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Simple Fibonacci Trading

  • #381
  • Apr 9, 2012 2:21am Apr 9, 2012 2:21am
Quoting Silent
Hi Hugh, pardon me for sounding stupid but here are some noob questions:

  1. When you draw the fibo retracement lines do you draw them exactly tracing the zigzag indicator?
  2. By using zigzag indicator settings to 15 - may I ask if you are referring to the M15 timeline or the ExtDepth variable?

Much Thanks! - CK

The zigzag indicator is just there as a visual guide to help spot swing high/low points. A lot of the time it lines up perfectly with the swing high/low points that you should be trading but sometimes you will be able to see other points that look better. This is usually when the zigzag indicator is picking out lots of smaller swings when a larger move would be a better trade. I suppose it's something you get used to the more you do it.

The 15 refers to the first setting in the indicator which I believe is extdepth.
  • #382
  • Apr 9, 2012 2:54am Apr 9, 2012 2:54am
Thanks for the replies there Hugh; While I technically know how to draw the fibo retracement.. I'm still questioning myself on exactly what is a valid retracement line.. is it generally safer to trace identical to the zig zags?
  • #383
  • Apr 9, 2012 3:08am Apr 9, 2012 3:08am
Quoting Silent
Thanks for the replies there Hugh; While I technically know how to draw the fibo retracement.. I'm still questioning myself on exactly what is a valid retracement line.. is it generally safer to trace identical to the zig zags?
Not necessarily but I suppose you could do that. The best thing to do is to look at lots and lots of charts. Go back through as much history as your broker has and use the f12 button to advance through one candle at a time. Try and spot when a market is beginning to trend and learn what a good impulse move looks like. Then draw the fib and see what would have happened to your trade. There is no substitute for spending long periods of time studying historic charts if you really want to get good at this. You have to develop a feel for the market you are trading. One thing that can really accelerate your learning is using a trading simulator. There is one on the forum. Put "trading simulator" into the search bar at the top and the first one in the list is the one I use. It's easy to set up and use. I have spent many many hours using that trading simulator with various strategies and I find it a brilliant tool.
  • #384
  • Apr 9, 2012 7:39am Apr 9, 2012 7:39am
UCAD 1st target hit.
Attached Image (click to enlarge)
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  • #385
  • Apr 9, 2012 7:41am Apr 9, 2012 7:41am
Quoting turboguru
UCAD 1st target hit.
Nice trade in the end then, well done.
  • #386
  • Apr 9, 2012 7:41am Apr 9, 2012 7:41am
I'm watching a long setup on gbpaud 4 hour but there may be a chance for a short on the same pair in the meantime?
  • #387
  • Apr 9, 2012 8:08am Apr 9, 2012 8:08am
Quoting Hugh Briss
I'm watching a long setup on gbpaud 4 hour but there may be a chance for a short on the same pair in the meantime?
Thanks don't really look at this pair. I like the short better theres been no big pullbacks on the H4 that I could see.
  • #388
  • Apr 9, 2012 11:11am Apr 9, 2012 11:11am
Watching AU
EU,GU and CHF retracing for a setup also
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  • #389
  • Apr 9, 2012 12:16pm Apr 9, 2012 12:16pm
Hi - A couple of questions for Hugh and turbo...

I notice that some of the trades that turbo is taking are pushing past the 75% retracement before entry which is against the original rules. Where do you set your, 'gone too far, now it's invalid' point?

Also, where are you both setting your stop losses? I didn't see a reference to that in the first post. Visually, it looks like it's at roughly 66% retracement, or are you setting it in relation to swing high and lows?

Thanks

PB
  • #390
  • Apr 9, 2012 12:49pm Apr 9, 2012 12:49pm
Quoting pixelboy
Hi - A couple of questions for Hugh and turbo...

I notice that some of the trades that turbo is taking are pushing past the 75% retracement before entry which is against the original rules. Where do you set your, 'gone too far, now it's invalid' point?

Also, where are you both setting your stop losses? I didn't see a reference to that in the first post. Visually, it looks like it's at roughly 66% retracement, or are you setting it in relation to swing high and lows?

Thanks

PB
The rules should actually be called guidelines. Nothing is to say that a pair that pulled back 76% would not be as good a trade as one that pulled back 74%. If the trade was originally invalidated but then starts moving smoothly in the right direction I would consider taking the trade. I believe that the stop loss is mentioned in the first post but you are roughly right, the stop loss goes 1 pip plus the spread above or below the 61.8% fib retracement level.
  • #391
  • Apr 9, 2012 1:01pm Apr 9, 2012 1:01pm
Quoting Hugh Briss
The rules should actually be called guidelines. Nothing is to say that a pair that pulled back 76% would not be as good a trade as one that pulled back 74%. If the trade was originally invalidated but then starts moving smoothly in the right direction I would consider taking the trade. I believe that the stop loss is mentioned in the first post but you are roughly right, the stop loss goes 1 pip plus the spread above or below the 61.8% fib retracement level.
Thanks Hugh - makes a lot of sense. By the way, had another look but I can't see the stop positioning on the 1st post (at least for people not using the EA). Thanks for clearing it up.

PB
  • #392
  • Apr 9, 2012 1:14pm Apr 9, 2012 1:14pm
Quoting pixelboy
Hi - A couple of questions for Hugh and turbo...

I notice that some of the trades that turbo is taking are pushing past the 75% retracement before entry which is against the original rules. Where do you set your, 'gone too far, now it's invalid' point?

Also, where are you both setting your stop losses? I didn't see a reference to that in the first post. Visually, it looks like it's at roughly 66% retracement, or are you setting it in relation to swing high and lows?

Thanks

PB
The EA is set for 78 so thats whr I left it. 75 or 78 is so close to me it doesn't matter. Its about the swings alot pull backs will make a 78 fib just have to look at bigger TF's. Remember pulling fibs on swings is pretty subjective,have to look at charts and go back as far as possible in history to get a feel,Hugh touched on backtesting nothing is more important than that.
  • #393
  • Apr 9, 2012 1:14pm Apr 9, 2012 1:14pm
Quoting pixelboy
Thanks Hugh - makes a lot of sense. By the way, had another look but I can't see the stop positioning on the 1st post (at least for people not using the EA). Thanks for clearing it up.

PB
You are right, I've adjusted the first post so it mentions the stop loss. Thanks for pointing that out.
  • #394
  • Apr 9, 2012 1:17pm Apr 9, 2012 1:17pm
Look at the channel on audusd 4 hour at the moment, there have been some big pullbacks in that trend, maybe some would have invalidated the trade originally but then gone on to be good trades. At the end of the day you have to feel comfortable with the risk you are taking. If you feel that the trade is worth taking but you have slight doubts about it then use a smaller position size.
  • #395
  • Apr 9, 2012 1:33pm Apr 9, 2012 1:33pm
Nice setup on gold at the moment.
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  • #396
  • Apr 9, 2012 2:42pm Apr 9, 2012 2:42pm
Gbpaud short has opened as well.
  • #397
  • Apr 9, 2012 4:17pm Apr 9, 2012 4:17pm
CAD long closed the other ones earlier today.
30m swing a little aggressive.
  • #398
  • Apr 9, 2012 4:19pm Apr 9, 2012 4:19pm
Sorry forgot chart
Attached Image (click to enlarge)
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  • #399
  • Edited 8:53pm Apr 9, 2012 8:28pm | Edited 8:53pm
GY setup

edit:cancelled
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  • #400
  • Apr 10, 2012 12:30am Apr 10, 2012 12:30am
I don't like the look of either of those. Yes they conform to fibonacci to a degree but it's not as though they are trending or anything. To me you're not trading impulse waves in a trend, you're trading random movements. Maybe this will work for you but I think you're better off looking for trends.

Having said that my gbpaud short stopped out for a loss. The obvious reason why was that it was against the trend! D'oh! Oh well, I'm short audusd now and 20 pips up so I'm back on track. Gbpusd is almost setting up too.
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