Fibonacci Retracement

What about Fibonacci Retracement?

Indicator This is one of most popular technical analysis tools used to identify potential levels of support and resistance.And I just applied this technique into Short-short Method because I've found it useful for trading and compatible with my techniques.

If you have read my previous posted("Exit Stop Loss and Exit Target"). You already known that my techniques is compatible with short term trading what gained profit for +10 point in 1-4 hours from you started trading and exit before the trends begin swing.

What about Fibonacci Serie?


The Fibonacci sequence of numbers is as follows :0,1,1,2,3,5,8,13,21,34...
Notice that each numbers have relationship with the 2 numbers before it(Ex.2=1+1,3=1+2,5=3+2) and a scientists've found this series is a number of natural.

Fibonacci replacement is created by taking two extreme points on a stock chart and dividing the verticle distance by the key Fibonacci ratios of 23.6%,38.2%,50%,61.8% and 100%.

The key Fibonacci ratio of 61.8% also referrred to as "The Golden Ratio" or "The Golden Mean" is found by deviding one number in the series by the number that follows it(Ex.8/13=0.3153).

The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right(Ex.13/34=0.3819).

The 23.6% ratio is found by dividing one number in the series by the number that is three places to the right.(Ex.8/34=0.2352).

How to apply it in trading?

Almost trends will often retrace a percentage of the previous move before reversing.In many times this retrace point was closed to 3 levels of the key Fibonacci ratio - 38.2%,50%,and 61.8% the 50% level really does not have anything to do with Fibonacci ,but traders use this level because of the tendency of trends yo reverse after retracing half or the previous move.


Look at "A ",The 0% key was tracked at the lowest point at that time(This is the first step to do). This point is the point that the trend retraced and you'll see it move on above the 23.6% key ("B") and retraced near the same key.After that,it up to 61.8% ("C") key and retraced again.If you move the Fibonacci retracement indicator to that point you will get new ladder key .But it's not necessaries now.At last,after retraced near "C" point,it go up to the 100% ("D")and got new resistance.In this point,you should insert your new Fibonacci retracement line and continue analyze if it not enough reason to start trading.

"Exit Stop Loss" and "Exit Target"

From previous two topics, The "Short short method" was presented to you.But It's not sufficient if you don't read this topic.

It is a 2 basics to "Control Risk" along with every decisions."Exit Stop Loss" and "Exit Target".

What about them?

First,the "Exit Stop Loss" is a basic method that everybody use for order when the trend should be close if still losing.People use this automatic service orders to close trading before it worse than current time.

And the last,"Exit Target" is a automatic service order when the trend should be close.That means "How many profit that enough for trading".

To use them,Click at the first column in the right bottom of the Streamster calls
"Position ID" and you'll see this event occur at the middle position.



Click at the "Change..." button and you'll see this following event.


Now,we will have some discussions about "Exit Stop Loss" and "Exit Target".

How to apply these services and sure about that will prevent you from "Lost"?.

Many peoples use "Exit Stop Loss" to prevent their funds,They set it not greater or lower than 10 points from their bid position.But in my tragic experiences, "It's always Loss and Loss".

Why?

Look at following picture



You'll find that the trend line (black line) is always non-linear.It's looks like a sine wave and have period itself.That means it goes up and down in cycle.If I set "Exit Stop Loss" at -10 point (Red zone), I will loss immediately when it toggled.So,I decided set it to -100 points.In the picture you will see the long vertical line above the bid position(small lightblue icon on the chart).It is the "Exit Stop Loss".And another vertical line in the green zone is the "Exit Target".

With the "Short shot method",I always set "Exit Target" to +10 points.Because of reasons in "Intro to Short shot method".

Before ending,Please notice that a trends moving not like a linear signal.It looks like a sine wave.So,don't kill yourself by "Exit Stop Loss".Thanks

Short shot method - Long case

From previous case,We can analyze or at least guest the movement of the trend in short case.And by the same technique,We'll effectively analyze this case again.

First,look at the point in the blue circle.You'll see that the the blue line went down slowly until I decided to buy it and moved up closed to immediatly.How I knew that thing would happended?

Easily,just look at the discrete brown line (Parabolic SAR) and black histogram at the bottom of chart.The Parabolic SAR was down for a long time and The Histogram was up from bottem section closed to the middle line.In my mind,It would be go up and it was.

Addition,you can see that the trend reached the "Exit Target" for a short time and it went down immediatly.If I was set "Exit Target" much than this,what should be happended?.This is the target of my "Short shot and Safe".And I want to share it with you.

Short shot method - Short case

In this case,I will show which trend's movement that I should buy(LONG).Look at the pictue-1,we 'll use the position in blue circle for analysis point.

In the 5 minutes chart (picture-1) was go down for a while.But it wasn't enough for decision,you should look at the hourly chart.And it down for a long time.So,I just kept this first key in my mind

Second,look at the brown discrete line.Before that point it had a move down peroid longer than move up period in both charts.So,it was told you that it will possible go down than go up.

Addition,Look at the bottom of chart you will see the histrogram that just have a few down from the middle line.With this indicators,if it had much decreased before i take it.I'll not invest funds in this trend.