Alexander_Nikitin
Long

Thoughts about Bat pattern. Some tips and secrets. Part IV.

FX:AUDUSD   Australian Dollar/U.S. Dollar
Hey, traders. It’s Wednesday and we have another edition of “Thoughts about Bat pattern”. Today we’ll continue talking about XA leg. As you remember from previous parts, XA is the MOST IMPORTANT thing in pattern recognition. Last time we discussed X-point location. Today we’ll discuss other points. And also we’ll talk about my way of using Fibonacci retracement tool. Let’s go.
Last time I told you that there’s a special algorithm helping to recognize XA legs. I’m going to reveal the sequence of actions right now.
Step #1. Always keep in mind that most people make their decisions to buy or sell currency without ever seeing charts. All they know is price. In many cases they know some price range. See what I mean? You may argue about impulses and corrections but price moves one tick up because those “most people” have bought all the offers at one-tick-lower price.
Step #2. Look at the last market movements. The final point of this movement is B-point.
Step #3. Look along this movement to its initial point. It’s A-point.
By these manipulations we have established an A to B range.
Step #4. Look left and find a larger range in relation to which the AB range can be called corrective. This larger range MUST end at the same point the smaller range starts from. It’s A-point. This larger range should look like 2 or 1.5 times larger than AB range. The initial point of this larger move is POTENTIAL X-point. Note that potential X point MUST be some sort of structure point. See “Thoughts about Bat pattern . Some tips and secrets. Part III”
Thoughts about bat pattern. Some tips and secrets. Part III.
to find out what I call structure point.
Step #4. Grab your Fibonacci retracement tool. Stretch the tool from potential X-point to A-point. Look at your B-point. Does it touch 50%? If not, then move your potential X-point to a higher structure point (for bull patterns) or lower structure point (for bear patterns). Restretch the Fibonacci retracement tool from this new potential X-point to A-point. Is B-point Ok now? If B-point goes through 50% and touches 61,8% then move your potential X-point to a lower structure point (for bull bats) or to a higher structure point (for bear bats). Restretch the fibs. Is B OK now? Remember: B-point MUST at least touch 50% and never touch 61,8% If there’re no structure points that allow your B-point rest in 50-61,8% range then there won’t be any Bat patterns.
Step #5. If there are more than one structure point allowing B-point rest in 50%-61,8% range, then choose whatever makes XA larger.
Step #6. After you have found a proper X-point placement measure the XA move. How many pips it is? To find out what size of XA move was proven to be optimal see Part I.
Thoughts about BAT pattern. Some tips and secrets.

Do backtestings to train your eyes. It’s all about practice. If you will practice long enough you will recognize proper XA simultaneously.
This pattern was found with Pattern Search Software (c)
Watch the sample video here: https://youtu.be/kK6QfJuCGwg
Contact me in PM if you wish to get your copy
Best regards, Alexander Nikitin.
Fulltime professional trader and programmer.
dionvuletich
a year ago
I think this is valuable but possibly a little too specific, bats are my favourite pattern and it depends on what you tested but I don't limit it to 50%... if there is a cluster at 88.6% I take it..

Keep up these posts I think newer traders will get some good value from them
Reply
RabiaKapadia
a year ago
what is the bat pattern % of success in your backtesting?

really good explanation ^___^
Reply
dionvuletich RabiaKapadia
a year ago
55-62% depending on the pair, with my targets and average reward to risk of 2.2-2.4:1,
a) some trade stop out,
b) some trades hit T1 then hit trailed breakeven stop loss
c) some trades hit T1 then hit a trailled stop loss above break even but not at T2
d) some trades hit T1 and T2

The average is a combination of all of the above.... but the best thing to do is buy forextester 2 for $150 (trust me it's worth every cent... as you can test something yourself) and then do exactly that...

If you don't do the testing yourself you won't have the confidence to know it makes money and keep going even when things are not going well...

Speaking from experience... had 5 losses yesterday mainly becuase of FOMC shaking up the USD with only 1 win, luckily the win erased most of the other losses but today is looking much better with a win about to hit target which will make up yesterdays losses and then some...

Do the work yourself... it's the only way to trust it
+1 Reply
RabiaKapadia dionvuletich
a year ago
thank a lot DionV
that s the next pattern to test
currently i m backtesting gartleys on majors
Reply
Alexander_Nikitin TOP RabiaKapadia
a year ago
It's 52% on eurusd, 52% on gbpusd and 53% on audusd. 50+% it hits 0,382AD before it hit 1,113XA. It's 23% on eurusd, 24% on gbpusd and 27% on audusd. 20+% it hit 0,618AD before it hit 1,113XA or breakeven. Note, that I trade 5M to H1 TF. Because of the specific XA size.
For example, you use fixed fractional MM. You only risk 1% per trade no matter what size your account is. Also no matter what size XA means. Always 1%.
Eurusd after 100 trades (a - T1, b - T2):
a) 1*48=48% It is total loss
1,3*52=67,6% It is total win
b) 1*48=48% It is total loss
2,2*23=50,6% It is total win
29% left zeroes.
Summary:
Total loss is 96%. Total win is 118,2%. Net Profit is 22,2%.
100 trades is about 1 month trading. If you trade 3 pairs you have about 60% monthly return)). Trading Lower Time Frames is better for me because it provides more rapid circle of wins and losses. All your statistic data is circled within 1 month of trading. It's almost impossible to have a losing month (in case you follow the rules literally). Trading H1 on the other hand requires more time for statistic circle come to end. One pair only gives you 5-6 trades per month. For more or less precise statistics we need 100 and more trades. How much time should you trade to find out that the pattern works good on this specific pair? 16 months? 17? The only way is to have many many pairs. 12 to 16. But note that statistic of one pair is no way interconnected with the statistic of another. I know that my pattern can give me 8 losses in a row (and then it gives me new equity highs). Thinking the worst: all my pairs give me 8 losses in a row. I have only three pairs. So, my max sequence of losses would be 24. But what if all 16 pairs give me 8 losses in a row. Hypothetically it is possible. 128 losses in a row! And what if you have more than 1 pattern. For example, 3 patterns. In some harsh times they all give you 8 losses in a row. But in the harshest times they all give you 8 losses in a row on EVERY pair you trade. Could it be possible? Absolutely yes. IF SOME SCENARIO IS POSSIBLE, IT WILL HAPPEN SOONER OR LATER. It's just a matter of time.
That's why I do what I do the way I do it))

+3 Reply
RabiaKapadia Alexander_Nikitin
a year ago
WOW!!! couldn't ask for a better reply!!! thank you very VERY much. Just love your way of thinking hope to get there soon. Absolutely awesome. thank again... when is the next episode coming haha :D
+1 Reply
Alexander_Nikitin TOP RabiaKapadia
a year ago
Next Wednesday Part V comes)
+1 Reply
riskmode Alexander_Nikitin
a year ago
hmm my math might be off, but if you're hitting the 38.2% ~50% of the time and only hitting the .618% ~20% of the time, shouldn't you just close the trade completely at the 38.2?
Reply
Alexander_Nikitin TOP riskmode
a year ago
Your math is alright. As you have seen from the above post 0,382 gives you 67% but 0,618 only gives you 50%. That's why I am not taking my profits at 0,618 every time. I take them at C-point retest. If we had a BC retrecement=0,382AB, then C-point coinsides with 0,618 AD. But 0,382 is minimum requirement for C-point. It means that usually we have C-point a bit further. My tests show usual C-point placement at 0,786AD. It's not a rare case to see a 0,886-1AD move. 1AD move means that C-point is at the same level A-point is. I also trail stop to structure to get an extended target2. So usually I don't have a breakeven trades, there're always some pips in there)). Note, that the more XA move is the more precise fibs are. For example, if the move is 50-70 pips then risk vs T1=1:1,3. But if the move is 80-100 then the ratio tends to move towards 1:1,5. 100pips XA has 1:1,5 ratio for 0,382, 1:2,45 for 0,618, 1:3,1 for 0,786, 1:3,5 for 0,886 and 1:3,9 for 1AD. taking profits at 0,618 was originally designed for H1 TF trading. 100pips XA move is one of the smallest for H1 TF on eurusd. For these large XA moves 0,618 profit taking will give you 56% net profit. Moreover swing trading bats are usually more accurate then daytrading bat. Win persentage for H1 bats is 63% (for T1). M5-M15 has more noise, that's why we have more false signals)). There're pros for swing trading and there are pros for daytrading. It's up to you to choose whatever you like.
+2 Reply
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