Recently, many people have been asking me about harmonic trading, so today I will systematically explain this method. To be honest, harmonic trading patterns look quite complex, but once you understand the principles, the success rate of identifying potential trading opportunities can reach about 78.7%, which is why top traders are using it.

Let's start with the simplest one. The ABCD pattern is the easiest to get started with in harmonic trading—it's composed of three waves and four points. AB is the impulsive wave, BC is the correction wave, and then DC is another impulsive wave in the same direction as AB. Using Fibonacci tools, BC should retrace precisely to the 0.618 level. The length of CD should equal AB, and the time span should also be similar. You can place orders near the potential reversal zone around point C, or wait until the pattern completes and establish a position at point D.

The Bat pattern was identified by Scott Carney in 2001. It adds an extra wave and point X to the ABCD structure. XA causes the retracement of BC; if B's retracement stops exactly at 50% of XA, it's a Bat pattern. The extension of CD should be at least 1.618 times BC, possibly extending to 2.618. The key is that point D forms a potential reversal zone, which is your entry opportunity.

The Butterfly pattern was discovered by Bryce Gilmore, using different Fibonacci combinations to find retracement levels. This pattern has four waves: XA, AB, BC, and CD. The most important retracement is at 0.786 of XA, which helps determine the B point and identify the potential reversal zone.

The Crab pattern is also Scott Carney's work, following the same four-wave structure but characterized by the XA extension at 1.618, which defines the potential reversal zone. In bullish Crab patterns, the AB retracement is between 38.2% and 61.8% of XA, and the BC extension can be extreme (2.618-3.14-3.618), confirming the pattern completion and reversal area. The Bearish Crab pattern reverses this process.

The Deep Crab pattern is similar to the regular Crab but differs in that point B must retrace exactly to 0.886 of XA and not exceed point X. The BC projection zone ranges from 2.24 to 3.618.

The Gartley pattern was created by HM Gartley. It has two strict rules: point B must retrace 0.618 of XA, and point D must retrace 0.786 of XA. It’s similar in logic to the Bat pattern, with stop-loss typically set at X, and take-profit at C.

The Shark pattern was also identified by Scott Carney, consisting of five waves. It must satisfy three Fibonacci conditions: AB retraces between 1.13 and 1.618 of XA, BC is 113% of OX, and CD targets a 50% retracement of BC. Trading is based on point C, with D as the take-profit.

The Three Drives pattern appears rarely because it requires perfect symmetry in price and time. It consists of five points: three drive endpoints (1, 2, 3) and two retracement endpoints (A, C). Drives 2 and 3 should extend 127.2% or 161.8% of A and C retracements. A and C typically retrace 61.8% or 78.6% of the previous wave; in strong trending markets, it can be as low as 38.2% or 50%. Time symmetry is crucial; otherwise, the pattern is invalid.

From my experience, there are three key points in learning harmonic trading. First, identify potential patterns—even if you're unsure what pattern it is, mark the reversal points first, which makes recognition easier. Second, measure the pattern's potential early by using Fibonacci tools to list observations and assess whether there are strong buy or sell signals. Third, only enter the trade once the pattern is complete—patience is the key to success.

Harmonic trading essentially follows the principle of buying low and selling high. Whether buying or selling, the price position should be ideal, allowing you to risk less and aim for at least a 2:1 reward-to-risk ratio. This method applies across various markets and timeframes.

Regarding identification and drawing, it mainly depends on whether the market is bullish or bearish. Bullish patterns are suitable for long positions, bearish patterns for shorts. The key is to judge market direction based on signals from the harmonic pattern.

Honestly, harmonic trading requires patience and discipline, but once you master the pattern rules, you'll find many trading opportunities hidden in the charts. Let's work together!