Charts 13 and 14. I did this all fairly quick so if I have missed some trades it wasnt intentional
hi, i started trading a couple of months ago and i have progressed in leaps and bounds. day before yesterday i decided to try uisng fibs on a tip from a friend. i used other indicators before but hadn’t really explored fibs until the last couple of days!
the point i want to make is this: i came to the same conclusion about the 23.6% fib as daedulus and i did this INDEPENDENTLY! i thought about it, back tested on the demo, made some money live, but wanted more confirmation, so i came to babypips forum on fibs and found the above.
now i know my fate is sealed! forward and onwards to a happy, propsperous and wampuminous life and a golden retirement for all who follow this free trading system.
thank daedulus for the confirmation
hi again, do you use these EMA’s on all time frames? if not, which ones are they best suited for?
thanks
hypnos
tonymand - You’re the man. The 78.6% is actually what the GBPUSD prefers most of the time. Thats why i’m actually taking trades that confirm at the 61.8% putting my stop at the swing high (as you pointed out), making sure they hold 87% and go, or if they blow through the 61.8 originally and then respect the 78.6% (or 75%, its the same more or less) then re-establish below the 61.8% i’ll again take the trade. You pointed out great examples! And if you are taking trades at the 78.6 and then go all out at the 38.2, you are essentially keeping the same risk reward as going from the 61.8 to the 23.6, you’ve just shifted the profit curve further down.
Also, thanks for bringing up the swing high stop placement, that is actually the next installment/revision I wanted to bring up. I hope to have that mini novel and examples up today if I don’t get too bored. 
hypnos63 - Happy to help and confirm, and likewise i’m happy to hear that my findings are confirmed by you as well. Maybe i’m sane after all 
Cheers to you!
I am now using the 62/78 EMAs on ALL time frames. After some more backtesting I came to the conclusion that the trade off of the longer time frames was you stayed out of some more counter trend plays - BUT that those counter trend plays were less likely to work, and thus it was easier and more profitable to use the longer time frames and just keep with the bias as price action permitted. The original post has been edited on the first page to include this information.
Stop Loss Revision
I’m going to keep this short, simple, and too the point. When i’m putting on trades these days i’m actually placing my initial stop loss 1-2 pips outside the swing low/high level (100%). The reason is simple. I have had one too many trades come up and test that 87% level, stop me out, close back under the grid and go onto work for profit. But it kicked me out at the worst possible time, it ended up that I wasn’t wrong about the trade, but my stop was just a SMIDGE too tight to hold. This can be simply cured by relaxing the initial stop to the swing high or low of your measurement.
Now before you jump up and call FOUL - this changes our Risk:Reward! Let me explain how i’m managing the stops. Yes - worst case i could have a candle just spike straight through my stop and it would hurt. But in my backtesting if price action tests that 87% level I give it ONE more candle to close back inside the grid. If not, i exit the position for what should be roughly the same amount of loss than if I put the stop right at 87%. But i’ve increased the likelihood of a successful trade by not getting high or low ticked out of a successful trade.
My end trade results have been better than if I was using stops at 87% simply because i’ve had a number of trades stop me out for max loss just as they go onto work if my stop was at the swing high or low.
Forgive the examples below, they were the first couple I found in the charts. By no means great trade setups really but they illustrate the point fairly well.
Image 1: First move into the area holds the swing low stop. But on the next candle it closes up INTO the grid, but NOT back inside it. Time to say “Yup, i’m wrong” and exit the position. Notice it should be fairly close to where your exit would’ve been anyway.
Image 2: Notice how price action spiked into what would’ve been my stop but held the grid. This is the scenario i’m talking about. What would’ve been a max loss turned into a profitable trade. These scenarios GREATLY outnumber the trades that stop you out right away at a swing high/low and thus, i’m advocating this stop placement to improve the overall results of your trades.
Hope this helps… I’m working on some more material to help confirm grid pullbacks, i’ll see if I can find something I really like to show you guys later today or not.
Cheers Folks!
Lesson of the Day: Adding a secondary indicator for confirmation
One of the hardest things to understand when you first start looking at fib grids is trying to weed out the setups that are going to work from the setups that aren’t. Essentially all we are doing here is buying pullbacks with a trend in a measured, reliable fashion correct? Well what i’ve found CAN help is using a simple confirmation indicator to identify areas on a chart to look for our grids to come into play. A foreword - You don’t need to do this. You have all learned thus far without it, but I think it can help identify areas to look for trades in a simple fashion that should increase your profitability.
Try adding a 6,3,3 Slow Stochastic to your charts. Thats it. Simply start looking for grids to come into play when the indicator shows it getting severely oversold or overbought (around the 20 and 80 areas) on the charts. Play the grids exactly the same, look for the same adherence to the grids and enter the same way. The idea is simply to pick out those MAJOR pullbacks and leave the lower odds minor pullbacks alone.
The other nice thing is it is really easy to skim through your charts and see which pairs are in these areas very quickly so you can pick out the one or two that are and start looking for grids to play there.
Image 1: The naked chart… which pullbacks are major and which are minor? Its hard to tell.
Image 2: By adding the stochastic and simply waiting for severely overbought/oversold areas to be hit we can identify the two setups that represent the highest odds setups.
Image 3: More example trades.
I hope this can help you guys. Like I said, its just the icing on the cake - you don’t need it, the cake will make you fat either way, but it can make the entire process of eating it that much better.
Cheers!
Interesting the way you are moving on this Daedalus. This latest change now brings it to a point where it is very similar to one of James key set ups on the IB system. Basically he is looking for a fib retracement, extreme on a stoch (8,3,3) and an inside bar to trigger. Perhaps not surprising when you are playing price action direct that different approaches give similar points of interest on the chart
hi
which time frame is best for fib retracement techniques? 15, 1hr 4hr or daily? is it effective on 15? which time frame do you use?
thanks
hypnos63
Yea… I have to admit it is a lot like that after spending the afternoon reading that thread. IB’s are just another way to find entries probably no better or worse. At the end of the day we are all trading the same movement, we’re just looking at it in a million different ways. I mean how many different ways can you take pullbacks? lol. Like I said, its just the added icing on the cake.
Keep the input coming Tony - I value your advice!
They will work on ANY time frame. I personally prefer a something around a 15min, 30min, 60min, 240min, daily… anywhere in there and you’ll be just fine. I trade tick charts which aren’t time based so its kind of hard to say definitively, but i’ve trade a 10min, 15min, etc before. The longer the time frame - the less trades - but the less fakeouts.
Cheers!
The big yen moves today (which I missed) came off good retracements but not quite so easy to get in off the fibs although there is a 78.6 retrace to 213.45 on GY but difficult to take given the weekend interruption means the data isnt continuous.
For fun I looked at the EY and GY using the same approach as GU yesterday
For the run since 27 Dec EY gives 8-8 but remember a win is about twice a loss.
For GY from 12 Dec it is 11-6 which is spectacular. Remember this is without any fancy attempts to monitor trends so some were taken when in real time it is likely that one would at least question the trend direction. In addition I again noted the importance of Daedalus’ observations. A significant number of trades stopped out on a spike only to resume their downward motion to profitability.
I have perhaps hounded this idea to death but thought that this is an interesting set up taking place now. Whether you go with the general uptrend or not the 78.6 could have given you some tight trades on this timeframe. I didnt take these but I think it answers the questions about timeframe
So based on previous data this would be an entry IF you have a clear trade plan. Just basing this on Daedalus’ observations we sell at 1.9632, stop at 1.9671 take profit at 1.9554. This also looks reasonable as there is a major support level in the 9550 region but you would want to keep an eye on the 9580 level which also looks reasonably strong and is at the 50% retrace level
Daedalus
I�m a newbie and have been following your thread with great interest (and being entertained at various points as well) 
. I do have a few questions if you don�t mind:
- How many pairs do you follow? Do you generally stay with the majors, or do you have a list of favorites? (Can you give us this list, if applicable?)
- With all the pairs mentioned above, how many trades (on average) do you open a day? (Just trying to see how many trading opportunities the system produces)
- How long does a typical trade last? (30 minutes-ish? An hour? Several hours? Etc�)
- How big of a bet do you typically take per trade relative to your account size? For example, if you had a $5000 account, how many lots/minilots would you enter per trade?
- Did I read somewhere that you do have a full time job while trading? If so, how do you find the time to manage your trades? Does your employer allow you to trade at work? Are you entering/exiting trades during non-working hours?
- I�m sorry if you posted this somewhere else already, but: What is the success rate of the system. I mean, if you took every opportunity you see (given the conditions that you already spelled out), approximately how any trades would result in a win? A loss? An approximate breakeven?
- Is this the only/primary system you use in your trading?
Thanks in advance! Also, just wanted to say that it never ceases to amaze me the way some people would give so much time and effort to help others, while asking for nothing in return. Karma loves people like you!
Dahlia
Do you guys use trendlines as well as fibs? Or is less, the new more?
gbp/jpy appears to be repecting the channel quite well.
-
USDCAD, EURUSD, EURCHF, USDJPY, GBPUSD, AUDUSD, USDCHF, EURJPY are what I follow daily. Selected for their fairly congruent price patterns and low < 3 pip spreads with my broker.
-
Between 1-4 trades a day. Sometimes none, sometimes more. Trade what the charts give you, sometimes there is more opportunity than others. Don’t force it when its not there, and rake it in when it is.
-
10 minutes to 12 hours on the smaller time frame trades, unless i’m taking a 4 hour/daily setup in which case it could take 2-3 days on the 4 hr, and a week or so on a daily setup.
-
I trade with the ideology of 500.00/per mini. So technically speaking with a 5k account you’d be trading a standard lot. This of course assumes you know what you’re doing and are consistently profitable EVERY week. That leverage amount is MY PERSONAL preference, but as discussed prior, is too aggressive for many, and maybe not aggressive enough for others. Refrence the “Adding Size” post and follow up discussion on page 7.
-
I’m actually a full time college student (i’m a senior in my last semester). I take night and online courses so I can trade during the day. However this semester I have to take a Monday/Wednesday morning class at 8:30… It was hell this morning. I might take my laptop with me and trade in class… I think more likely though i’m just not going to trade during that 2 hour period twice a week for the next couple months. No biggie.
-
I typically hit 75-80% win rates (this includes trades that fail at 38% and stop me out for nothing or a small 1-2 pip (spread) loss.) But I must emphasis this is NOT a system - it is a method. I’ve tried to make it as mechanical “1-2-3-Make Money” as possible, but there is an inherent level of interpretation and subjectivity that is left up to every trader. This works for us, but if you can’t handle those types of decisions and situations you may look elsewhere for a more mechanical true “system”.
-
Yes. After a small stint trading automated systems in equities, this is THE ONLY METHOD i’ve ever traded. Its evolved over time into what it is now, but more or less the core has not changed one iota.
Hope that answers your questions!
I don’t personally. I have before, they have relevance in the markets, and there is no reason why you can’t or shouldn’t. Add whatever you feel gives you an extra edge, be it the stochastics, a different MA setting, or confluence from other fib grids (my next post in the works).
At the end of the day they are just one more way to identify a trend that we can use fibs to enter with. Hell, you could scrap the MA’s entirely and just use trendlines or channel regressions for your trend identification and I have no doubts you would do just fine!
Cheers!
I just felt like holding myself accountable here… Here is a live trade I just entered. Price basis is 1.0182 long… Stop at 1.0150.
Well see how it plays out one way or another! 
Yes I agree with Daedalus. I do have them on my chart. GU is also close to the channel bottom. It gives me food for thought if the price stalls there although I give more credence to the supply/demand areas
I see that has played out beautifully
