Well boys, as I may have mentioned before, I started back at trading the S&P 500 e-mini futures this wednesday. EXACT same method. Same rules, exits, everything. I just wanted to illustrate that this method applies to ANY market and works exactly the same way. You can go out with what you’ve learned in here and trade Crude oil, wheat, corn, soybeans, s&p 500, 600, russell 2k, dow jones industrial, APPL, RIMM, GOOG, 30 year bonds, EVERYTHING and do it succesfully.
I just took 300.00/contract out of the S&P in about 5 minutes over lunch. Easy peasy japanesy.
Hi Daedalus - flew too close to the sun!?
Thanks for taking the time to post your thinking about trading on fib retracements on the strong trend
I have read through your posts on page 1 and the subsequent posts
I was going to correct you on the taking profit on half the contracts point, but I see that you have worked this out - the probability on price reaching a short distance (say 20 pips) from a retracement is much higher than reaching say 50 pips. I haven’t done any backtests, but logically, I would guess that you should take 75% of your profit at the 20 pip target and leave the rest to run
I was really interested in your short pullback set up. I had not seen this before and I will look at your proposal for TP at -10%. Price will usually test a previous high and either carry on or fail
thanks once again for sharing your systems and set ups
I see you use tradestation for charts, is this because brokers platforms are not good enough. I use Accucharts from FX Sol, which are pretty good
Hey NKE! Welcome! Let me know what you think of the short pullback setups. I’m still not using them very much. I focus mainly on deep pullbacks but i’ve heard from others that they are using the shallows with much success. That being said I have found they work much better on longer timeframes… 60min, 4hr, daily, than on a short time frame, so keep that in mind…
As for taking profits, thats for each individual trader to decide for themselves. I only tried to design this system to get out with the most amount of profit the most amount of times. It didn’t make sense to me to try and hold for a huge gain every time because you only got that outcome maybe 1 out of every 6 trades, whereas by getting out for less pips, but more consistently 5 out of 6 times, you were actually more net profitable in the long run.
But i’m open to ideas on improving the system. A good discussion is always welcomed!
As for Tradestation, they are, as far as i’m concerned, the ultimate charting package. They are a bit pricey, but I feel they are worth it. I use them as my Future broker as well so if I get my charts for free assuming I make a set # of trades every month (Otherwise its 100.00/month). I use tick charts heavily and a lot of other providers don’t offer them so thats one big reason why I stick with them.
This is a trade i just exited, Deep pull back method. Might think of refining the placement of my stops to maximize R:R.
All the lines on the chart are S&R lines taken from the daily and 4hour chart. I’ve found that if the 78.6% level more or less matches with a s&r line, its a potential great set up. I normally only look to play retracements of the 78.6% fib level for the big moving pairs.
^^^ Gorgeous setup Kagein. And you are right with the S/R lines lining up with retracement levels. There are a lot of guys I trade with in the S&P and they look for swing high/lows levels to be broken and then retested with those retracement levels overlayed. It can be a very powerful combination!
Yes, ditto the comments of daedalus. You sure combined that combination to maximum effect, well done.
A colleague executed a continuation short around similar vicinity (155.69 during yesterdays Tokyo shift), but differing reasons & probably lower down than your entry too.
Regardless of the price, the vicinity & reasonings for the trade are the important factor. If the technical crutches you use help identify the lower risk directional bias more times than not, then you’re onto a winner.
Nice trade George. Appears as though you’re paying good attention to the content on the [I]Alternative Tech Templates [/I]thread
Amazing the difference a solid template (s&r) can make when you add another flavor (Fibs or whatever) to the pot huh?
I’m getting quite confident with this type of setup and now that im getting a grasp of price action and how it behaves around s&r lines i think my trading can only get better.
The alternative template thread has a wealth of information, its rare that you get such insight on how pro’s look at things. A good read for those who haven’t come across it yet.
Hi Daedalus,
Thank you for taking the time to write about your Fib Approach. I am guessing you are not so old but you certainly have a maturity in your trading approach.
It was very refreshing to read through this thread after using fib levels in many markets since the days of the Gorilla stocks of the late 90s dot com boom.
I am actually trading the yen right now as the Fed has decided to shred the dollar. Even tho we had a .382 retracement of the major upthrust, it is a .618 on the hourly chart and coincides roughly with historical support of .98 and the always strong 1.00 level so I am long.
I am expecting a move to the .618 of the hourly downleg at around 1.0281.
I think this trade met your requirements for double penetration of the .382 AND subsequent closes above .382, but would be interested in your thoughts
Have you ever looked at fib patterns? These can augment this system very powerfully…
Thanks again for all your insight on the fib trading. I have been trading the fibs on the 1H/15M TF and wanted to run something by you. I drilled down your 4H chart to a 1H time frame and noticed a perfect set up to go short again on that pair after your initial trade to the 23.6. After the two candle penetration of the 0 line on the lower 0 line was established (blue oval) price was telling us where it was going to go, it was most certainly going to revisit it and blast through to the 138 at least. I typically trade the shorter pullbacks because I am looking for trend continuation price to go past the 0/100 line to it’s TP area of the 138 or 162 area. I like to get my entry in at the 50 or 62/38 lines and watch it go through the 0/100 line and onward to it’s TP1 area. That lower blue oval on my chart was IMO a perfect short signal set up. I would get back into the short trade after price retraced back up to and came out of the 62/50/38 fib zones.
Just wanted to stop in and say thanks for the starting this thread (im late to the party :)) and sharing your ideas. I’m very new to Forex and still learning my way around but it is posts like these that give new people ideas to consider and help shed a little light.
You can PM me anytime, just keep in mind I think you need to have a minimum of 50 posts to be able to use the PM feature on this forum. So while you’ll be able to send me them, I won’t be able to reply to you until you rack up some more posts. If they are general trading or fib specific questions feel free to just post them up in this thread so everyone can benefit!
>you need to have a minimum of 50 posts
Aaaah that was the piece of info I was missing.
OK well one thing I wanted to clarify was you Long entries. It looks from a few of the charts that you entered on the second bar not the third. Meaning, bar one penetrates the fib level and closes, bar two you are long, rather than waiting for bar two to close and confirm the retracement then enter on bar three long.
You have the right concept… sometimes when i’m making these charts i miss the arrow by a bar or two (they can be finicky in Tradestation)… but you are correct…
Think of it this way, it would be entering on the close of the bar with the arrow, or as you said, at the open of the 3rd bar.
Thanks daedalus for this method, it’s one of the best I’ve tried so far. Here’s one example of a recent trade, maybe it was just luck but at least I tried to follow some logic: waited for a retracement to 76.4, put a long order at 61.8 and then this morning a nice surprise, it was not too far from 23.6.
Maybe I could have stayed in the trade, but I happily took the 78 pips. Many thanks again
