Advanced system #2 (Fibonacci Trading)

is this the correct way to trade this system?

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

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 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

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 Jim,

Sometimes trading your own strategy is much easier than explaining it to someone else :), especially when it comes to each trading case.

I tried my best to explain it, but there could be some commissions, possibly, so please feel free to point them out if you find any.

That's how it should be:

2. If the the "must channel" is not penetrated, but, following the retracement, there is a move in the direction of the trend of at least 100 pips, then we re-draw the Fibs only when the move exceeds the previous high/low, which we used to connect Fibs to. Otherwise there is no point to change the Fibs, since price can still return to the old Fibs.

3. Here I referred to the same "must channel". If price doesn't come back to test it, all you can do is wait till there is a new move of 100 pips + this move exceeds the previous high/low in order to allow re-drawing the Fibs.

Best reagrds,
Edward

Edward,

Thanks so much for telling me of this system. It's been very helpful to me. I've also explored the mentioned ICWR material, which is also excellent, and I like your changes and additions to the system.

I have a couple of questions which are based on your statements below which appeared in a prior answer. My questions are lettered, below your numbered statements.

1. If on the retracement the price didn't enter the "must channel" and, after resuming a trend, dropped below the previous low (which you connected Fibs to), but less than for 100 pips - you have to readjust the Fibs to a new low.

A. No question regarding #1. Thanks for this clarification. Very helpful.

2. If on the retracement the "must channel" was penetrated, then for any down move which is less than 100 pips, we draw no new Fibs and do not make adjustments - the old Fibs stay up.

B. While I understand #1 and #2 above I want to know what to do if there is a retracement where the "must channel" is not penetrated, but, following the retracement, there is a move in the direction of the trend of at least 100 pips. Does this move following such a small retracement constitute an opportunity to draw new Fibs and move the Stop? If it does, what is the minimum move of such a retracement?

(I would assume the retracement has to at least be one candle with a high and low opposite to the trend direction, not just an inside bar, and not just a small sideways trend, but an actual corrective retracement, but I'm not sure how to quantify a corrective retracement wave to a degree justifying redrawing the Fibs.)

3. Price may not, however, come back to the old Fib retracement levels again, so if you have closed a trade earlier, or didn't trade, there will be no more opportunities until new Fibs can be drawn or the price makes a run for the old Fib retracement.

C. I don't understand #3 at all. I think it would help me if you gave an example, showed a chart, or presented some made up numbers, or maybe just stated it in a different way.

I am attempting to make sure I have a completely mechanic understanding of this system and eliminate subjectivity as much as possible.

Thanks so much for this thread and all the work that you've generously put into it.

Jim Wallace

I understand what you mean, but I don't know about such feature in MT4.
I believe it doesn't exist.

Best regards,
Edwards

Thanks for this wonderful site.
On the sides, Is there a way one can save a modified MT4 fib tool so that one can use it alongside the default one or others? ok, When you modify the tool it is saved by default when yu close the program until yu modify again or reverse to default. but is ther a way one can save several of the modified tools and use them alongside each other?

Thank you!
If on the retracement the price didn't enter the "must channel" and, after resuming a trend, dropped below the previous low (which you connected Fibs to), but less than for 100 pips - you have to readjust the Fibs to a new low.

If on the retracement the "must channel" was penetrated, then for any down move which is less than 100 pips, we draw no new Fibs and do not make adjustments - the old Fibs stay up.
Price may not, however, come back to the old Fib retracement levels again, so if you have closed a trade earlier, or didn't trade, there will be no more opportunities until new Fibs can be drawn or the price makes a run for the old Fib retracement.

Best regards,
Edward

Hi Eward,
what a great work! Unbelievable that u made it public. THANKS.
Maybe I missed something (although I read the whole thread a couple of times) but what do I have to do when the following happens:
I draw the fib retracements on a 100 pip DOWN move (all other 3 indis are in line for a down move). Now - after a retracements of not more then to under the 38.2% level - the price drops below the 0 line but not making a new 100 pip move. Do I have to "widen the former 100% range to the new low (so that the 0% line meets the new low) or do I leave the former range alone (so the 0% line stays @ the former low) and still wait for a retracement to the 38.2% level?

This is old ICWR forex strategy, but thanks for mentioning in a concise manner. In the original strategy, 40 pips were used to indentify the active wave

No, because daily RSI and SMA+EMA don't agree on a trend.
From your description: RSI shows an uptrend, while SMA+EMA suggest a downtrend.

Best regards,
Edward

Happy New Year Edward, thanks for sharing this with us, I am trying out your strategy, but got a question for you, what the red SMA 150 is over the green EMA 100 meaning is downtrend right, but RSI on daily chart showing just bigger than 50, just under 70, so the trends from these indicator do agree with each other, now the candle has touched the 'must channels' and the new candle complete above 75% mark, can I go long?

I can say it is making profits, but I'm not ready to tell how much since I'm using Fibonacci method in combination with other methods, which is rather a complex chart analysis.

Best regards,
Edward