, but without the help of the pictogram and the tooltip messages.

Pin It on Pinterest

[index]
[index]