In this next installment of how to trade your trading profits, we are going to head back to the years of the days of Leonardo Bonacci. The history is not what is really important to us in terms of taking your profit exits when trading. Using Fibonacci can give you exact and objective price points to exit any trade that you are in. The way we are going to use them is also going to give you one key element that must be present for a chance of trading success: You will also be able to have trade plans that give you the chance to scale out partial profits, hold for an all out target, and also have a way to measure if the trade has strength to fulfill your objective.
I will detail that later. Before I start, usual disclaimer that you must test, verify, and prove to yourself that this concept makes sense to you. I am sharing this with you because this is a method I personally have used over the years depending on the trade plan I was using.
We are going to use. These are a combination of retracements and extensions. Due to space limitations, I will work from Jan to give you examples but feel free to head much further back on any instrument. After selling the rally, price breaks the confirming ratio. As you can see, price slams through the confirming ratio , slams through the first target , pushes above the second target and then reverses.
Price forms a double bottom trading pattern , struggles through the confirming ratio before hitting our profit target to the pip before reversing course. The EURUSD is currently heading to the downside setting up bigger swings and this chart shows some levels on the radar. Look at this chart. The downward arrow shows the swing we are measuring assuming you trade pullbacks.
This is the move into your setup. The move to the upside is what is projected. Price slammed through our confirming ratio and busted up through our first target, After about a day of sideways price action and a fake to the downside, price drove up to the final target.
Price then dropped, interesting enough, right back to our confirming ratio. I urge you to go back over your charts and see how this plays out in your chosen instrument. I will leave you with this chart of Gold and the first retracement after the March highs.
You will see price has bottomed out after the second pullback series right at the 1. Want more ways to take trading profits? Check out my other trading posts. Your email address will not be published. Why Use Fibonacci Using Fibonacci can give you exact and objective price points to exit any trade that you are in.
Two knocks against Fibonacci: This is not something I invented but picked up from a few traders including the late Mark Braun. If price fails at this level, we may want to tighten up our stop or exit the trade completely.
If this level breaks in the direction of our trade, the next ratio comes into play. Depending on strength, the next ratio can come into play. What do you see? Was there any concern that the trade was in danger?
Keys To Trading Success. A range is not an issue but strong reversal signals will have me taking action on the trade. Until price reaches that level, I am in set and forget mode.
Good luck and let me know how the testing goes! The following two tabs change content below. CoachShane Trader at Netpicks. Shane his trading journey in , became a Netpicks customer in needing structure in his trading approach.
His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. This has allowed less time in front of the computer without an adverse affect on returns. Latest posts by CoachShane see all. Leave a Reply Cancel reply Your email address will not be published. Here is the website link:More...