Powerful Fib Based System - developed by DAZfx (Powerful Fib Based System - by DAZfx)
Hi,
First of all, I am a full-time trader and I have been trading the currency markets for over four years. Being a lurker on this forum for a long time, I finally felt the need to join the forum because day trading has become boring. I have three very powerful strategies in my trading arsenal, and what better way to start than by sharing one of them here? I wouldn't call it a completely mechanical system because you need to use some judgment. I will outline some important factors that you may want to consider before trading based on this system later in this article.
I call this system: AMG Wave
Time range: any. However, I use 1 hour or more to avoid jagged situations.
Currency Pair: Any currency pair.
index:
Stochastic Oscillator(8,3,3)
5SMA
Before I give the admission requirements, please take a look at the picture below. This setting only exists if the fiber retracement of the impulse wave is 61.8 or 78.6. The idea behind this approach is that if wave AB retracements 61.8% or 78.6%, it should equal wave CD. Only look for setups in the direction of the larger trend (ie: if you are looking at hourly setups, then only look for signals related to the daily trend).
{Figure 1}
long
Generally speaking, when the AB pulse wave retraces to the 61.8 or 78.6 levels, you are buying in an uptrend. You need to wait for the next candle (confirmation candle) to form before determining the precise entry point. This cannot be beyond the low of the retracement and must be a bullish reversal candle (i.e. Harami, Doji, Bullish Maribozu, Bullish Belt Hold, etc.).
At the precise entry point:
1) The new candle after the confirmation candle is at or near the 5 SMA.
2) In the Stochastic Oscillator window, the fast stochastic (blue line) has crossed or is crossing the slow stochastic (red dotted line) and is starting to take the bait. This crossover should not occur in overbought territory (80 or above).
short
Generally speaking, when the AB pulse wave retraces to the 61.8 or 78.6 levels, you are selling in a downtrend. You need to wait for the next candle (confirmation candle) to form before determining the exact entry point. This must not exceed the high formed by the pullback and must be a bearish reversal candle (i.e. Harami, Doji, Bearish Maribozu, Bearish Belt Hold, etc.).
At the precise entry point:
1) The new candle after the confirmation candle is at or near the 5 SMA.
2) In the Stochastic oscillator window, the fast stochastic (blue line) has crossed or is crossing the slow stochastic (red dotted line) and hooks downwards. This crossover should not occur in oversold territory (20 or below).
Invalid setting
Setting considered invalid:
1) If there is news release within 15-30 minutes.
2) If the confirmation candle moves too far, causing the stop loss to expand to the point where the risk/reward ratio is no longer 1:1.5.
3) Are there major psychological support/resistances before the first profit level (Target 1) (i.e. GBP 2.0000, EURUSD 1.5000, etc.).
4) If the setup goes against the main trend (at least 2 TF higher than the TF you are trading).
stop loss
The stop loss should be set at the beginning of the first pulse wave (point C on the chart). Only trade if the stop loss is less than your stop loss
Expected goal 2.
entry strategy
Below is an example using a $10,000 account with a leverage of 1:100.
I am only willing to risk 1% of my account and assume that the stop loss has been established (beginning of the first pulse wave) and is 30 pips + 3 pips.
(10,000*0.01) / 33 = 3
Therefore, I can trade at $3/pip, which means I can trade with 3 mini lots. There are three take profit levels, so I should divide the lot into three equal lots and enter all lots at the same price (entry point). In this case, I have 3 x 1 mini lots entered at the same price, and if they were not stopped out first, I would exit each mini lot with a different target level.
exit strategy
Continuing with the previous example, I will exit my first move at Target 1. If price does reach target 2, I will take out the second lot and move the stop loss to breakeven (entry point). When goal 3 is reached, I will take out the final batch.
If you look at the chart provided, you will see that you can use the Fibonacci extension tool to calculate your targets.
- When confirming that the candle is a harami (inside bar), use FE 50.0 as target 1, FE 61.8 as target 2, and FE 78.6 as target 3.
- When the "AB" wave consists of more than 10 candles, use FE 50.0 as target 1, FE 61.8 as target 2, and FE 78.6 as target 3.
- When the confirmation candle is quite large, use FE 61.8 as target 1, FE 78.6 as target 2, and FE 100.0 as target 3.
illustration
Check out the chart below for examples of recent short and long trades I've made. I'll add more upon request.
I hope I didn't get bored with this lengthy post, and if I did, apologies. I look forward to your feedback; let it be positive or negative.
Thanks.
First of all, I am a full-time trader and I have been trading the currency markets for over four years. Being a lurker on this forum for a long time, I finally felt the need to join the forum because day trading has become boring. I have three very powerful strategies in my trading arsenal, and what better way to start than by sharing one of them here? I wouldn't call it a completely mechanical system because you need to use some judgment. I will outline some important factors that you may want to consider before trading based on this system later in this article.
I call this system: AMG Wave
Time range: any. However, I use 1 hour or more to avoid jagged situations.
Currency Pair: Any currency pair.
index:
Stochastic Oscillator(8,3,3)
5SMA
Before I give the admission requirements, please take a look at the picture below. This setting only exists if the fiber retracement of the impulse wave is 61.8 or 78.6. The idea behind this approach is that if wave AB retracements 61.8% or 78.6%, it should equal wave CD. Only look for setups in the direction of the larger trend (ie: if you are looking at hourly setups, then only look for signals related to the daily trend).
{Figure 1}
long
Generally speaking, when the AB pulse wave retraces to the 61.8 or 78.6 levels, you are buying in an uptrend. You need to wait for the next candle (confirmation candle) to form before determining the precise entry point. This cannot be beyond the low of the retracement and must be a bullish reversal candle (i.e. Harami, Doji, Bullish Maribozu, Bullish Belt Hold, etc.).
At the precise entry point:
1) The new candle after the confirmation candle is at or near the 5 SMA.
2) In the Stochastic Oscillator window, the fast stochastic (blue line) has crossed or is crossing the slow stochastic (red dotted line) and is starting to take the bait. This crossover should not occur in overbought territory (80 or above).
short
Generally speaking, when the AB pulse wave retraces to the 61.8 or 78.6 levels, you are selling in a downtrend. You need to wait for the next candle (confirmation candle) to form before determining the exact entry point. This must not exceed the high formed by the pullback and must be a bearish reversal candle (i.e. Harami, Doji, Bearish Maribozu, Bearish Belt Hold, etc.).
At the precise entry point:
1) The new candle after the confirmation candle is at or near the 5 SMA.
2) In the Stochastic oscillator window, the fast stochastic (blue line) has crossed or is crossing the slow stochastic (red dotted line) and hooks downwards. This crossover should not occur in oversold territory (20 or below).
Invalid setting
Setting considered invalid:
1) If there is news release within 15-30 minutes.
2) If the confirmation candle moves too far, causing the stop loss to expand to the point where the risk/reward ratio is no longer 1:1.5.
3) Are there major psychological support/resistances before the first profit level (Target 1) (i.e. GBP 2.0000, EURUSD 1.5000, etc.).
4) If the setup goes against the main trend (at least 2 TF higher than the TF you are trading).
stop loss
The stop loss should be set at the beginning of the first pulse wave (point C on the chart). Only trade if the stop loss is less than your stop loss
Expected goal 2.
entry strategy
Below is an example using a $10,000 account with a leverage of 1:100.
I am only willing to risk 1% of my account and assume that the stop loss has been established (beginning of the first pulse wave) and is 30 pips + 3 pips.
(10,000*0.01) / 33 = 3
Therefore, I can trade at $3/pip, which means I can trade with 3 mini lots. There are three take profit levels, so I should divide the lot into three equal lots and enter all lots at the same price (entry point). In this case, I have 3 x 1 mini lots entered at the same price, and if they were not stopped out first, I would exit each mini lot with a different target level.
exit strategy
Continuing with the previous example, I will exit my first move at Target 1. If price does reach target 2, I will take out the second lot and move the stop loss to breakeven (entry point). When goal 3 is reached, I will take out the final batch.
If you look at the chart provided, you will see that you can use the Fibonacci extension tool to calculate your targets.
- When confirming that the candle is a harami (inside bar), use FE 50.0 as target 1, FE 61.8 as target 2, and FE 78.6 as target 3.
- When the "AB" wave consists of more than 10 candles, use FE 50.0 as target 1, FE 61.8 as target 2, and FE 78.6 as target 3.
- When the confirmation candle is quite large, use FE 61.8 as target 1, FE 78.6 as target 2, and FE 100.0 as target 3.
illustration
Check out the chart below for examples of recent short and long trades I've made. I'll add more upon request.
I hope I didn't get bored with this lengthy post, and if I did, apologies. I look forward to your feedback; let it be positive or negative.
Thanks.
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