Advanced system#2(fibonacci trading)




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Advanced system#2(fibonacci trading)Advanced system #2 (Fibonacci Trading)

Submitted by Edward Revy on May 6, 2007 - 04:39.

The fact that Fibonacci numbers have found their way to Forex trading is hard to deny.

Moreover, trading currencies with Fibonacci tool for many traders have become the bread and butter of their whole trading career.

So, shall we look at the one of such good Forex trading systems today?

Trading setup and tools we need:

Time frame: 3 hour (or 4 hour).

Currency pairs: any.

Indicators:

Fibonacci tool - our main tool

EMA 100 – green (visual guidance)

SMA 150 – red (visual guidance)

RSI (14) on a daily chart

We will be working with next Fibonacci retracement levels: 0.382, 0.618, 0.250 and 0.750.

Default stop loss – roughly 100 pips and then adjusted according to the most recent swing high/low.

Find the closest to the current price wave with a distance from High to Low over 100 pips.

Apply Fibonacci on it no matter if the wave is going up or down, only size matters.

Some terms we are going to use here:

The corridor between 0.382 Fibonacci retracement level and 0.618 retracement on the chart – will be called a “must channel”.

Fibonacci retracement levels will be numbered always from bottom to top, no matter whether it is an up or a down wave. E. g. at the bottom we will always have 0.250, then next 0.382, 0.618 and finally on top – 0.750 Fibonacci retracement level.

Entry rules:

Always enter only according with both:

1. EMA and SMA trend suggestion (e. g. green on top – uptrend, red on top - downtrend)

2. RSI suggestion (e. g. reading below 50 – only sell orders, above – only buy orders).

Now, after applying Fibonacci on a wave bigger than 100 pips we wait for the price to go inside a “must channel” area (at least to make 1 pip into the channel). Only then next rules will be valid:

- If a full candle (including shadows) is closed below 0.250 Fibonacci retracement, we go short. If we are currently long – it is time to close long position – it is an exit rule as well.

- If a full candle (including shadows) is closed above 0.750 Fibonacci retracement, we go long. If till this time we had short positions open – we close them – and again it is an exit rule as well.

Important . once another wave greater than 100 pips occur, set a new Fibonacci on the new wave. Retracement levels will change and so we will now follow new retracements.

(Optional: for visual aid traders may mark old Fibonacci wave to see the general pattern of consecutive waves on the chart).

That’s it. Stay in trade, resetting Fibonacci with each new wave and moving a stop loss according to the last swings high or low (in simple words, a stop loss will be always just below the Fibonacci 0% line) until it is time to close the position according to our rules.

This strategy prevents a lot of “bad” entries, eliminates early exits and allows staying in trade for a long period of time helping to take everything a current move can offer.

Traders may close all good winning positions on Friday evening if they prefer not to hold them over a weekend.

Advanced system #2 (Fibonacci Trading)

Submitted by Edward Revy on May 6, 2007 - 04:39.

The fact that Fibonacci numbers have found their way to Forex trading is hard to deny.

Moreover, trading currencies with Fibonacci tool for many traders have become the bread and butter of their whole trading career.

So, shall we look at the one of such good Forex trading systems today?

Trading setup and tools we need:

Submitted by User on February 15, 2011 - 19:29.

Iam the guy who posted the PDF

Well if those people are right then they at least tried to measured which filter and which stop and average wavelength is the most profitable in the long run. They did it on three Spot currencies. although EUR/USD and GPD/USD are highly correlated anyway.

I tend to doubt sellers and marketing guys very much specially in trading, but at least the dont use "new and awesome trendmaster 3000 indicator" which repaints of course if you look at it more closely and they have clear and defined rules for entry and exits which is more the very most "gurus" can offer.

On the other hand they sell something which is nothing realy new and also never show losses just epic wins. you wont get that often.