During January 2020 till the end of April 2020 we’ve tested the 10 most popular Harmonic Scanner softwares. Today we publish this post to reveal the test results.
Before we show the research report, we will introduce the basic of Harmonic pattern trading and the importance of Harmonic scanner to give you basic knowledge regarding the report.
For you who have already known Harmonic trading, you can skip the introduction and jump directly to the research section.
Here are what you can learn in this post:
- Introduction to Harmonic Pattern
- Harmonic scanner
- Our research
- The test results
- What makes the FSO Harmonic Scanner unique
- Our suggestions
Introduction to Harmonic Pattern
History of Harmonic pattern
Chart pattern is the main ability most traders develop in Technical Analysis. It might be a basic knowledge in Forex trading, but to master pattern recognition, it takes repetitive exposure and practice. Mastering recognition of patterns could help traders to predict and react to the market movement.
Some of most popular patterns in the past are Symmetrical Triangle, Cup and Handle, Head and Shoulder, Flags, Double Bottoms, Broadening Patterns, etc.
Then in 1932 H.M. Gartley found a pattern which is much more accurate and then the pattern was named Gartley pattern. It is the basic concept of Harmonic Pattern.
The method then developed more by Larry Pesavento by adding Fibonacci Ratios to the recognition to make it much more accurate.
Then Scott M. Carney developed more the pattern through his book “Harmonic Trading”. Scott found some other patterns and named them as Crab pattern, Bat pattern, Shark pattern, and many more.
The main theory behind the Harmonic pattern is the Fibonacci ratio and the symmetry of the pattern. By using the Fibonacci ratio (Fibonacci retracement), a pattern could early detect the turning points or reversal point with amazing accuracy.
Not only that, by still using the Fibonacci ratio (Fibonacci projection), Harmonic pattern could also predict the length of the reversal which is the potential profit for trader, and also the safe stop which is the level that break the pattern.
Example of Harmonic Patterns
Below is one of example of Harmonic pattern called Gartley pattern:
The pattern formed by 5 points which are X,A,B,C,D. The point of D is the reversal point that trader should entry (in Buy position), with the target of 0.618 of XA. While the stop can put on some pips below the D point.
List of Harmonic Patterns
Below are the list of most popular patterns in Harmonic trading:
- ABC Bearish/Bullish
- AB = CD Bearish/Bullish
- 3 Drives Bearish/Bullish
- Gartley Bearish/Bullish
- Butterfly Bearish/Bullish
- Bat Bearish/Bullish
- Crab Bearish/Bullish
- Shark Bearish/Bullish
- Cypher Bearish/Bullish
Advantages of Harmonic pattern trading
- Highly probability setups.
- Frequent and repeatable.
- Provides future projections (so you can predict the market earlier).
- Trading rules are standardized by Fibonacci ratios, which give you more objective in pattern detection.
- Works well in any instrument (stocks, currency, commodity, etc.).
- Can be used for any direction (bullish and bearish) .
- Works well in any time frame (from M15 till Monthly).
- You can use this tool both as solo indicator and combined with other indicators like RSI, MACD, MA, Stochastic, etc.
- With the right pattern detection, traders could get much bigger of potential profit ratio compared to the risk taken.
Disadvantages of Harmonic pattern trading
- Complex and highly technical (making it difficult to trade manually without Harmonic scanner).
- Fibonacci retracement and projection conflicts can cause difficulties in recognizing the pattern and defining the reversal zones.
- Opposing patterns form that may occur in different timeframe could make a confusing of trader who trade without the Harmonic scanner.
How to trade the Harmonic patterns
The concept in executing a harmonic pattern is actually easy. There are only two steps before you execute the trade:
- First, wait till the pattern recognition completed.
- Second, wait till you got a confirmation that the pattern is completely formed.
For example, if you trade the above pattern (XABCD bullish Gartley pattern, wait on the potential zone of D, which is the reversal zone. When the pattern (XABCD) is completed, wait the confirmation signal which is bullish movement. When you got the signal, you may enter to the market in long position.
For the Target, you may put it by using Fibonacci projection. Each pattern has its potential reach of Fibonacci projection. While the Stop is some defined pips below the D point. The distance is defined based on the broker’s spread plus pips of margin of error.
What is Harmonic scanner
Harmonic scanner is a tool to measure, analyze and display all the Harmonic patterns detected by the algorithm in any given time-frame.
With a scanner, trader will see a dashboard on their trading platform which shows all the patterns found. Based on the information, the traders could decide which pair and which time-frame will need to execute.
The scanner gives the trader ability to monitor all pairs, all time-frames and all possible patterns in one dashboard, instead of open and analyze them one by one.
Why you need a scanner
There are at least 5 reasons of why you should use a Harmonic scanner if you want to trade the Harmonic pattern effectively and maximize your results. They are:
1. To avoid missing in good opportunities
You can always do a manual trading in Harmonic trading, but the chance for you to miss a good opportunity is much higher than using a scanner.
2. To avoid a late entry
Manual measure in detecting harmonic patterns will be very time consuming. This one often causes a trader too late to enter the market. Keep in mind that harmonic trading is a reversal trading, which the power is in its risk to reward ratio. By late entry you lose the power of harmonic trading itself. Ie, your risk could be just as same as your reward, or even bigger.
3. To avoid a false in pattern recognition
The harmonic scanner built to eliminate human error in measurement and detecting the pattern.
4. To reduce trader’s emotion and other psychology factors
By sitting too long to monitor and waiting for a good pattern to catch, traders often get a bad mood, trigger their emotion, etc. which then causing a wrong decision.
5. To avoid pattern recognition conflicts in different timeframe
Sometime you will find a bullish pattern in higher timeframe followed by a bearish pattern in lower timeframe. This condition could make a manual trader hard to make a trading decision. With harmonic scanner (the good one), this kind of condition is anticipated. The scanner has been programmed to decide which pattern has the most probability to be right and ignore the less one.
The scanners we chose to test
In this research we test 10 harmonic scanners. How did we choose them?
Here are the steps before we chose them:
First, we browse on Google to find out several trading groups, especially the ones which Harmonic trading discussion. We joined 13 forum sites, 21 facebook public groups, 6 facebook private groups, 19 whatsapp groups and 25 telegram groups.
We collect information on what harmonic scanners are most talked about in the discussions. From the investigation, we got 17 brands.
Then we choose the 10 most talked about in the forums and groups. We purchased the scanners, configure all settings, read and watch all the guidelines, and then start the tests at the same time.
In order to protect their privacy, we won’t reveal the name of the scanners in this report, except the one got top score in the tests. But if you need the exact names for evaluation, you may ask us through our Contact Us page.
Factors to evaluate and score
There are only 3 factors we use to evaluate and score the 10 harmonic scanners. We don’t use any irrelevant factors like ease of install, service after sale (customer support), product price, money back guarantee, etc. Instead, we use only factors that matter for the trading itself.
We calculate the score based on the value of each factor. Here are the formula we use to calculate the score:
FACTOR SCORE = VALUE OF FACTOR X SCORE
Each factor has its value. The more important the factor, the bigger the value. The less important the factor, the smaller the value.
1. Success rate (value: 40%)
We put the success rate as the number one factor with highest value (40%).
The success rate is counted by divide the number of win positions (hit the Target 1) with the number of trades.
We define the success rate after executed all detected patterns and put the target and stop based on the level given, or by following the software’s guide.
2. Number of patterns the software could recognize (value: 15%)
The ability to detect patterns is important as the more patterns you could recognize, the more opportunities you could take. For sure in real trade you don’t need to execute all the existing opportunities, but the ability to detect many patterns will give you more chance to catch the best ones. For this factor we give a value of 15%.
3. Number of instruments monitored by the software (value: 15%)
Some scanners could monitor only 10 pre-defined instruments. But some scanners could monitor up to 40. We see this factor as important factor too as the main benefit of using harmonic scanner is you could monitor all instruments you would like to trade in one dashboard. We value this factor as 15%.
4. Ability to monitor multi time-frames (value: 15%)
Some scanners has limitation of number of time-frame to monitor (ie: could monitor only 2 given time-frames), while the other ones could monitor up to 6 different time-frames. We give this factor value of 15%.
5. Ability to anticipate pattern conflicts in different time-frame (value: 15%)
If you have some experiences in manual trading with harmonic pattern, there is chance that you experienced a pattern conflict. This conflict occurs when a pattern direction in a time-frame against the pattern direction in a higher or lower time-frame.
Within the condition, some scanners will display both of them, which just making you hard to choose. A good scanner should display the one that has highest probability to win. Or, they may display the both complete with the probability ratio.
The test results
Below are the graphic of total score we got from the tests. The score is the sum of the 5 factors above generated by each of software.
Here are summary of the test results:
- There are 3 scanners failed to pass our minimum standard (50% in score).
- There are 3 scanner failed to pass our second standard (60% in score).
- Only 2 scanners got total score of over 70%.
- The highest score achieved by FSO Harmonic Scanner 8.
What makes the FSO Harmonic Scanner unique
Based on our research, FSO Harmonic Scanner 8 has three features that we didn’t find in other scanners.
First, FSO has its own artificial intelligence in Neural Network connected to the scanner. This feature gave the software ability to self-learning from mistakes to provide self improvement.
With this feature, the software can automatically improved its analysis by self-adding new algorithms and eliminate the old algorithms with less success rate.
Second, the FSO doesn’t use Fibonacci retracement/projection to define safe stop and targets (both Target 1 and Target 2). Instead, this software use their own algorithm inside the Neural Network.
To be noted here, we didn’t evaluate second target during the tests since some scanners only have one level of target.
Third, the FSO has second indicator called Maxwell’s Equations which the function is as a confirmation before you execute any harmonic pattern.
The Maxwell’s Equations display future prediction so you can cross-check with the pattern’s direction. When the future prediction confirmed the direction, you get even better probability to win.
Image below should represent how the Maxwell’s Equations works as a confirmation of the price reversal and potential distance of the price movement.
How to maximize your trading with FSO Harmonic Scanner
Below are some tips to maximize your trading results with FSO Harmonic Scanner 8:
- Always use stop level based on the level given by the scanner. Do not put your Stop just on some pips below/above the entry level, like suggested by many theory. The FSO already calculated the exact level of threshold of pattern validation.
- No matter how good the pattern formed, do not enter to the market before you got a confirmation signal from the scanner.
- Since the distance of stop will be varied on each position, then do not use flat lot for all of your positions. Instead, use proportional lot based on the stop distance and the money you’re willing to risk for the trade.
For example, if you want to take a risk of $50 on EURUSD, with the stop distance of 25 pips, then the lot size you need to take will be 0.2 lot. Take the same risk for all of your positions.
- To maximize your potential profit, always put your target on Target 2, but when you achieved Target 1, close your position partially and move your Stop to Breakeven (to entry level).
- Trading the Harmonic pattern in higher time-frame will be less frequent. But keep in mind that in term of Harmonic trading, you don’t try to get frequent trades. Instead, your priority should be your winning rate. We suggest to trade patterns only on H1, H4 and D1. With the ability of the scanner to monitor up to 30 instruments, you will get enough opportunities even you limit your trades to only on those time-frames.
How to get FSO at Special Price
FSO Harmonic Scanner is produced by FX Tech Group, Ltd. Anytime the producer launch a promo or discount, they will launch it on their Special Offer page, which you can access through the link below: