Trading fibonacci levels with entry orders

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Old Apr 12, 2009, 7:24am   #1
Joined Jul 2008
Cool Trading fibonacci levels with entry orders

Trading Fibonacci levels with entry orders (usually on 1 Hr charts or higher).

I have been experimenting with this and have done it successfully a couple of times, but also unsuccessfully a few times and wonder if there are any traders doing this regularly and profitably. How do you tweak it to be successful more often? What is your win/loss rate, profit ratio etc?

What do I mean? Let's say a currency pair/security is finishing a downtrend and starting to go up. Wait until there seems to be a retracement starting, then draw your fib levels from the latest swing low to the new swing high, put in an order to limit buy at, say, the 50% retrace of this fib, one at the 61% retrace, with stop losses for both set at about 77%.

I have done this successfully and unsuccessfully.

Advantages: Once the retrace is established, and you have placed your orders, it can be "set and forget" for a while (or completely if you also set a fixed take-profit). This is especially so if you are using longer TF charts - I Hr and up.

Disadvantages: Obviously some of the "retracements" are really a reversal and you lose all your money. A possible way to reduce this would be to do the buy order as a trailing buy (buy when price rises by X pips during the retracement downtrend - but this method does not give the best price for the buy).

I would appreciate being redirected if there is a thread on this topic already.

My current trading style is to watch for a breakout of a trend, then buy one lot (or sell if appropriate), then look for that next retracement to scale in another lot or two, trying to get the cheapest price - usually somewhere between the 50% - 61.8% level of the retracement. I guess I am really asking is there a way of predicting what percentage the next retracement will go to (fairly exactly), then do the limit-buy or limit-sell orders.

You could keep doing this all the way up the new uptrend, which would give you the cheapest prices for each retracement. How do you decide when this uptrend is finishing so as not to do the last BUY orders?

Successful pips to all..

Regards, Chris
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Old Apr 13, 2009, 9:02am   #2
 
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G'day.....a curious style.....all the evidence that shows you breakouts, reversals and turnarounds is the evidence that is not reliant on fibs.....you might say fibs are redundant or secondary to that evidence.....that being the case, fibs make for great observation.....placing the fibs above the evidence that created the transaction you have entered is self-destructive.....afterall, the evidence that gets you in is the inverse evidence of what gets you out.....well, maybe.....think on it......

fibs are the russian doll..again, you'll see evidence that says the fibs is, well, a fib and that very evidence is what drives your decision (enter and/or exit) you see, at some point the fib maybe valid and you must decide at what point the fib become invalid...so, how much time and capital are you going to give up figuring that out?

I think Jeffrey Kennedy at elliott wave international does a fine tutorial on fib levels and clusters.....however, fibs of time and price should be treated as purely notational and a distant supplement, in my humble opinion......I think there are few pro traders who would disagree and I seriously doubt you'll find pro traders who'll rush to show competent results from the use of fibs......you may lock yourself into a fibonacci discipline, however, price doesnt discipline itself to fibonacci.....

the next logical step is to move to be squaring, geometrics or ganning......eventually you end in the sub orbit of mercury counting earhtquakes......each step is step removed from what is going inside the price movement.....and that movment is the place you first saw evidence.....inside that evidence is the validation.....

just a thought
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