Hi everyone, I want to say that I have an "edge" using mainly Fibonacci retracement lines with the help of CCI and ATR Trailing Stop for risk management. I try to keep my R:R to 1:1 per trade. However, because Fib retracment is subjective and every trend has different lengths, how exactly do I define my R:R overall. For example I can win 5 small trades in a row with 1:1 but lose it all in 1 bad trade still with 1:1 R:R. Also I would especially love to hear some risk management technique for those that uses Fib retracement. Thank you in advance.
Have you looked into using multi timeframe charts eg. 30m and 2m? https://elitetrader.com/et/threads/charts-for-no-reason.344272/page-4#post-5093091
Are you satisfied with your stop loss method, where to place your stop loss? What CCI Length are you using?
i would say that overall I am pretty satisfy with my method from entry point to stoploss and exit, my win rate is 70% but i believe i am still missing something in my strategy. The only thing I can think of is that if i am trying to capture huge trends where the fib is much larger, i may have to reduce my contract qty just to keep the R:R at a similar level.
Which fib levels work best for now, as is? What products do you trade? Are you keeping good records of your trades and of the outcomes that "could have been" if held longer?
I trade fx mostly and i like to capture the 38-61% level for my profit. My record keeping is not the greatest, but to answer your "could have been" question, unless I expand my risk to 1:5 or higher, then most of my losses could have been saved. These past few hours I began looking at multi-time frame to see if it can help me avoid these bad entries and looking back at my losing trades it seems like it couldve aided my decision to not enter. Hopfully in the long run it is something that I can add to my strategy.
My chart incorporates a higher level time frame with the current time frame so that I don't need to use more than one chart per instrument. That being said, you can then use a fib tool to draw a fib line. Obviously, if the bottom of the line is broken then the fib did not hold. So if you are buying on a higher fib line with stop below the bottom line, then yes 1 trade can wipe out multiple profitable trades. Some ways to avoid this would be to test if taking lower fib pullbacks so your don't need a wide stop may be worth investigating. Also, you would not want to have a trade on right before a news event that may influence price. I thought if you watch the show Industry, there was one episode that was very cool. The female trader was carrying a loss forward into a news event. The news came out, and price at 1st spiked her way so that she could have actually killed the trade at breakeven. However, it was a false breakout, and price not only came back down, it kept tanking till she was forced to kill her trade at a bigger loss. All that being said I don't need to use fib lines since I can see price action just by looking at a chart.