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
Read entire post >>>
Hello Edward,
Nice and simple Fibo-based strategy I've ever seen. However I have a question. Hope you don't mind to answer
I tried it with GBPJPY on H4 chart.
With GBPJPY on H4, each candle's size is usually more than 100 pips and according to the rule I have to re-draw the Fib every candle. As a result, once the price entered "must channel" it had been a new wave because the size of this candle is greater than 100 pips so it's difficult for a retracement to be happened.
If it's not clear for you I could post a screen shot.
Thank you,
Regards,
Keith
Hi Keith,
You've already almost answered your own question.
GBPJPY has a way more higher daily average range than other pairs. We can't use 100 pips rule here. The amount of pips should be increased, but only after one works with GBPJPY charts closely in order to identify the length of an average wave. I have no such immediate data for this pair.
Best regards,
Edward
Hi everyone, could use a little help here. I'm scratching my head over the idea of entering long at the high point, and exiting at the low point. This seems like a big loss to me. Because I'm blind, i do not look at charts. I only trade with my own MQL programs I write. I'm new to the Fib trading systems and do need to understand what is going on. I understand the rules ok, but not clear how buying at 0.750 and exit below 0.250 would bring a profit. Thank you for any help.
Jeff
Hi Jeff,
I could be mistaken but I think the question was about entering at 0.750 and setting a stop loss at 0.250 Fibonacci level.
If so, then of course, when the stop loss is hit, you'll be out with a loss.
If I got it all wrong, please submit your question with some further details.
Best regards,
Edward
is this the correct way to trade this system?
Yes, the candle you've highlighted as "Entry" should close - it'll become our signal candle - immediately after the close we can enter with a Buy order.
Happy trading!
Edward
Hello Edward,
If i want to use this strategy on m15,m30 than how much pips for a valid swing should i look for?. Or i can go with any AB swing wave?
Regards
fasi
Hi Fasi,
that's a difficult question. In fact, I don't know what will be the best number for those time frames... There we'll be looking at less obvious short lived trends, a much higher number of smaller waves, and on top, we would need to pay a much higher attention to the volatility factor of every currency pair we trade with.
Is there a certain wave length we could use? I dont' know. I've never traded or tried to find it out on those smaller time frames. I'm sorry.
You can start by taking every AB wave and then average it out for your chosen currency pairs.
Kind regards,
Edward
Post new comment