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
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Hello Edward,
Hope this day finds you doing well! My question is, let's say we're trading long, you say wait for a full candle to close outside of .750
Do you mean a complete candle above the .750 line or a candle that passes up through the .750 line and price closes on that candle above the .750 line. Thanks for clarifying this for me. Best wishes to you and your family for the upcoming Labor Day weekend!
Thanks again,....Phil
Hello Phil,
Thank you. Same good weekend to you!
We need a complete candle above 0.750, e.g. the whole body of the candle including shadows. The candle that passes up through 0.750 isn't enough, but it carries a good message for us to check up on the charts soon.
Best regards,
Edward.
hi edward,
thanks for your well thought out responses to these questions. your answers really clarify the use of the strategies!
if the trend is up, and the price dipped below the upper "must" level, and then a full candle (including shadows) closes above the .75 level, we go long. but what if either the daily rsi is less than 50, or the 100 EMA is below the 150 SMA?
would you then wait until both the rsi and MAs are positive (which might take awhile) and the latest candle is also above the .75?
kind regards, gibson
Hi Gibson,
Thank you for your question.
Yes, I would suggest waiting for both RSI and MAs to confirm market direction, which would be a safe mode entry, the one I prefer.
In the past I tried relying on Fibonacci signals only. It often hit me badly. Since then I stopped taking unnecessary risks.
Best regards,
Edward.
hi edward,
this is a really nice strategy. have you tested it on a one-hour time frame?
the most successful strategies seem to be on the daily and 4-hour timeframes, but are like watching paint dry for people who like to check the screens every hour or so.
kind regards,
gibson
hi edward,
to clarify my prior post; using the one-hour chart would allow one to get in as soon as a one-hour candle closed above or below the .75/.25 level, rather than waiting for a 4-hour candle close.
kind regards,
gibson
Hi Gibson,
I haven't tested the strategy on 1 hour chart. Hourly charts can be quite misleading when it comes to identifying the major trend. Since my plan is to stay in a trade for a long time I decided to avoid reading signals off 1 hour charts.
If you'd like to try it out, I would really appreciate some comment-report about the performance on hourly charts.
Happy trading!
Edward.
hi edward,
I noticed that Fibonacci tool is difficult to get higher and lower swing that fall betwween 100 pips. From the chart GBP/USD the smallest pips between higher and lower swing is 200 to 400 pips.Pls kindly assist
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