Taking investment decisions on the futures contracts market with the application of Bat harmonic pattern – the increased efficiency of investment

Bednarz Krzysztof ()
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Bednarz Krzysztof: The John Paul II Catholic University of Lublin Al. Racławickie 14, 20-950 Lublin, Poland

Folia Oeconomica Stetinensia, 2013, vol. 13, issue 1, 7-21

Abstract: The Bat harmonic pattern presented in the article shows that transactions made thanks to it on the contract market are characterized by an above-average rate of return (206.43% within 27 days) while accepting the initial risk (R). The use of the potential reversal zone (PRZ) calculated thanks to the Fibonacci retracements (internal and external retracements as well as pricing projections) makes profits that arise in such a short time to be considered impressive. This article presents also one of the simple methods of profits protection which involves exceeding the local maximum (for a short position) or the local minimum (for a long position), modified by the degree of the accepted risk (R). It is worth noting that the POO can be calculated for several hours (days, weeks, months - depending on the time interval) before the actual transaction is concluded. In this, among other things, the harmonic trading with XABCD pattern differs from many other investment methods. This is a decision making based on the data available up to the last bar in the chart of what is likely to happen after this last bar. You could even say that POO is buying fear when prices are falling heavily and selling greed when prices are rising rapidly.

Keywords: Bat; retracements; internal price retracements; external price retracements; the potential reversal zone; harmonic pattern; Fibonacci; Fibonacci’s numbers (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:foeste:v:13:y:2013:i:1:p:7-21:n:2

DOI: 10.2478/foli-2013-0002

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