Complex trading system #5 (Fibonacci trading)
Submitted by Edward Revy on June 30, 2007 - 13:27.
Traders were asking to post some strategies that will work on smaller time frames.
Here is one very nice trading system that can be worth your attention.
When a trader chooses to use small time frames (like 10 min, 15 min, 30 min even 1 hour) risks to be wrong are always higher than with larger time frames.
Therefore, it is very important to have a really good Forex trading system that can advise on entries with high chances to win and what's more important it should be able to tell exactly where to exit without need to constantly monitor the price.
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Hi Josh,
5 min can be traded as well. Use same 5 WMA there.
5 min TF is a very comfortable time frame once you get used to it, oftentimes it feels more flexible and revealing than 15 min. So, definitely try it.
Regards,
Edward
Hi Edward,
God bless you for helping us out.
One quick quest..what wma to use on an 1 hour chart?
thank you.
Hi,
It will, in fact be the same 5 period WMA.
Regards,
Edward
hi guys..been trying this system on the 15 min chart..making profits but losing them in the end...think the system is good ...maybe i am not getting the trend right...which ma is the best for determining the trend?
I've heard that 50 SMA is good for these purposes, as well as 20 EMA if you want more precision for smaller trends.
Mark
Hi Edward great site and very good explanation although I would get my head round how the fib levels are as per your original screenshot. I am having a problem with this and wondered if you could help me. Please view the screenshot i have attached in which it shows that the 38.2 and 61.8 retracement levels are by default of MT4 (Alpari) shown opposite to that shown by your screenshot as a result I would like to know how I can change this to the same appearance of your initial screenshots.
Am i correct in assuming that in an uptrend you would drag fibs from high to low (in downtrend low to high). If this is the case the two fib levels (61.8 and the 38.2) are shown the opposite way around as identified in my screenshot. This is clearly impacting on the take profit targets of the 138.2 and the 161.8 and i wonder how i can resolve this problem.
Hope this makes sense. Please see my screenshot for better understanding.
Kind Regards
Shane
Hi Shane,
in MT4 we use 2 tools:
1. Fibonacci Retracement - which we'll draw from the bottom to the top i an uptrend (from the top to the bottom in the downtrend).
2. Fibonacci Expansion - for setting profit goals, such as 1.618, for example.
This tool might not be visible on your initial MT4 platform menu, so you have to customize it by Right clicking on the menu somewhere near the Fibonacci Retracement icon and choose "Customize". Find and add Fibonacci Expansion tool.
To use it you have to connect 3 points: A, B and adjust the third line to the point where the retracement has ended.
Kind regards,
Edward
Hi
Say i have a 100 to 0 fibonacci,does it mean yo levels are the same as mine coz yos seems to have 4 lines and mine 5 lines.So which ones would be almost equivalent to yours?
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