How To Use Fibonacci Retracements In Your Forex Trading Strategy
Let's talk about can you trade with fibonacci, retracements, alone. All right. The concept of fibonacci, retracements, right a lot of people are asking me you know what is the main, way, you. You trade. Right, um. What is your main training strategy. Right and i can confidently, tell you that 80, or 90, of my trading strategy. Revolves around fibonacci, retracements. And fibonacci. Extensions. Right can you trade with fibonacci, retracements, alone, yes. But. To trade it effectively. You need fibonacci. Confluence. Right and confluence, is where multiple. Things line up, uh add up together. So just let me see if i have the slide over here, uh now i'll be showing you guys the slide later, right but, the concept behind fibonacci, confluence, is when, multiple levels line up together. And, and, um. And that increases, your probability. Of a trade working. All right and i'll be showing you how you know we look at the markets later, how to filter the good, from the bad, and how to trade it, okay. Now, what are the, um, so say a. Long answer to a short question, yes you can trick with fibonacci, retracements, alone. Right but for it you don't just use a single fibonacci, retracement, number, you need to, find multiple, fibonacci, retracement, numbers. Right before you can find a high probability. Um setup. Okay. So, what are, the, important. Fibonacci. Ratios. All right, um. Let's see if i have it here yeah there you go okay. This, are the important fibonacci. Ratios. Okay. I am not highlighting, a single one a lot of people like to say 61.8. Is the, is the golden ratio. Right and. You're not wrong that 61.8. Is a golden ratio but it if you just trade purely, on 61.8. Retracement, alone. You're not gonna make money. Right uh it's not gonna be effective. Right instead, what you need to do is to, is to, is to. Once again. Fibonacci. Confluence. Right i know it's a little bit confusing, that you're looking at this and like why do you split it into three, why do you have like the negative. And then you have those, from 0 to 100, and then you have those. Above 100. Like what the heck does that mean. Right so. I'll i'll be showing you a little bit more about the, uh traditionally. Most people just stick to this fibonacci, retracements, they stick to, those within. The zero to 100.. What i can actually tell you is that, what is really effective. Is this area, then the the negative, and those that are above 100. Those. Those, are really strong retracement, levels but you need to know how to use it correctly.
Right And i'll be showing you how to use it correctly, later. And you'll. It'll open you up, you open your mind right open your mind to a whole new dimension, of using fibonacci, retracements. Very powerful. And. Yeah. And we will touch on that. In probably. I think two chapters from now. All right. Now i'm moving quite fast. Right so, once again guys if you have questions. Please. Ask them, all right there is there's a there's a there's a place for uh you know, there's this, that's this thing go to webinar where you can ask questions straight away i i, once again i literally have another monitor, open right here. Right, monitoring, your questions. So if you have a question, ask it straight away because i cannot guarantee, that at the end of the, uh at the end of the session. I will have the time to explain to you uh or have time to address these questions so if a questions just ask it straight away all right. So um. Now, understanding. The fibonacci. Retracement. The first thing we need to know about fibonacci, retracement. Is that, it works well when there is a clear market structure. And in what you're what you're seeing over here, is what i call an unclear, market structure. All right um let me see if i can use my pen once again i know you guys. Hate it when i draw. But. Too bad, right i love to draw. So, you can see there's a very unclear market structure, right you know the, price is going down up down you know this. This is what i call. Uh, uh, this this is hell for fibonacci. Okay because fibonacci, works very well when you're looking at the clear, structures. Right but when you have it like this, it becomes, very ineffective. Right, um and i'll be showing you okay you know what i'm just going to show it to you right now. I. What i mean by this, um. All right so. Uh how clear fibonacci, structure works is that you know when you're looking at fibonacci, over here you want to look for the clear market structures i'm looking at it here, and this is the market structure i see, right this is a very clear movement down. This is a very clear movement, up. Down. Up. Down, up. Down this are clear market structures. Okay. So when you're drawing a fibonacci, retracement, what you will notice, and you got to see my mouse right i click on it and i go all the way down right i'm not sure you can see it.
But Can you see. Can you see that i have a dotted, line over here, right i have a dotted, line. And that dotted line is is like is what you call your fibonacci, trend line, right and it's supposed to be. Price needs to follow this trend line, very closely, for it to be accurate. What do i mean by that is that in this example, right price follows the trend line very, closely, and hence, the retracement, is good it's you know it is effective. Right, however. However, if price, you know if you draw a fibonacci, retracement. Someone say you know droid from a high to a low. Right you draw it from here all the way to here. Now. What is wrong with this fibonacci, retracement, you see that initially. It looks like price is kind of you know moving quite closely with it, then out of nowhere, right there is this massive. Spike. Right and and you see the distance. You know well the distance, of price. Over here, from the from from your trend line. Right the distance, is so huge. And because of this, your fibonacci, retracement, will not be effective. Right whether it's your retracement, or whether it's your extension, right what you want to do is to always. Draw it very closely. Enjoy it very closely to your, um, to price, the closer, it is to price the better you obey the structure. Of the market the more effective. Your fibonacci, retracement, is, all right. So, anyway, trying not to deviate too much, right this is what i call. Um as unclear, market structure. All right and, this is what i clear. This is what i mean by clear market structure. So the, the, you know you can you can see like what i drew earlier you know the the. The way the market moves it's just very very, it's very clean. Right you get very strong little zigzags. Here and there, right and one of the tricks actually one of the tricks to get this is if you're looking at a market like this and, usually, on the lower time frames. Maybe like the five-minute, charts. I don't know i'm sorry. I guess the five-minute, charts, it might look very messy. Right it might look, very messy. But if it looks messy on a five-minute, chart, right you can you what i tend to do is i tend to take a step back. Zoom out a bit zoom out a bit and you get to see a clearer market structure, so on the five-minute, charts it wasn't clear but on the 30 minutes you're seeing much more structure. Right so usually in this kind of cases, right um. What can really help right if i can if i can find an example over here. The. Let me see i can find. Yeah like yeah euro, singh.
Um, You're saying steal okay. Euro aussie. Yep you see your aussie here is just very very messy. What i don't like to see, is i don't like to see the big wicks. Why do i hate to see big, weeks. Okay, it's very simple. When it comes to fibonacci, retracement, what you're usually doing is you're taking. Uh you know from a high. Five high to a low. Right. You're taking something from like, uh, you know the right the high high over here all the way to the low. Right this for as an example. So. The. Your weeks, are very important. Right your weeks are very important if you're weak, right if you're, for example. Right, when i see. When i see. This kind of market structure, is usu it is usually. On those less liquid currency pairs right the crosses. Um the um. Mainly the crosses the miners. Right you won't see this on something like euro dollar you know you won't see this kind of, oh sorry. You won't see this kind of big like little wicks here and you know everywhere, literally, every single. Every single place you're seeing these kind of big wicks. Right the problem with these weeks is that when it comes to fibonacci, retracement. Right if your week is just a little bit longer. And that's the thing that happens with, um crosses. Um. Or, are um. Yeah with with, with. What the heck is that word crosses, currency, pairs. Right um rather. Your minor currency pairs, is that see. I in one situation, my fibonacci, retracement, is here. And in um. And in another situation, yeah the fibonacci, retracement, is slightly lower and this affects, can you see, this affects the accuracy, of your fibonacci. So usually. Fibonacci, works better. I personally, feel on the higher time frames. Right 30 minutes and one hour and beyond. Right, if the market is less choppy. Right and not so much on the exotic, currencies, right where, where it is debatable. Where is your ending point or starting point of your fibonacci. Right rich i can see that you're asking a question yeah i can see your question so don't worry if you have questions just shoot them, straight ahead, um. I see that uh. Okay um. I mentioned about price movement. All right uh, okay yes i'm glad that my explanation, of how, um, how price needs to follow your fibonacci, so-called trend line, very well, right has helped you. Hey nice to see you again. Anyway. Right back to my topic. Uh. Cat yen, right we're looking at cat yen, we're looking at this, we're looking at clear market structure.
So Sometimes. Like you look at the end there's less of that crazy, kind of weeks. That you see, and that is because cat yen you know naturally, um. The yen currency pairs tend to be, less. Tend to fluctuate, less. Right um because, uh. It's, hard to give a reason, right but you'll notice that it tends to fluctuate. Um, it doesn't tend to be as well as something like like euro aussie. Where literally, you know every single corner every single turn is a big, wick that you see. All right. So, once again don't want to digress too much but some things you need to take away, from this is that if it looks too messy on the lower time frame try to try to increase your time frame, right try to look for the um try to go for higher time frames one hour four hour to better see the structure of the market. Right and, and yeah you know um. Usually, the for the higher. Uh for the higher time frames it starts to be okay to look at different currency, pairs, the majors the miners. Right, um what that what you probably want to stay away from, are stuff like you know and you're also if you look on something like. A dollar ringgit, right. I guess oh. Yeah that's terrible. Maybe, um dollar cnh. Dollar signage is actually pretty okay. Right but, so, what what i what i'm very afraid of are stuff like this. Right like this, this spike down here. Right i'm always very worried when i see a big spike. Right because, spikes. Basically. Mean that it's um. Different brokers different price fee. Right, one uh you know. For this case this broker's, price feed might be over here the spike might end over here, another spike might end a little bit higher and i'll spike my end a little bit lower, right and all of that affects the accuracy, of your fibonacci, retracement. Right so every time you see something like this a big spike, right always. Be careful, right especially the spikes are very very big, right you know you um in this case right i like this, right. Very small spike on top very small spike below, right you can see how price tend to uh obey you know touch 23, touch 38, touch 50, it obeys it slightly better. Right you need clear market structure you need less room for ambiguity. Okay. Now all these, important things to take note of, right i'm not even halfway through and we're almost halfway through the, webinar. Um. Um so we have a question from imat. Nice to see you again iman, all right, uh, does fibonacci, retracement, work best in trending, and ranging markets, but not choppy markets.
Right. They, work in both. Right and that's the beauty of fibonacci, they work very well in trending, they, work very well in ranging. But what. They work very well in choppy markets. Um rather. The the the key thing you need to look out for, sorry. The key thing you need to look out for, is clear market structure, so, your determining. Factor. Is whether there is clear market structure. Right i don't care if the you know the market, is like this and it's going up and down up and down up and down, right there's a range, it's a trend. Some people call it choppy, when it's going up and down you know it's not deciding. Um which direction, is going. Right rather what you're looking for is you're looking for that clear market structure, and what brings about that clear market structure. Is really, liquidity. Um. Less noise the higher time frames, right those are things that really help you, determine, a clearer market structure. Okay. Now. Um. Okay uh we got burn saying there's no audio, i believe there's audio, right maybe you need to check, your audio output that you're using you know uh you're using the correct speaker. Okay. Um, but yeah if you're 20 minutes in and you realize that i'm not talking, that's something that you need to worry about. Now all right, fibonacci. Retracements. Okay, so what you will notice about fibonacci, retracements. Right, there are the retracements. That exist, from zero to a hundred percent. Right these are the ones in the middle i talked to you about. There are the retracements, that go beyond, hundred percent. These are those over here. And there are the retracements, that go negative. Right, to, negative, 27. And negative. 61.8. So how do these, retracements. Work right, let me share it with you let me see if i can erase my. Drawings. Right, and. Okay. Let me just see. Okay so rich is saying. Uh. It's a clear market structure is very. Uh, is uh it's very subjective, and it's a very vague, concept, so, i fully understand what you mean, right, um. If. If you want to, put a defining, term to clear market structure. Right what what i'll be. Um. Let's let's try let's try to solve this right if. In order to find clear market structure. Right what you want to do when drawing a fibonacci, retracement. One of the guide so-called guiding principles, that you want to use, is that yes, your retracement. Should follow price, you know your, should follow the trend line very well. The better you can follow the trend line the better, um, the better it will perform. Okay, so, um, how do you know that, um. How do you know that it is a clear market structure. Right, it doesn't matter if it's choppy or not, what what matters, is that you're able to draw fibonacci, retracement, accurately. Okay. Fibonacci, retracement. Actually, draws his theory, from chaos, theory. Okay. And that's where elite wave comes from a little bit of fibonacci. Harmonics, come from, it's, chaos, theory, right there is, there is the beauty, in chaos. Right so. What you have to do now, is to look at the chaotic, state of the markets, of going up and down, and the concept of fibonacci. And chaos theory, that's where it brings meaning to it. Right and it can only bring meaning. If you use it correctly. So don't worry, whether you're looking at any market and like is this choppy, is this not choppy. Right is this ranging, is this trending. Um you know, um. You're, you do not know what to make of this market. All you need to do, right if you're talking about clear market structure is that when you go enjoy your fibonacci, retracement. When you start here. And you end here make sure that price. Follows. Your trend line, very well. The clearer it follows, the better you'll perform. Okay. The clearer follows the better you perform that's all you need to know. Okay so that let that be one of your guiding principles, rich, when it comes to drawing fibonacci, retracements.
All Right. Now. Um back to my topic. Uh, on yeah when drawing fibonacci, retracements, you'll notice that there's the there's a portion in the middle, that is 0 to 100, those that are beyond 100 and those that are below. Are negative. Right so, then the negative region. How does this work. Okay, let me, maybe, um. Let me, see if i can. I can i can highlight this to you guys. All right and i'm gonna use the highlighter instead, all right so this is our starting point over here remember, i said this is our starting point. And this is our ending point, right so we drew a fibonacci, retracement. This way. Okay. Um yeah this way. What, exactly, is a fibonacci, retracement. Okay, assuming. Assuming, from my starting point over here, from my starting point over here, to my ending point over here. Right assume that this is 100, pips okay i'm just going to change my, you know i can't change the color of my highlighter, but yeah assuming this is 100, pips. Okay. From my starting, point, all the way to my ending point. Right this is. Let's just assume this is 100, pips. Okay. And, and um. And what does a 50. Retracement, mean. Right a 50, retracement, mean right, over here. It means that, price would have. You know, from the ending point it would have climbed climb climb all the way up to 50. That means, price would have moved up. 50 pips. Fibonacci. Retracements. Is basically, like dividing. Right. What is 23.6. This is 23.6. Pips, assuming, this you know you're starting to your ending point is 100, pips. Right 50. Is your midway point 61.8. Is well. You know price had moved 61.8. Percent of it and yeah so that is essentially, what fibonacci, retracement, is about, right, and once it goes beyond, you know you reach, 71.78. It reached 88. And once you reach 100. What does it mean. It means that, your starting, point. To your ending point, price basically. Did what you know a v shape right it come all the way down. And it come all the way up, so it retrace, a full 100. So that is what it means when it retraces, a full 100. Then that, helps you understand. What it means when it retraces, 127. That means it goes, even beyond the 100. And it goes all the way up to 127. So this is where it gets a little bit. A little bit crazy. Right that means you you need to look at price that okay i can not only, retrace, all the way, you know to my, 23.
38. 50, 61.8. 78. 88, 100. But i can retrace, beyond, that. Right, i can retrace beyond that and reach the 127. Percent. Okay, so that is the concept, of, um, of fibonacci, retracements, that are beyond 100. All right, what you usually have to look out for is a very clear, v, structure. Right and you look for a very clear. V structure, for this to be effective. Okay, what we cannot, use, right is something like um, let me see let me see if i can find an example. Once again. What we, cannot use, is maybe an example like here, right this, is not a very clear, v structure. Right this is not a very clear v structure because of the big distance, over here. Right so if you're, if you're drawing a fibonacci, retracement, you start here, and you end over here, once again. Right, like what i mentioned to you rich, previously, it's all about having a clear market structure, when it comes to fibonacci. Right the the clearer. You know the clearer it is the clearer, price is to your to your trend line. You know. The better you will perform, in this case it's not very clear. Right. In this case it doesn't follow it very clearly, hence the effectiveness. Of the fibonacci. Right, will not be as effective when you're trying to project. Something, in this direction. All right you're trying to project it in this direction. It's not going to perform very well it's not going to perform very well for this, all this fibonacci, retracement, it's not going to perform well for anything. Right the clearer the structure is the better will be, right in some cases you feel like okay it looks effective. But that doesn't mean anything. Right um the the market. In the way it moves. Right you need to just stick to your gun stick to your principles, and use it properly. Okay. Now um. Let's, uh, let's, see. Um. What about the concept, of, i. What about the concept, of, negative, fibonacci, retracement. What does it mean. Okay. For negative fibonacci, retracement, to work. Right. Your fibonacci, retracement, should traditionally. Retrace, anywhere, to between, 38, to, 88. Okay, let me, repeat that again. For, this part here. To work. Let me see if i can use a pen. For this part here to work. Your fibonacci, retracement. That you draw after you draw a starting point, and your ending point. Right your fibonacci, retracement, needs to retrace, at least up to 38. Right even if it retraces, to 23. It will not work. Right it will unlikely, work rather because you know the market, if you're talking about a 23. Retracement, the market, is kind of just. Going down, right you know market is just going down going down, a 23. Retracement, is not a big level. It's not too big a retracement, right there are other reasons to use it in elliott wave theory but if you're talking about. Like projecting, further down to a negative 27. Or negative 61.8. You need your fibonacci, retracement. To at least go up to 38. 50, 61, 88. I uh or 88, right i will not go all the way to 100. All the way here and then it projects, downwards. That is how fibonacci. And a negative fibonacci, retracement, works. Right so let me show it to you in, an example. All right let me show it to you in example. So in this case. Sorry. Yeah in this case. I. I'm not sure what we can use. Okay, one example let me see if this works. Yep, okay so. So let's see, if i can. Do a bar replay, feature, and i do it until. Here. Yep. Okay so in this example, we see. Right, um, price, this is our starting point, and this is our ending point. Right it's a it's a decent movement, all the way down. Price retraces. Up to, 50. Right price retraces, up to 50. Right and from there, uh it starts to reverse. Right it starts reverse. Okay, so, because, it has, a reverse, up to anywhere within 38, to 88. Right i can do this thing called negative, fibonacci. Uh retracement. Right that means you you um you is, it's, kind of like another way of fibonacci, extension but slightly different. Right so i get a project that price might come down to here. And, if price comes down to here, what is it likely to do it comes down it bounces, up right that's called contouring, style of trading. And this is the. This is the, the technique, which i will be teaching you guys. Right so, um. So i know it has a benefit of hindsight, but we can see price you know it comes down, and then bounces, up. Okay. It bounces up a bit and then continues, going down. Right. My style of trading. It's very much in scoping, so i only need to play this bounce over here many of you guys, um seen what i post on.
Uh Excitators. Facebook, you know trading circle, right i like to play the scalping, trades. Right so i only like to go in and when price bounce. That's all i'm trading, right i don't need to trade, uh a trade that you know go back to 300, 300, pips, you know goes all the way to the moon, right later i'll expand a little bit more on that, but what i want to share with you, is that um, that is how you use a negative, 27. Retracement. Right you need price. To bounce up to at least, anywhere within, the 38. To 88. Range. Right and once it bounces from there, right that is where you can start projecting, downwards. Right, and then if it reaches any of these levels, that's where it can bounce nicely. Importantly. A very very, importantly. Is that. You. You also need a very nice price structure, for this to happen. Meaning. All right i'm just going to erase all this here. What i mean you need a nice price structure, right how a negative 27. Retracement, works very well, is that when price comes down. It goes up you're looking for, a clear movement down. You're looking for clear movement down you're not looking for movement, like this. You're not looking for this kind of movement. It won't work very well because, this movement, has its own chaos theory, this movement has its own chaos. This movement has its own this movement has its own, right so fibonacci. Retracements, and extensions, they work very well, when you're when you're using the most recent market structure. Right you're not looking for something that you know if the moment this happens. The moment this happens. Right my, my retracement, down here becomes ineffective, because, the market is not moving in like clear, structures. Zigzags. Right i always talk about zigzags. They work the best, they work the best when it comes to fibonacci, extensions, they work the best when it comes to retracements. They work the best when it comes to elliot wave it works they work the best when it comes to harmonics. Right so always look for clear market structure, in the form of you know, price being very close to your trend lines, price being very close to the. Zigzags. Okay. Now, um. Now we got a question, from heighten, right what is the name of the youtube channel to watch this webinar. I believe at the end of um the entire session, uh at the end of all our. The. Of this initial, training session. Of fibonacci, of um that's helped by exit trader, it will be on ic traders youtube page. Um so, so yeah but it only happens at the end so, um, so. You, know. Hang around and learn. Right hang around and learn right instead of waiting until maybe, i don't know, mid-august, or something before you get to see the, um see the sessions. Right, and anyway. Um we're not digressing, too much again, right that is the concept, of. Negative. Fibonacci. All right let me see um a negative fibonacci, retracement. Okay. Okay yeah that's the concept. Of negative fibonacci, retracements. Right there, they tend to be pretty effective, i like them myself. Right and let's see if i can use another example, to show you. There we go, right so this is how uh. This is how um. You remember earlier when i was sharing with you, how a positive fibonacci, retracement, works, you know you you basically. Go down and then you do a v-shape, recovery, upwards. Right this is an example of how that works, right. You go down here. And you do a v-shaped, recovery, upwards. Okay sorry the v-shape is even stronger, right you do a v-shape recovery upwards the market structure is very cl, it's very, um the market structure is very clear. Right so you can see it goes down and goes up it reached the 127. It didn't work out and it reached the 161.8. Here, where it has slowed down. Okay. Now. That is, uh that is, the concept. Of a. Of. What i call yeah you know it's above the retracement, is above, 100. All right this retracement, is above, 100. Now, what do i mean by fibonacci, confluence. Now, right what do i mean by fibonacci. Confluence. Okay. Let's see if i can um. Let me see if i can pull up some of the. Like these things over. Here. Okay yeah our next slide will share with us, a little bit um no actually yeah the next slide actually shows you. Right, how, you know, how price. Let's, see. Comes down to here, uh price points up oh yeah this is that this is an example of the. Negative fibonacci, retracement, i was talking to you about. Right so, um, so let me just draw it out. Same thing you know very clear market structure, price comes down here, price bounces up to 61.8. And then, right uh. We we project, um, that if price comes down to a negative negative 27, level, there is a chance that you come down here and then bounce up, so our strategy. Is not to play the move down. Right our strategy, is to play this little bounce up here. Okay, that is that is the the trading strategy, which i'll be teaching you guys.
All Right there'll be a trading strategy which i'll be teaching you guys. And you can see in this example. Right, exactly, how price went down it came up and it um it went down. It touched the negative 27. Over here, and then it bounce up, right, so what it likes to do usually, um this is a pro tip is that when it does a bounce up it tends to like to go back to the zero percent here, where, usually, from a structural, point of view, right there will be a pullback resistance. Like, um. Uh if you guys attended my my previous webinars you know what what's a pullback resistance. Right so yeah that's how pullback, resistance, and overlap resistance. Kind of work. Okay so that is one of the ways that you can use, the um negative fibonacci, retracement. Okay, and i do want to um, um. Wow, time is really flying by man. I do want to touch a little bit on finding fibonacci, confluence. Okay guys. Hmm. Uh just thinking, if i okay nevermind. I will not touch on uh, exactly how to draw fibonacci. Um, instead i will share with you the juicy stuff on finding fibonacci, confluence. This is finding fibonacci, confluence. Using. Just fibonacci, retracements, alone. Okay. Now. Um. This is your starting point, over here. And this is your ending point. Over here. Okay. Starting point ending point, a very clear market structure that we're looking at right we find a 50, retracement. Another. Starting point. Ending point, we find a 241, percent retracement. Another starting point another ending point you find a one two seven retracement. Right. Because. One, two, three, all of them are lining up nicely together, we expect that if price actually comes down to this level. Right we can expect the bounce up. Right we can expect a pretty, uh pretty nice bounce up, how far the bounce is gonna go, it doesn't really matter, right because our style of trading this specific, strategy. Which i'm using, doesn't really use, um doesn't really try to play the big. Major, economic. Um, so-called, news events 100 pips 200 pips in one direction, we're just trying to play that little reaction that, that happens. Okay. Now what happens from here, right um sorry i need to erase this. You can see price really comes down, it touches, the fibonacci, confluence. Area, and then it bounces, up from there. Okay, that is the concept, of using, fibonacci, confluence. Fine don't just use one i wouldn't just use 150. To trade by itself. Nor would i use uh, 1 241. Or 127. To trade by itself, but when, combined together. Right you know you know what captain planet would say you know with our powers combined. Right it becomes. Better. I'm not sure how many of you guys know what captain planet is. Right, i don't think i'm that old right. But but yeah you know that, it's all about combining, the powers, right combining, multiple levels together, right having a strong area of confluence. Right, and then. Taking a trade from there, personally, what i like is that if you combine, both the higher longer time frames, and the shorter time frames. Right to find that that specific. Area of confluence. Okay. I do want to touch on a topic, now, i do want to touch on the topic where, um. The the question is. This trading strategy investment which you're showing me. Right this trading strategy. How many pips of stop loss or how many pips or take profit do you target. I can feel my sore throat coming back i'm talking so much. All right uh. Okay we got a quick question, from tapatsua. Could you also do a webinar on elliott wave. Uh, well. I. Believe, that elliot wave. Is. Well. Wave is not one of the topics that we'll be covering, but but yeah you know you can request that, and i'm pretty sure xc trader will be more than glad, you know for us to accommodate. Accommodate, you and create that that um. Create that webinar on elliot wave. Right but before you can, even. Understand, the concept of elliott wave you need to be a master of fibonacci, retracements, and extensions. Okay, so, so so yeah you know um, retracements, extensions, correlations, those are a few main things that you need to look at before you even grasp the concept of elliott wave. Okay, now back to back to this, right i want to. Now this is a quiz time for you guys. Okay quiz time. I have this trading strategy here, right that has a 50 pip stop loss, and a 90 pips of take profit. Okay. 50 pip stop loss, 90 pips take profit. I have another strategy. Which is a 20 pip stop loss, and 36, pip take profit. Right, this is number one. This is the first one i'm showing you. This is the second one i'm showing you. Okay. Which one number one or number two will make me more money. All right, guys. Please answer, yeah please participate, so i know that, uh so i, yeah so i know, yeah i can see. What you guys answering. Okay. Okay we're getting a lot of. Um, you know we're getting a lot of questions, actually. No they're not, not not not questions, uh we're getting a lot of answers, right we got. Wow we got some people saying one some people saying number two.
Right Uh, yeah actually everyone, has, has. Has an answer, i see one very nice answer here. Right, um that comes from mark. Both, both marks right we got we've got two marks. Um, that are saying that, it is the same. Now. Take out your calculators. And. And calculate, this with me. Right, so the first one. Is. 90. Oops. Take out your calculators, with me right um i know a few few of you guys are saying it depends on the percentage, of risk but assuming you risk the exact same amount. Right. Take out your calculators, the first one was 90. Divided, by 50. Right, the second one is 36, pips of profit, divided, by, 20 pips of stop loss. What is your answer. Right. Just take out your calculators. And, calculate. Can you tell me what is your answer, if you're on google you can just type out. Okay guys what is the answer to this. Christian i see that you're rounding up you know you don't need to round up. Right. Okay. What you realize. Is the answer is 1.8. It is the. Same. It is the same between the first and second so what does that mean it means that, my take profit, 20 times 1.8. Is 36.. 50, times 1.8. Is 90. Right, they have the same, risk to reward. So one goes for 36, pip one goes for. 90 pips of profit. But they make the same money. Because it's not about, only it's not only about how much you you make but it's also about how much you risk. Right so. So. Seeing the answers, here. Right guys, seeing the answers here, um what i what i really want to teach you guys, is that, don't. Go, don't be tricked, by the. Gurus. Out there, who say, i made 100, pips of profit, today. I made 200, pips of profit. Right. Profit, means nothing if you do not know what was his, risk. That he was risking on the trade. I made 100 pips of profit but my stop-loss, was 1 000 pips away. You never hear, anyone say that, right that is what scam artists. Do that's what, people who are trying to trick you to do this so i made 100 piece of you know i it's a hundred pip trade, but they don't show you how much they were risking. Right if it was risking. 1 000 pips and he made 100 pips. That's terrible. That is absolutely, terrible. Right that means his risk to reward is 0.1. Right it's, essentially, 0.1. Right he one one losing trade can wipe out 10 of his winning trades. Right so so i need you guys to grasp, the concept, here that when it comes to trade. Don't, think, about the take profit how many pips of profit you're gonna make. Right instead, look at it both sides, how many people profit gonna make and, in order to make that many pips of profit, how much are you risking. The less you risk the better right in this case. Risking, 20 pips. Right, gives me 36, pips of profit, right, my risk reward, is one is to eat. If i risk, 10 pips right if if my egg if my entry is so accurate. Right that i'm only, a i'm i'm confident, enough to raise 10 pips instead. My risk to you what becomes, 36, divided by 10 it becomes. 3.6. Right and if i'm, super duper accurate, and my. My, my, my. My stop loss is only five pips and this is where scalping, comes in. Right, suddenly. My risk to reward, is 7.2. Right and this is, really, really these are really really good numbers.
Right, Um even 1.8, is a good number. Right, so, so grass. You got to wrap your wrap your. Um wrap your. Your head around the concept, that is not only how much you make, how many pips you make by how much you risk, and it's not only about the big numbers that you're looking for i can make five pips a day and i'm happy. Right i can make 10 pips a day, right, if i, if my trade and many of you guys in the trading circle you see the way i trade. Right most of the time i'm targeting, 10 pips. Right, and i'm glad i'm having this webinar, with you guys now to let you know that, just because i target 10 pips doesn't mean i'm trash. Okay. If i target 10 pips profit. If my tp is 10 pips, and my stop loss, is 5 pips. Right, my risk to reward, is 2. And most of the time you see that my stop loss is 5 pips to 10 pips, right i keep a very tight stop loss, a very tight take profit and that is the concept, of scalping. When it comes to scalping, it's not about, you know heating you know scalping. Uh, or day trading or sing trading you're looking for 100 pips of profit. But at the same time your stop loss could also be 100, pips. Right you're playing a very wide range. Right and because of that you need a very wide stop loss and you know you're targeting a bigger take profit. Right. For for, for scalping. That's where the accuracy, comes in, right i'm only targeting, 10 pips but at the same time i'm only risking. A few pips. Why do i like scalping. It is because, it. It it, allows, me to stay. Away from news events. What i call known unknowns. Right i shared with you guys before. A news event, is called unknown. Unknown. Right if i'm going to spell it out for you guys it's a. K-n-o-w-n. Is a known. Unknown. Right. I know that is coming i know that the non-farm, payroll is going to come on friday, the first friday. But i, i it's an unknown, outcome. How much is it going to move the markets, in one direction or the other i have no idea.
Right It's a non-unknown. Okay. Now. Um. When it comes to scalping. I get in and out of the market fast right so imagine, imagine, i'm just gonna i'm just gonna. Erase, all drawings over here imagine this is a day right this is your start of the day and this is the end of the day. Okay, in between the days there are many many news events right there's a news event here news event news event news event depending all the different. The different times. There's so many news events. Right. Now. We have so many news events. Okay, what is likely to happen when you trade you know one way one might push the market, up one might push the market, down, one might push the market down one might push the market, up. Right there are many ways that can, uh this can um. The the many ways that this can, affect the market is that you know you can push it up you know sometimes it can be pushed up sometimes it can be pushed down, okay. Now, when you hold a trade for the entire day. Right you are leaving your trade, um, um you're leaving a trade exposed to many of these known unknowns where price can go up and price can go down. Okay. But when it comes to scalping. Right when it comes to scoping we usually. Look to stay away from these big news events right we play. Right we play the moves in between. Right i can hold a trip for maybe just one or two hours. Get in and out. Uh get in and out fast and this is my trade. Right if another, if i got another news event here i get in and out fast over here, right scouting. Because of how. Um how quick you get in and how quick you get out it allows you play, this um you know it allows you to, exist and trade in an environment, where there's no big news events that that that occur that can push, your, you know push the trade, very strongly, in one direction, or the other. Right. Okay, now um. Now moving on, right moving on from here. Just erasing, it um that is the cons that is the reason why i prefer. Scalping. Okay that's the reason why i prefer scalping. Let me see what i'm going um, the things about. So it's not only about the number of pips, you made, but it's also the risk to reward, of your trade. Okay, it's a risk reward of your trade so i got a question from, from henry.
Right Um, how many pairs do you look at right i can show you my. What i usually look at my trading setup. Right now this is my the trading um, my trading setup is usually like this. Okay, um. I would. Go into the four hour charts, right i'll kind of, look for clear market structures. Across over here. Let me see if i let me see if i can show you. This is yeah this is one tab. This is another tab that i have right i'm not just you know i'm not just creating this i'm just dragging it from one computer. Screen to another computer screen. Right. I'm just showing you all the different setups that i have. Right i'm monitoring, literally, almost every single, major and minor currency pair. Right and i'm just seeing how it moves i'm looking at aussie yen over here i'm seeing, pongian, that's a very nice market structure. Aussie yen looks like this there might be a very nice market structure here, right and then. I pull this out, right because i see there's a nice market structure. And i start doing my fibonacci. Okay, i look at the zigzags, right the first i do a fibonacci, retracement, from here to here. Right, i look at levels. I do a fibonacci, extension. From here. Down to here. And up to here. Is there any level where they all line up very nicely. Right i can look at the i can look at the levels and i can honestly tell you. No, there isn't a level that lines up very nicely for this yet, right and because of that i will close it off. I saw poundian, over here it looks quite nice. I click on this, and i and i, take a look at the market, right. So one thing i do is i do a fibonacci, extension. From, here. Down to here up to here. I notice the 78.6. Extension, over here which i like. Right, but at the same time it's only a 78.6. Extension, i can't find any other big level around there. Right. There is the possibility. Of drawing a fibonacci, retracement, from here. All the way up to here. Right and suddenly, what i noticed. Is that okay this, follows the market decently, it's not the best car market structure but it still follows it you know um especially, for a long term kind of fibonacci, retracement. Right it follows the market pretty decently. Right. I noticed that there's a 50, retracement, over here, that lines up with my 76.4. Retracement. At the same time. At the same time it, is also below, a big swing low. So what tends to happen this is what i call the market, uh, the stop hunt setup. All right this is what i call a stop hunt set up so there's a very high probability. That, this is going to be a big area of interest. Price is going to fight over here. It's going to spike down to this fibonacci, extension level, and then it's going to bounce up. How high is going to bounce, i don't honestly care. Right what i'm trying to play. Is i usually play to the. Most recent, 23. Right, the 23. Is the most recent level i play to, so if price comes down here, and it bounce up to here, i would get out at 23. Right, so, that is all i'm going for i'm just going for a small little movement here, i'm not trying to play the move all the way up to here for v-shape reversal. I'm just looking to play this movement here because, a very nice 78.6. Retracement, a very nice. A very nice 50, retracement. A very nice, swing low support, area, is all lining up here, there's a, higher probability. That price might bounce up here, versus, breaking down straight away. My stop loss i will put it below the next big level so if this is a 88. Retracement. My stop loss would be slightly, below that, level. Okay, i'm just looking to get in and out fast. Right and i will only go for levels which are untested. What what i mean by untested, is that there is you know price never came down to this level before. Right. I mean price never came down to this level before, over here. Right because we're always trying to be one step ahead of the market. So if price came down to a level you know it to me it's it becomes a game of support and resistance.
Right But the the beauty of chaos theory, the beauty of fibonacci, retracements, and extensions. And wave structures and harmonics, is that you can predict. Into the future. How price is going to react off certain levels. Right so if you follow me on the trading circle, uh on xc trader right you notice some of the trading setups we do we all we always. Forecast, into the future, and most of our trades are pending orders, they're never market orders. They're forecast in the future where a reversal, might happen. Okay. Now um. So, one of the setups i was actually looking at earlier today was cad yen i believe. Um. So this setup on cadien. Which i particularly. Like. Right, so how would go for a setup here, right um, i'll go for um i'll look for the zigzag, kind of formation. I notice a 78.6. Retracement, over here. Right it lines up very nicely. With. My swing high resistance, over here, i'm not sure you can see it but yeah that's a nice. You know there's nice swing high resistance, over there, that's a nice 28.6. Extension, over there, there is a nice. 161.8. Retracement, over there. Okay. So. How many levels are over here minimally, i look for three levels, one, nice, extension. One nice swing high resistance, one nice one six one point eight retracement. As long as there are three levels they add up at a certain level, right i would look to at least play a small move from there, right in my trading strategy, i'll be looking to take a position, here. My take profit, like i mentioned is 23. Right so we can see. That. We can see that price actually touched this level and it fluctuated. Down to the 23. Area. Right so i don't, look to play a big move down i only look to play the reactions. Right strictly speaking i call this the reaction, trait. Where you're only looking to play the reaction. You're not looking to play a big move up like a position, trade, where you hold it for a long time you're only looking to play the quick reaction. Okay. So, yeah in this case you know a quick reaction off there and it drops down. Let me see if i can find any other levels for you guys that, um. That we could possibly, trade from. Right, that actually falls more under, a, live trading session which we'll probably have in the future. But um i might as well just take these last few minutes i have with you to show you how i would do my own, like um trading strategy. Right so i think this big move all the way down from here to here. 78. Retracement, lining up very nicely with 88. I'm starting to notice that. 88. Retracement, lining up pretty nicely if 100. I do a retracement, from, here down to here. Right do i see anything, nope nothing worth looking at, i do my little, zig zag retracement. Do i see anything. No not really anything, and my last exact retracement, from here to here. Okay. Um not the best retracement. Again. Right not the best retracement. But 127. Retracement, lining up with 100. Lining up for 88. This to me assuming, price continues, up nicely towards here, this would be a level for me to play a quick reaction, from.
This Is that's essentially how i trade every day right all i do is i just open up a chart. Right and i see is that clear market structure. Right now look at this is there a clear market structure. Um, not really. Nothing nice. Right i click here. I load this, kiwi dollar is that clear market structure. There is possibly, something. Right so i do at um fibonacci. Extension, here. Right i know this is 100. I do a nice fibonacci, retracement, from here to here. Any of the levels line up nicely. Nope. I do that little. Negative, retracement. Any of the levels line up nicely, nope. Done, move on to the next one. Right this is essentially, how. This is essentially how i trade. Market structure i'm looking at this that looks like a nice. Fibonacci, extension. Up to here. Okay at the same time it looks you know i can do that, negative fibonacci, retracement. At the same time i can do another fibonacci, retracement. Any other levels lining up nicely, no, okay, it's okay. All right i will continue. Right that is that is essentially, how i trade. Right um. Now that's essentially how i trade right so it's, a case of just looking at fibonacci, confluence, levels. Finding an area where everything lines up and then i take a quick trade from there, right i'll play to the 23. Retracement. And that's it. I'm not looking to play too. Far.
2020-08-30 07:05
