Tradingbay: Discovering The World’s First Custom Harmonic Trading Patterns For Crypto

Our leading indicator detects re-occurring price pattern formations during high impact market events that can be used to predict future moves

5 min readJan 31, 2022

Tradingbay has pioneered proprietary software that is able to scan cryptocurrency markets for re-occurring custom harmonic trading patterns.

The software is able to simulate thousands of combinations to find specific price behaviors which take place during major market moves.

The reason this method of analytics has proven to be very successful so far is because Cryptocurrency markets are cyclical in nature and human behavior is inherently predictable.

How it Works

Video explainer: https://www.youtube.com/watch?v=GbCQy1irJDc

Our process begins by scanning the market for price pattern formations in periods of big market moves.

Once a set of pattern ratios are collected, our trend engine runs simulations in order to identify which pattern occurred the most during big market events.

The trend engine determines the direction of the signal meanwhile the custom harmonic pattern determines the timing.

Together the solution finds re-occurring price behaviors exhibited by the markets which led to a successful trend move that can be replicated in the future.

Additional risk factor filters are applied to clean up the signals.

USE CASE 1: SIMPLE LAYERING

To use HARMONICS, simply add it to any chart you create that focuses on market entries. We recommend placing harmonics panels separate from all others and typically at the top of the chart position wise. HARMONICS work best alongside EARLY TREND & CORE TREND.

Here is a recent example of layering only HARMONICS for all BTC & ETH pairs relative to 13 other coins. The overlay setting chosen is RETRACEMENT. We have the background set to CORE TREND to help us stay on the trending side of the market at all times when trading this set up on BTC. In this setup we are looking for the majority to agree of the same bias. Keep in mind that HARMONICS is not the same as TRENDS or REVERSALS and often occurs less frequent per month. Having at least 5+ harmonics matching in a similar time period is often a strong market indicator whilst at the same time not having any counter signals clashing.

USE CASE 2: PAIRING WITH TRENDS + RE-ENTRIES ON THE SAME ASSET (ETH)

A simple but effective use of HARMONICS is to pair it up with multiple synergistic asset pairs such as all ETH HARMONICS systems alongside all ETH CORE TREND & EARLY TREND systems. In this setup the user would wait for all trends to agree on the same bias and have 1 or 2 HARMONICS confirmations as entry points into the market. As seen in the scenario above between 29 DEC and 05 JAN, there were 3 points of entries.

[A] This entry supports the trading rule of 8 TRENDS + 1 HARMONICS confirmation + 0 clashing counter signals.
[B] A second confirmation appears in HARMONICS allowing us another entry to the market. Traders may opt in to double up on their positions for this SELL scenario. This is viable for as long as the bearish signals are still true. More risk averse traders may look to enter the market only when 2 HARMONICS or more agree on the same signal. In such a scenario; your entry would be located here.
[C] A use case showing RETRACEMENT as a supporting tool identifying trend pullback zones. These could be pairs with trend shifts confirming a trend continuation. Notice how a few bars ago markets broke out slightly but did not trigger the majority. At the time of the fake out, 4X TRENDS said BULLISH and 4X TRENDS said BEARISH. This reading supports the bias of a trend pullback.

We applied RETRACEMENT as the candlestick overlay. During the entire time the trend shift occurred, we had a bearish pullback signal confirmed (notice the red colored bars). Once all the TRENDS came back into BEARISH, this confirmed the downside trend will likely continue. During this same time, we ALSO have both HARMONICS systems still at a SELL. A third trade entry is possible in such a scenario with minimal risk and far more profit potential.

In this scenario discovered by the team utilizing the Layering Principle, we are able to identify 3 points of viable entries to ETH/USD at markers [A], [B], [C].

USE CASE: SWING TRADING REVERSAL LAYERING VIA ALTCOINS

In the scenario shown above, the set up includes ADA/USD setups via exclusively looking at ALTCOINS. We loaded up HARMONICS for:

XMR/USD
TRX/USD
EOS/USD
XLM/USD
DOGE/USD
DOT/USD
XRP/USD
BCH/USD
ADA/USD

Harmonics is loaded in the top panels and EARLY REVERSAL & CORE REVERSAL bottom panels. As reversals do not occur as frequently as trends, it is harder to find matching criteria relative to other systems. Having at least 2–3 matching REVERSALS in a short period of time is a strong indicator.

[A] In the first SELL signal in our stack, we found a total of 4 simultaneous SELL signals which is a strong indication of selling action. To further the validation, we met our minimum rule of 2–3+ REVERSAL signals across the ALTCOINS.
[B] Soon after we receive an additional 2X HARMONICS SELLS making it a total of 7X HARMONICS SELL providing a very strong sign. To compliment the HARMONICS, we also see an additional REVERSAL confirmation from ALTCOINS meeting both rules in our stack.

You may find more success in trading multiple entries for the same signal direction in order to maximize profits, some traders prefer this method. Alternatively, if you wish to be more on the extra safe side, there is no harm in following all the SAFE EXIT signals even if it means you close your trade early. You can always re-enter the markets if the systems support that bias but if you leave the trade running for too long, you may find yourself very quickly on the losing side of the market.

Learn more: https://tradingbay.io

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