Spud's MTF FIB Breakout System (Spud's MTF FIB Breakout System)
Spud’s MTF FIB breakout system
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Ever since I learned about Fibonacci numbers, they have developed a compulsive interest in my purely mathematical statistics side. Having said that, for such a simple sequence of numbers, it seems they can lead to very complex trading methods.
This is a simple day trading system that incorporates stochastics and Fibonacci numbers to give you a winning edge on your trades.
index:
Stochastic indicators 5, 3, 3 and 14, 3, 3 (highest/lowest, simple)... use only %K lines and are superimposed in one indicator window.
Fibonacci setting levels are:
0 marks 100
.764 tag is 23.6
.681 tag is 38.2
.500 is marked as 50.0
.382 tag is 61,8
.236 tag is 76.4
1 marked as 0
Always draw Fibonacci lines from the low to the high of the previous days.
Settings <br> At the close of the trading day (call it the previous day because the day is now over) draw a Fibonacci line from the previous day's low to the high and draw it so that the horizontal line extends into today (i.e. set the offset of your chart)
Entries <br> Look for price to break through the Fibonacci 100 or 0 levels. You can do this by observing or placing a long order just above the 100 level or a short order just below the 0 level. You want price to go above the 100/0 level, not just touch it.
Meanwhile...look at the Stochastic...when price breaks above/before/or after the 100 Fib line, you can almost be sure that the Stochastic is breaking above the 80 line or higher...well, we hope it does, or we will wait for it to do so and then we enter the trade. Likewise, if the price breaks above the 0 line, we want the Stochastic to be in the 20 area or below.
You can take more risks. Over a long period of time; if the Stochastic climbs together after falling and rising; or if the Stochastic has broken through 20 and is rising.
Exit <br> When the price breaks above 100 (for the long example), move the FIB line upward so that the 0 line is where the 100 line is. Exit when you reach 23.6 (123.6), 38.2 (138.2), etc.
Let Stochastic be your guide...if either or both of them remain above 80, proceed with the trade.
The 14,3,3 Stochastic has a greater impact on trading than the 5,3,3 Stochastic, but the two work together perfectly.
What is MTF? Where is it?
MTF = Multi Time Frame, in the 5,3,3 and 14,3,3 stochastic ranges.
Time range <br> I use 1 hour chart every day. You can use the 4 hour chart, but then you trade every week. I wouldn't use a smaller time frame than 1 hour because you'll start to lose the reliability of the Fib.
Currency <br> This is universal, but I like GBPJPY. You want pairs with good daily ranges because you want wide Fibonacci numbers so you can earn some pips!
If you trade smaller daily range currency pairs, use the 4 hour/weekly fib.
Hmm..isn't this just a break above yesterday's high/low?
Well, if you just trade breakouts and use random numbers...but oh boy, there's a lot more to this simple system...
Fib levels give you exit goals, use Fib/stochs and get used to it... you won't regret it, and you'll have a better understanding of what happens next (later).
Here's a picture...hopefully it speaks 1,000 words:
--------------------------------
Ever since I learned about Fibonacci numbers, they have developed a compulsive interest in my purely mathematical statistics side. Having said that, for such a simple sequence of numbers, it seems they can lead to very complex trading methods.
This is a simple day trading system that incorporates stochastics and Fibonacci numbers to give you a winning edge on your trades.
index:
Stochastic indicators 5, 3, 3 and 14, 3, 3 (highest/lowest, simple)... use only %K lines and are superimposed in one indicator window.
Fibonacci setting levels are:
0 marks 100
.764 tag is 23.6
.681 tag is 38.2
.500 is marked as 50.0
.382 tag is 61,8
.236 tag is 76.4
1 marked as 0
Always draw Fibonacci lines from the low to the high of the previous days.
Settings <br> At the close of the trading day (call it the previous day because the day is now over) draw a Fibonacci line from the previous day's low to the high and draw it so that the horizontal line extends into today (i.e. set the offset of your chart)
Entries <br> Look for price to break through the Fibonacci 100 or 0 levels. You can do this by observing or placing a long order just above the 100 level or a short order just below the 0 level. You want price to go above the 100/0 level, not just touch it.
Meanwhile...look at the Stochastic...when price breaks above/before/or after the 100 Fib line, you can almost be sure that the Stochastic is breaking above the 80 line or higher...well, we hope it does, or we will wait for it to do so and then we enter the trade. Likewise, if the price breaks above the 0 line, we want the Stochastic to be in the 20 area or below.
You can take more risks. Over a long period of time; if the Stochastic climbs together after falling and rising; or if the Stochastic has broken through 20 and is rising.
Exit <br> When the price breaks above 100 (for the long example), move the FIB line upward so that the 0 line is where the 100 line is. Exit when you reach 23.6 (123.6), 38.2 (138.2), etc.
Let Stochastic be your guide...if either or both of them remain above 80, proceed with the trade.
The 14,3,3 Stochastic has a greater impact on trading than the 5,3,3 Stochastic, but the two work together perfectly.
What is MTF? Where is it?
MTF = Multi Time Frame, in the 5,3,3 and 14,3,3 stochastic ranges.
Time range <br> I use 1 hour chart every day. You can use the 4 hour chart, but then you trade every week. I wouldn't use a smaller time frame than 1 hour because you'll start to lose the reliability of the Fib.
Currency <br> This is universal, but I like GBPJPY. You want pairs with good daily ranges because you want wide Fibonacci numbers so you can earn some pips!
If you trade smaller daily range currency pairs, use the 4 hour/weekly fib.
Hmm..isn't this just a break above yesterday's high/low?
Well, if you just trade breakouts and use random numbers...but oh boy, there's a lot more to this simple system...
Fib levels give you exit goals, use Fib/stochs and get used to it... you won't regret it, and you'll have a better understanding of what happens next (later).
Here's a picture...hopefully it speaks 1,000 words:
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