Fibonacci Extensions Magic 2

Fibonacci sequence are invented by Leonardo Fibonacci who was an Italian mathematician.The Fibonacci sequence is a series of numbers that takes the previous number and adds it to the current number to get the next number in the sequence. For example: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 etc.The levels for Fibonacci extensions are calculated by taking the standard Fibonacci levels and adding them to 100%. Therefore, the standard Fibonacci extension levels are as follows: 138.2%, 150%, 161.8%, 231.8%, 261.8%, 361.8% and 423.6%. Fibonacci extensions can be applied to both downtrend and uptrend.

Why Fibonacci numbers work:

The world's largest equity or forex traders, Banks, and Institutions use them to determine when to exit or lessen their positions. When they take their profit at extensions numbers we will see market will react sharply as they are the major part of the market.

I use 161.8%, 261.8% and 423.6% Fibonacci extension levels. Fibonacci extensions combination with round number, moving average and candlestick pattern determine appropriate target prices. I usually close quarter of my position at 161% level, another quarter at 261% and close my position at 423%. This numbers work on any time frames and on any instruments. Any one can learn it and imply on their trading strategy very easily. Most of the trading software provides Fibonacci tools. Some time they work so accurately is unbelievable, but they are not foolproof. If you stick to 15 minutes chart and 161%, 262% and 423% extesions,you will see better result.I also use trend line to determin the short trend if it is trending market.In a strong trending market 423% extension target can easily get hit but in a side ways movement ,traders should be cautious

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Hot set-up

The stock was consolidating previous day and formed a doji in the daily chart. Price opened below 10 MA and hold very nicely. Enter a full position just below the narrow range bar. Stop-loss above the NR bar. Exit a quarter of the position at 261%, another quarter at 423% and exit rest at the end of the day. Risk:Reward=1:14.(Risk was only 16c)

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Hot set-up

Not very impressive open but bear was strong enough to push the price down to previous days low.As we know previous day high/low play a important rule in day trading.This kind of set-ups become very effective when price open close to previousdays high or low.

Trading breakout without consolidation is always risky

Fibonacci Extensions magic

Fibonacci extension levels I use are 161.8%, 261.8% and 423.6%.Fibonacci extensions in combination with round number, moving average and candlestick pattern determine appropriate target prices. How accurate this extensions work is unbelievable. In the chart above we can see how price reacted when it approached 261%.

Risk and reward ratio

I made three test,where the capital,commission,trade no,probablity, risk per catital are the same but increased reward in second test by 100% and 200% in third test.


Starting Capital: $5000
Commission: $7 per trade
No of trade: 10
Probability of success: 70%
Percent of capital risk 1%
R: R= 1:1
Test: 1
Results:
Trade 1: Market goes your way...
Risk $49.93 / Gain $49.93 / Commissions $7.00
Net Gain $42.93
Capital: $5,042.93
Trade 2: Market goes your way...
Risk $50.36 / Gain $50.36 / Commissions $7.00
Net Gain $43.36
Capital: $5,086.29
Trade 3: Market goes your way...
Risk $50.79 / Gain $50.79 / Commissions $7.00
Net Gain $43.79
Capital: $5,130.08
Trade 4: Market goes your way...
Risk $51.23 / Gain $51.23 / Commissions $7.00
Net Gain $44.23
Capital: $5,174.31
Trade 5: Market moves against you...
Risk $51.67 / Lose $51.67 / Commissions $7.00
Net Loss $58.67
Capital: $5,115.64
Trade 6: Market goes your way...
Risk $51.09 / Gain $51.09 / Commissions $7.00
Net Gain $44.09
Capital: $5,159.73
Trade 7: Market goes your way...
Risk $51.53 / Gain $51.53 / Commissions $7.00
Net Gain $44.53
Capital: $5,204.25
Trade 8: Market moves against you...
Risk $51.97 / Lose $51.97 / Commissions $7.00
Net Loss $58.97
Capital: $5,145.28
Trade 9: Market moves against you...
Risk $51.38 / Lose $51.38 / Commissions $7.00
Net Loss $58.38
Capital: $5,086.90
Trade 10: Market goes your way...
Risk $50.80 / Gain $50.80 / Commissions $7.00
Net Gain $43.80
Capital: $5,130.70
After 10 Trades: $5,130.70
Test: 2
Starting Capital: $5000
Commission: $7 per trade
No of trade: 10
Probability of success: 70%
Percent of capital risk 1%
R: R= 1:2
Results:
Trade 1: Market goes your way...
Risk $49.93 / Gain $99.86 / Commissions $7.00
Net Gain $92.86
Capital: $5,092.86
Trade 2: Market goes your way...
Risk $50.86 / Gain $101.72 / Commissions $7.00
Net Gain $94.72
Capital: $5,187.58
Trade 3: Market moves against you...
Risk $51.81 / Lose $51.81 / Commissions $7.00
Net Loss $58.81
Capital: $5,128.77
Trade 4: Market goes your way...
Risk $51.22 / Gain $102.44 / Commissions $7.00
Net Gain $95.44
Capital: $5,224.21
Trade 5: Market goes your way...
Risk $52.17 / Gain $104.34 / Commissions $7.00
Net Gain $97.34
Capital: $5,321.55
Trade 6: Market moves against you...
Risk $53.15 / Lose $53.15 / Commissions $7.00
Net Loss $60.15
Capital: $5,261.41
Trade 7: Market goes your way...
Risk $52.54 / Gain $105.09 / Commissions $7.00
Net Gain $98.09
Capital: $5,359.49
Trade 8: Market goes your way...
Risk $53.52 / Gain $107.05 / Commissions $7.00
Net Gain $100.05
Capital: $5,459.54
Trade 9: Market goes your way...
Risk $54.53 / Gain $109.05 / Commissions $7.00
Net Gain $102.05
Capital: $5,561.59
Trade 10: Market goes your way...
Risk $55.55 / Gain $111.09 / Commissions $7.00
Net Gain $104.09
Capital: $5,665.69

After 10 Trades: $5 665.69
Test: 3
Starting Capital: $5000
Commission: $7 per trade
No of trade: 10
Probability of success: 70%
Percent of capital risk 1%
R: R= 1:3
Results:
Trade 1: Market goes your way...
Risk $49.93 / Gain $149.79 / Commissions $7.00
Net Gain $142.79
Capital: $5,142.79
Trade 2: Market goes your way...
Risk $51.36 / Gain $154.07 / Commissions $7.00
Net Gain $147.07
Capital: $5,289.86
Trade 3: Market goes your way...
Risk $52.83 / Gain $158.49 / Commissions $7.00
Net Gain $151.49
Capital: $5,441.35
Trade 4: Market goes your way...
Risk $54.34 / Gain $163.03 / Commissions $7.00
Net Gain $156.03
Capital: $5,597.38
Trade 5: Market moves against you...
Risk $55.90 / Lose $55.90 / Commissions $7.00
Net Loss $62.90
Capital: $5,534.48
Trade 6: Market goes your way...
Risk $55.27 / Gain $165.82 / Commissions $7.00
Net Gain $158.82
Capital: $5,693.30
Trade 7: Market goes your way...
Risk $56.86 / Gain $170.59 / Commissions $7.00
Net Gain $163.59
Capital: $5,856.89
Trade 8: Market goes your way...
Risk $58.50 / Gain $175.50 / Commissions $7.00
Net Gain $168.50
Capital: $6,025.39
Trade 9: Market moves against you...
Risk $60.18 / Lose $60.18 / Commissions $7.00
Net Loss $67.18
Capital: $5,958.20
Trade 10: Market moves against you...
Risk $59.51 / Lose $59.51 / Commissions $7.00
Net Loss $66.51
Capital: $5,891.69
After 10 Trades: $5 891.69

http://www.valtinho.com/invest/risk_management_simulator.html#trade10

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Fit for summer

Gisele Bunchen

Choose a daily breakfast, lunch and dinner and two of the healthy snacks from the list below...

Breakfasts

Porridge with skimmed milk, handful of fresh berries

Granary toast, peanut butter

Granary toast with poached egg and grilled tomatoes

Low-fat yoghurt with sprinkling of chopped nuts

Tomato and goat's cheese omelette

Lunches

Can of vegetable soup with lentils and beans

Wholemeal wrap filled with hummus and salad

Can of sardines in tomato sauce on granary toast

Lemon and herb couscous salad with grilled chicken pieces

Tuna salad with boiled egg and green beans

Dinners

Grilled salmon with lemon and garlic, new potatoes and steamed mixed veg

Vegetarian chilli with kidney beans served with basmati rice

Cod grilled with basil and a little mozzarella served with a selection of leafy green veg

Chicken and vegetable stir-fry served with rice noodles or brown rice if possible

Small lean grilled steak served with roasted red pepper, courgette and butternut squash

Snacks

Two oatcakes, cottage cheese

Handful of unsalted almonds

Small fruit yoghurt

Nut-based cereal bar

Any fruit

Handful of olives

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Trading course

I am almost finished writting the trading course which i started last year,hopefully next week it will be ready.
Course outline:

1. Basics of the market
2. Who are the players in the financial market?
3. How does the financial market work?
4. Pattern day trading margin rules.
5. When can we trade? Time zones and trading session for equity and forex trades.
6. How tape reading (time and sale window) can help you to make the right decisions.
7. What is level 1 and level 2? What does it mean to day traders?
8. Order types and how to use them.
9. Money management: Why this is the most important element of our trading?
10. Position sizing: Why this is the key to money management (two methods explained).
11. Stop loss: Where to put stop loss and why (three methods explained).
12. Trailing stop and partial exit strategy.
13. Risk and reward ratio: How this can be critical to the system.
14. Probability: How high probability trading system can change your account
15. Basics of chart reading (candlestick chart, bar chart, line chart)
16. Candlestick charting (Most important candlestick chart pattern, how to use them to your advantage)
17. List of all indicators available
18. What is Support and resistance? Why they are so important and how to use them in day trading.
19. Trend line analysis: How can we say which one is valid?
20. Technical analysis, why we only use technical analysis.
· Head and shoulder pattern: How to trade them (two methods)
· Cup with handle pattern: How to trade them
· Double top/bottom
· Triangle: Why triangles are so popular
· Flag: How to identify flags and trade them
· Channel: How to use this in day trading
· Consolidation: Three/four month breakouts
21. Indicators I use, how they can help you to trade
22. Volume analysis: Why and where we need to look for increase in volume
23. Psychology of trading: Why some traders will always make money and some doesn’t
· How to select a winning stock .
· Entry strategy
· Exit strategy
Grade A set ups (Success rate 70-80%):
· Parallel set up 1
· Parallel set up 2
· Parallel set up 3
· Parallel set up 4
· Parallel set up 5
· Parallel set up 6
· Parallel set up 7
Grade B set ups (Successes rate 50-60%):
· Parallel set up 8
Grade A set ups (Successes rate <50%)
.Parallel set up 9
.Parallel set up 10

Forex

· Benefits of forex trading
· Forex economic indicators
· What to look for in a forex firm?
Forex set-ups (successes rate 60-70%)
· Support and resistance bounce and breakout (4 hours time frame)
· Triangle pattern
· Wedge pattern
· Channel bounce and breakout
24. Why every trader should have a trading journal
25. General trading rules
26. Most common mistakes
27. Most important websites: More then 100 financial websites
28. Brokers and softwares: top 20 brokers
29. Free scanner: five free scanners
30. Most important books: 10 best books on trading.

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One trade

My Entry was :77.19 and exited :78.33 .I was talking to some of my students yesterday about support resistance in intraday trading,this was a live example how previous resistance can become support.

Descending Triangle

I was reading an artical ,it claimes that pattern doesn't work in day trading accorditing to him Pattern only works in swing trading(i mean in daily chart).This posting for him ,he should come and see this pattern.

New set up

The main focus of this set up is consolidation near yesterdays high and other set up is very similar to this one but the difference is ,we look for consolidation near that days high .

Head and shoulder reliable reversal pattern

Head and shoulder pattern

Head and Shoulders (H&S) is the most common and reliable reversal pattern. H&S pattern appears at the end of a bullish trend. Typically, it takes at least two to three months to complete and sometimes much longer. When a stock breaks below the neckline, there is no longer any support and very rapid declines can occur, often on increasing volume.

1. A confirmed head and shoulders formation offers an excellent shorting opportunity.
2. It can also provide an early warning sign for those with long positions to sell quickly.

Missed a nice clean set up