Disliked
Another great thread. The simple trend trading approach is very much aligned to my own thinking.
Just some areas I am seeking clarity on. If you have already provided this, then please excuse the question or point me in the right direction. (I get lost in all the posts!)
1)
Can...Ignored
Hi dmuk,
Thank you for the compliment and questions... I find it's best to quote and answer in a different colour so that others can learn from the answers too:
1)
Can you explain how you apply the fib tool to your charts? And when you will use it and won't use it? What impact would round numbers have above/below the key fib numbers?
Personally, I find the use quite subjective (much like trend lines) and hence some inconsistencies appear.
Indeed – it is one of those self fulfilling prophecies – which trading is in fact made up of. I tend to use them to measure the retracement of the most recent swing in the direction of the trend. It is basically a guide so I know how far the retracement has gone – ideally I would like to see price retrace at least 50% of it’s last leg in the direction of the trend before becoming of interest to enter. Again, I line the levels up to the round numbers (I don’t physically adjust the fibs, I just do it mentally; so if the 50% level fell at 1.3415 for example I would round that to 1.3400 for an entry).
2)
Once in a trade, can you reconfirm your original stop loss approach? And explain when you move the stop loss to break even.
My stop loss is initially positioned a little above the high or low of the setup candle (if it’s a short signal the stop goes above the high and reverse for a long signal). Moving the stop loss to breakeven is a little more complicated – it is a whole subject in itself and I will come to it shortly!
Hope that helps!
Regards,
Dan