Setting Take Profits and adjusting the Stop Loss for Harmonic Patterns – Presentation #7

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When it comes to trading the Harmonic patterns, the trader must identify his/her entry point and also create the right strategy for exiting the market. Traders can use multiple methods for trade management once they have recognized a harmonic pattern. An effective and easy method that traders can implement is to wait until the price is confirmed as well as place their stop loss immediately beyond the swing point. Continue reading to find out how to set profits and adjust the stop loss in Harmonic patterns.

Taking Profits in Harmonic Pattern

Traders who are already aware of the right time of entering the market as well as the exact position where they would place their stop loss must know the duration for which they would remain in their trades. As a trader you already know that the harmonic patterns targets must be associated with the pattern’s levels itself. For instance, below we have taken bullish Butterfly pattern on USD/CAD into consideration. 

In this example, we have also included 4 potential targets beyond the price movement aside to stop loss. The 1st target is associated with point-B on the harmonics chart. This indicates the drop in price at the time of a decrease in AB. The 2nd target is point-C and there is an increase in the price post the increase in BC. The 3rd target is related to increased price that appears owing to an increase of XA. The 4th target is represented by 161.8 percent level of extension of the price movement in CD.

Adjustment of Stop Loss

At the time of trading Harmonic setups, one should also take trailing stop into consideration in order to benefit from large pricing movements and safeguarding one’s capital amount. Traders should adjust their Stop Loss on the basis of the pricing action to earn profits. Hence, when we take the above mentioned USD/CAD price chart into consideration, each time the pricing fulfills a target, we must modify Stop Loss order and locate it under the lowest or bottom level during target break.

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