How To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.
In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD
GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time
 Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!
The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.
Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

 100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.com
How To Trade
with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com
Fine-Tune the London Breakout Trade with Fibonaccis
Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading
- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.
- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY
GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.
This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.
(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.
(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".
Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.
While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer
There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.
This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?
The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.
Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?
When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?
Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision
DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.
11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.
Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.
Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"
Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.
In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.
In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.
THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.
As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:
 38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.
Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.
The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle
Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements
In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume
 Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".
(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.
#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High
 Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:
In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.
Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.
Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -
(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade
with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.
In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD
GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time
 Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!
The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.
Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

 100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading
- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com
The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF
Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.
This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.
(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.
 Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".
Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan
- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.
This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.
Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?
When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion
The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.
In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.
Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.
In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.
THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.
There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.
(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)
Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.
As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.
Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

 50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy
Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.
In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.
The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle
Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential
About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements
In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume
 Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.
Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".
(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.
#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low
 Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.
His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:
In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.
In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.
The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -
(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.
Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.
Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.
In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD
GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time
 Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.
Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com
Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com
The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.
If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.
Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF
Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.
- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.
(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -
(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.
 Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.
This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.
(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan
- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.
Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.
Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?
When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion
The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net
"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.
In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.
The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.
Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com
The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.
Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.
There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.
(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)
Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.
Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.
Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

 50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.
If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.
About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy
Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.
In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle
Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?
In this case, we see two levels of consolidation in the daily charts. A
consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential
About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.
Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price
 Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.
Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.
Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low
 Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.
His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.
Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.
In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.
The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?
This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.
Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.
Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.
In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD
GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.
Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range
 Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.
If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.
Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com
Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision
- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.
Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com
The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.

Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.
If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.
Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF
Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?

When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.
- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.
Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.
(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -
(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

 Fibonacci Sequence - Created "In the beginning" discovered by man recently in
1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.
This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.

Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.
(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.

The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.

(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.comHow To Trade

with Fibonaccis
In This Report
Top Fibonacci Levels to Trade
Todd Gordon, TradingAnalysis.com

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

Fine-Tune the London Breakout Trade with Fibonaccis

Joshua Martinez, MarketTraders.com

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net

Risk Disclaimer

There is a very high degree of risk involved in trading. Past results are not
indicative of future returns. SirIsaacPublishing.com and all individuals affiliated
with this site assume no responsibilities for your trading and investment results.
The indicators, strategies, columns, articles and all other features are for
educational purposes only and should not be construed as investment advice.
Information for futures trading observations are obtained from sources believed to
be reliable, but we do not warrant its completeness or accuracy, or warrant any
results from the use of the information.

Your use of the trading observations is entirely at your own risk and it is your
sole responsibility to evaluate the accuracy, completeness and usefulness of the
information. By downloading this book your information may be shared with our
educational partners. You must assess the risk of any trade with your broker and
make your own independent decisions regarding any securities mentioned herein.
Affiliates of SirIsaacPublishing.com may have a position or effect transactions in
the securities described herein (or options thereon) and/or otherwise employ
trading strategies that may be consistent or inconsistent with the provided
strategies.

Privacy Policy

Copyright 2016 by Sir Isaac Publishing. 37 N Orange Ave STE 500 Orlando, FL
32801 http://SirIsaacPublishing.com All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Sir Isaac Publishing

Back to Table of Contents

Top Fibonacci Levels to Trade

Todd Gordon, TradingAnalysis.com

Are You Making These Mistakes With Fibonacci?

You know something about them, but not enough to trade with them? You know they
have value, but don't know how to draw them properly? Maybe you know how to draw
them, but are you having difficulty using Fibonaccis to identify the best
opportunities for trade entries and exits?

This video will demystify Fibonaccis. Todd is a master market technician and full
time contributor to CNBC. In this video, you will get an in-depth crash course on
Fibonaccis, and Todd will reveal exactly how he uses Fibonaccis in his daily
trading, including:

- Amazing proof that Fibonacci numbers work - even in highly emotional trading

- How to use Fibonaccis to anticipate where any market is headed with uncanny
precision

- How to tell exactly where to place your Fibonacci levels on any chart

- 3 tools of Fibonacci analysis that can quickly take your trading to exciting new
levels

- How to handle all aspects of your trade - from entry to your stop trail action
plan

- And much more...

THE MOVIE

Grab a notebook, and follow along as Todd dives deep into how to trade with
Fibonaccis, include how to spot trading opportunities at a glance.

Get My Course, "The Best Way to Trade Fibonacci" Here!

About Todd Gordon

Todd Gordon is originally from upstate New York, the Saratoga / Lake George area.
His career as a trader started back in college when he first fell in love with the
game. He opened an eTrade account and spent his summers day trading around his job
on the golf course.

He attended college at St. Lawrence University in upstate NY where he majored in

economics and competed on their NCAA Division I ski racing team with several future
Olympians. Following college he packed the car and drove cross-country to the beach
in San Diego, CA and took his first professional trading job. He learned to trade
professionally from a proprietary equity trading firm in San Diego. In 2004 he
packed up the car and drove back east and headed to his first job on Wall Street in
New York City.

His career continued to grow and Todd became a Senior Technical Analyst at
Forex.com on Wall Street followed by a stint as a trader at Gain Capital Asset
Management, again on Wall Street and a partner in a Research and Trade Advisory
Business. He is a regular contributor on CNBC, with more than 300 appearances, and
he is currently in his second, three-year contract with NBC Universal.

Todd founded his company, TradingAnalysis.com, where he focuses on educating others

to become consistent in their trading. He is happily married and a proud dad of
twin boys.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.
Tap Here to find out more

Back to Table of Contents

Find Precise Entries and Exits with "The Equality Trade"

Jody Samuels, FXTradersEdge.com

The Equality Trade is a chart setup that uses the convergence of Elliott Waves ,
Fibonacci and Harmonics to identify precise trade entries and exits.

When I look back over my 30+ year trading career, I cant point a single time where
I didnt use Elliott waves in my analysis of the markets. In fact, I wont trade
without it.

In this video, I will share my knowledge and passion for Elliott waves, and then I
am going to mix in Fibonacci and harmonics to show you how to blend these elements
to find the best setups..

THE MOVIE (35 minutes)

New Scanner Lets You Trade - While We Count the Waves!

About Jody Samuels

Jody Samuels is one of North Americas leading coaches for successful traders, and
the creator of The FX Traders EDGE Program. She works with members of her program
in group and private coaching sessions and is passionate about teaching individuals
how to trade the market cycles and use entrepreneurial skills and habits to
effectively manage their businesses.

Back to Table of Contents

How to Capture Large Moves Almost Daily

On the London Open
Joshua Martinez, MarketTraders.com

The Forex market is the largest financial market with almost limitless amounts of
liquidity. That means the opportunities for financial gain are almost limitless as
well. When it comes to average daily trading volume, almost $5 trillion is traded
daily in the Forex markets. In contrast, $22.4 billion is traded on the New York
Stock Exchange, $18.9 billion is traded on the Tokyo Stock Exchange and $7.2
billion is traded on the London Stock Exchange. The volume trade in the major stock
exchanges is a fraction of the volume of transactions traded on the Forex market.
Because of that, its no surprise that top banks and investors like Warren Buffett
and George Soros trade the Forex markets.
Another advantage to trading the Forex market is that its open 24 hours a day, 5
days per week. If you work a day job, and cant trade from 9-5, you still have
trading opportunities available to you when youre off work. The table below shows
the 24 hour cycle of the major global financial markets.

In the Forex market, you deal in pips. A pip has the same relationship to a penny
that a penny has to a US dollar. There are 100 pennies to a US dollar, and in the
Forex market, 100 pips make up a penny. When you trade Forex, you are buying or
selling fractions of pennies. The value of your pips is measured on a much larger
scale when you trade the Forex market. In this chapter, we are going to be working
with an investment of $2,000 US dollars per trade. This is known as a standard lot
investment. When you invest $2,000, every pip on average is worth $10 US dollars.
If you make 10 pips on a trade, you will make $100. Conversely if you lose 10 pips,
you will lose 100 dollars. Your $2,000 dollar investment is not your risk. Your
risk is measured in pips and your reward is measured in pips.

The strategy being discussed today is designed to generate between 200-500 pips per
month, which translates in to $2,000 - $5,000 of real money in your trading
account. So we are using a $2,000 investment to generate $2,000 - $5,000 in income
every month.

This chart shows the GBP/JPY currency pair. As you can see, the Forex markets tend
to have repeatable highs and lows on an uptrend, and it also has predictable lows
and high on a downtrend. But heres the most important thing to know, and its
pretty obvious: Every trading day has a high and a low. And here is the essence of
this chapter:

If you can become really good at identifying the daily low or high between 2am-5am,
you have the potential to make a lot of money trading the GBP and its related
currency pairs.

In this hourly chart, we see two yellow circles:

- On 7/1/14 the daily low was established at 2am EDT and the GBP/JPY went north for
the rest of the day.

- On 7/2/14 the daily low was established at around 2am EDT, and the GBP/JPY headed
north for the rest of the day.

If you go back in time, you should be able to identify an obvious daily low or high
on almost any day. In this example, neither of these days were small directional
moves. The market rose over 75 pips. And 75 pips equals $750 in profits. Looking at
the chart above, can you identify the low or high between 2am-5am for the previous
three days? The bigger question is: How do we take advantage of this information to
make money trading the GBP currency pairs?

The next thing you need to know is that the distance between the daily low and high
is the Average Daily Trading range (ADT). The ADT for the GBP in the summer months
is about 100 pips. Since, the ADT is 100 pips, the goal is to make 50 pips per day
per trade. 50 pips yields a $500 daily profit on a standard lot investment.

Lets begin within the opening of the trading day. The European markets open at
2:00am EDT, but London opens at 3:00am EDT. When the London markets open, what
typically happens with the Bank of England? A wealth of transactions that have
built up from the previous day need to be cleared. The majority of large currency
exchanges are processed through the Bank of England every day. Its the largest
currency hub in the world. 3:00am EDT is also the final hour of trading in the
Tokyo Exchange. The combination of activity in these two markets will usually
result in a strong bullish or bearish directional move in the GBP and its
associated currency pairs.

The key to this strategy revolves around an hourly chart and the 3am bar. There are
two ways to use this strategy: The Blind Straddle and the Educated Straddle

Blind Straddle

Step 1 Place a 10 pip Entry BUY Order above the one-hour 3:00am EDT candlestick
wick high. With the Blind Straddle, you want to wait for the 3am hourly candlestick
to close at 4am. The first step is to place an ENTRY BUY order +10 pips above the
wick high of the 3:00am EDT closed candlestick. In this example, the entry buy is
174.04. This is not a market order. You are not physically in the market yet. An
entry order is a pending order. You are making it a requirement that the market
crosses over your specific price point before entering you in the market. If the
market does not touch your specified price point, then your trade is never
activated.

Step 2 Place an Entry SELL Order -5 pips below the one hour 3:00am EDT closed
candlestick wick low. The reason why you have an entry sell order -5 pips below and
not -10 pips below the 3:00am EDT closed candlestick wick low is because of the bid
and ask price. The chart above is a bid chart. That means you are only seeing the
sell price. The ask price is also known as the buy price, and it is usually 2-5
pips above the sell/bid price. The above chart does not show the ask/buy price. So
there is no need to compensate for the spread at an additional +5 pips when
selling.

Step 3 Once you are in the market, cancel the opposite order. The candlestick has
crossed over your entry sell price. Your entry order is now an active market order.
You are physically in the market selling. Once this happens, you want to
immediately cancel your outstanding ENTRY BUY order, because you dont want that
order floating. It has served its purpose. Get rid of it.

Step 4 Set your STOP +5 pips above the previous candlestick high.Your risk will
be the distance in pips between your market sell order and your stop. In this
example, your risk is 24 pips or $240 dollars.

Step 5 Set your reward at 50 pips from your market SELL order.Youre done. You
are risking 24 pips, or $240 to make 50 pips or $500. A very nice risk/reward
ratio. In fact you would only have to win 4 out of 10 times to make money with this
risk/reward ratio. Now we wait.

Step 6 Collect your profit. This strategy uses an hourly chart. Notice that in
just 5 hours, we cross our reward line. In just five yours, we close out the trade
and pocket $500. And this strategy works over and over again with the GBP and its
related currency pairs.

Note: If you click on the YouTube presentation at the end of this chapter, Joshua
Martinez will take you through multiple examples of using the Blind Straddle, and
it is well worth watching just to show you how repeatable this strategy is within a
given month.

Make Sure You Have a Profit Plan

Its also very important to have a Profit Plan with this strategy. A profit plan
keeps you from flying blind in your trading. It is advisable to set up your profit
plan on 10 trades. Thats about 2 weeks of trading time. Heres what happens if you
win four out of ten trades with an average profit of 50 pips and an average loss of
25 pips.

What if you win six out of ten trades? Then the Profit Plan looks like this:

In the first profit plan, we make $500 every two weeks ($1,000 per month), winning
just four out of 10 trades. In the second profit plan, we make $2,000 every two
weeks ($4,000 per month).

The London breakout strategy, if followed properly, works very well within your
profit plan. The five major currency pairs this strategy produces the best results
are:

GBP/USD

GBP/CAD

GBP/NZD

GBP/AUD

GBP/JPY

GBP/CHF

Educated Straddle

When evaluating these currency pairs, we are using an hourly chart, but its also
important to take a long-term view of the market, since the long term history of a
chart controls the short-term charts. Lets look at the GBP/NZD on a monthly chart.
What do you see? Is the market moving up, down or sideways?
When you plot support and resistance lines, what you see is this currency pair is
range-bound within 1,848 pips for the past four years. Thats an $18,480
directional move that happens every six months on average. If you could take a
$2,000 standard lot investment and generate over $20,000 in profits per year, would
you consider that a good return on investment? Looking at the monthly charts can
also provide some valuable insights into your current trading month.

In this exploded monthly view of the GBP/NZD, you can see a clear uptrend during
the previous four months. The current month has broken the trend line, but there
are still 21 days left in the month, and history suggests that there is still
plenty of buying to do. If the trend reverses, there is still an 800 pip range
between the last candlestick and the support line, offering an opportunity to pick
up $8,000 possibly within the next five months.

Lets drill down and superimpose a daily chart below a monthly chart. Remember the
longer time frames always control the shorter time frames. What do you see? Will
the market go up or down?

In this case, we see two levels of consolidation in the daily charts. A

consolidation is when you see equal highs and lows over a period of time. Since
Consolidation phases tend to bounce off support and resistance lines, it makes
sense that the market will probably move up. But how can you confirm this? This is
where analyzing wave patterns with Fibonacci tools helps.

Fibonacci tools are wonderful when you learn how to use them. They identify highs
and lows and they will help you learn if the markets are in a retracement or an
extension. We identify our first low (A) at the support line and our proper high
(B) at the resistance line. That gives us our up A/B boundary. This chart
illustrates a Fibonacci adage:

As long as the market doesnt take out the A, it has no choice but to go your
way.

What this means is that once the market reaches the B, any retracement will be
short term, and the market will be moving to the upside. For a more detailed view
of Fibonacci analysis, click on the YouTube of this presentation and fast-forward
to the 49:00 minute mark.

The key to the educated straddle is to gather more information about the probable
direction of the market on a daily basis.

- Take a longer-term view of the GBP currency pair. The more information you have
about the longer-term direction of the market, the more certain you will be about
the direction of the market. Make sure to look at the monthly, weekly and daily and
hourly charts to help make your decisions about the direction of the market.

- Learn how to use Fibonacci tools. The can help you identify market tops and
bottoms, and whether the markets are set to retrace or extend their direction.

If you can master this information, and you know that the daily high or low will
likely be established between 2am 5am EDT, how much more confident will you be
making trading decisions?

Conclusion

The London Open Breakout strategy has been successfully traded for many years. The
rules are based on a very simple premise:

If you are able to successfully identify whether the market will form a low or high
in the morning, and you know where to set your strike price, stops and reward
targets, it is possible to make $500 per trade and $4,000 per month on a $2,000
standard lot investment.

THE MOVIE (1:14:28 in length)

Grab some popcorn. Josh will walk you step-by-step on how to tade the London
Breakout strategy in this highly informative video.

THE SPECIAL OFFER

Learn Our New "Euro Wave" Trade Strategy Here!

Over 2,600 Pips in Profit Potential

About Joshua Martinez

Joshua Martinez is Market Traders Institute's (MTI) head analyst with more than
four years of experience analyzing and trading the Forex market. As a trader and an
instructor skilled in both technical and fundamental analysis, Josh, also known as
FX Pathfinder, has used the mentoring lessons taught to him by his father (world-
renowned trader Jared Martinez) to build his own reputation as a successful trader,
analyst and instructor. He has developed several trading strategies and systems
including the 3:10 London Breakout Strategy that is taught in MTI's Forex Mastery
Course.

Back to Table of Contents

Learn How to Trade with Fibonnacis

Get the course modules, coaching and assistance you need to to trade profitably,
week-after-week.

Once you have demonstrated mastery of trading strategies that fit your trading
personality, we will invite you to trade with our money. Keep your money in the
bank.

You keep 60 - 85% of your trading profits every month. Earn incremental income or
build a full time career trading without risking a dime of your money.

This only works if you're consistent and profitable as a trader. It's our job to
help you.

Tap Here to find out more

Back to Table of Contents

Using Fibonaccis to Trade Futures with Precision

DeWayne Reeves, CFRN.net
"Pure mathematics is, in its way, the poetry of logical ideas." Albert Einstein

If you are not familiar with the man or the mathematics I do encourage casual
research as Fibs can be successfully used for confirmation and/or projection when
properly applied. A word of caution, Fibonacci Retracements and Extensions should
always be used in conjunction with other indicators or methodologies. As a
standalone tool its subjective nature simply leaves too many questions unanswered.

There is no question as to the elegance and even precision with which these levels
can be viewed after the fact. The most common levels are watched by a great number
of traders and on larger time frames it is easy to see the hive mind at work which
begs the philosophical question of "Predictive tool or self-fulfilling prophecy?".
Either way, as long as we are able to enhance our trading performance through its
use and armed with the caveats previously stated, lets go Fibbing.

Fibonacci Retracements

In an uptrend, the basic idea is to be a buyer in the market as price pulls back to
a Fib Support level. Most charting platforms do come with a Fib Retracement Tool
built in. Fibs are like trend lines in that you can draw them all day, as many as
you want and they are absolutely free. All one needs to do is clearly identify a
significant swing high and a significant swing low. Many charting platforms also
include an indicator that will identify major swings for those who are new to
trading. Keep in mind, this indicator prints several bars after the actual high or
low based on the default "look-back' period which can also in most cases be tweaked
to best suite the time frame and market you are trading. If the swing high or low
is exceeded, the indicator will recalculate and mark you chart accordingly.

In the example below we are using a volume based chart. But you may be using other
charts:

Volume

Price

Time

Range

Tick

All of these are acceptable and will provide you with the same Fib Retracement
Levels as long as you are using the same swing high and swing low price. In the up-
trending example we simply click the swing low and drag our cursor to the swing
high and release our mouse button.

(ES) SP500 Fib Levels

We drew from the swing low at 1447.75 up to the then current swing high at 1451.75.
There was no way to know for sure that 1451.75 would be the swing high, but with
each candle that closes higher you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back
initially to 1449.50 which was the midpoint between the 50% and 61.8% retracement.
On a smaller move such as this one, the difference between the 50 and 61.8% was
only 2 ticks. This is an "area" and quite suitable for our example.

Price makes an initial bounce back to the previous swing high. It retraces again,
this time to the 38% level which is also an "area" as the new swing high is 1 tick
higher. Price ultimately rallies to 1454.50. Entering this trade at the 50% level
would have resulted in very little draw down and a 5 point move. On larger time
frames the distance between levels can be relatively significant which as you will
see can lead to greater risk. Even though we purposely chose a "good example", we
have to ask ourselves what our risk would be if price had not reversed upwards at
1449.50. If we entered on "blind faith" our stop would have needed to be either
just below the 61.8% level or preferably just below the swing low itself.

Remember, we are looking at a historical chart here. Once the market has moved on,
it is much easier to come back and identify these areas. If you want to add Fibs to
your daily toolbox then you will need to learn to utilize them while the market is
moving. This takes practice but as with all things trading, patience is required.
Again, with the benefit of hindsight we were able to select an example that
exemplifies a positive "textbook" outcome. Before we move to a less than perfect
example I want to show you the same chart with some additional information.

Fib Levels + CF_MA1

Notice on the second chart where the low of our entry candle is. Even though the
reversal came between the Fib levels, the CF_MA1 nailed the entry to the tick. Is
that by accident? Not quite. While Leonardo da Pisa has achieved a bit of Rock Star
status within the world of trading, math is math. Keep in mind, he didn't invent
Fibs, he discovered a principle that had been in play since the foundation of the
earth. Do the research as suggested and you will discover Leonardo's discovery was
based on the copious copulation habits of rabbits. True story.

Let's look at a not so perfect example.

(ES) Fibs Hourly Chart

In this example we use the swing low at 1421.25 and the swing high at 1439.25. The
first pullback was to the 38% level at 1432.37. Because the ES trades in 1/4 point
increments or "ticks" we have to round that price up to 1432.50 or down to 1432.25.
Either way the 38% level failed to hold. There was 1.5 point bounce but keep in
mind this is now an hourly chart. The 50% level at 1430.25 also failed to hold. The
final level at 61.8% or 1428.13 appears to be holding... Did it? Let's see -

(ES) Fibs Behaving Badly

This Controversial Commodity is Going to be 5X More Valuable Than Gold

What do Colorado, Washington State, Alaska, and Washington, D.C. have in common?
They've all been making huge money off of this controversial cash crop. It's
expected to create $6.7 billion
in new wealth this year and an estimated $35 billion in 2020... For investors, this
industry is providing HUGE opportunities.
And on November 8th, it was just made legal in four additional states.

Click here to get the full story.

This shows the other side of what can happen. Sometimes they hold, sometimes they
don't. This is not to discount their usefulness; this is to show why Fibs should
only be part of a comprehensive trading plan. Let's look at the same chart again
through a slightly different lens.

(ES) Hourly Fibs + CF_MA1

Using our indicator set and methodology we would not have been a buyer here. In
fact the first red candle which closed at 1433 based on this chart setup would have
been an alert for us to consider entering a short position and/or exiting any long
position we might have been in. The other option for someone who has a strong
attraction to Fibonacci would be to simply remain flat. No position is also a valid
position.

FIB TIPS AND OTHER HEAD TRIPS PART

As traders we are quick to put on mental shackles. Bind ourselves to a way of

thinking that lives somewhere between no-sense and nonsense. We paid our dues
($99.95) to the indicator man, had a free lunch and spent 3 hours earning a degree
from the traveling seminar man ($299.00) and now we're ready. Bring on those
champagne wishes and caviar dreams. How did I live so long without hearing about
this trading stuff? Oh well, no time for remorse but I do feel sorry for those poor
fellows who haven't heard the good word and still have to earn a living by the
sweat of their brow. Perhaps I can help a few out in the future in my spare time,
but for now I have to get clicking and start making those ticks cause- "Come on
baby, daddy's about to get rich".

Luke may have made a few mistakes in his day, more than a few, but one thing he
fully understood was that the Man (in our case - the Market) can be a rough old
boy. No trader makes it through unscathed. We all get a little taste of the snake
oil in one form or another. For some, one taste is enough. Unfortunately for
others, the never ending search for a quick fix of easy money, it just... never
ends.

Those who do come to their senses early on figure out just like Luke did, there are
no shortcuts. If you are going to succeed in building your trading business you
must Learn How to Trade. Interestingly enough, the most powerful tools available in
today's hi tech trading arena are in my opinion, not the new ones, they are the
ones steeped in a rich history, the ancient of days.

Candlestick Signals - 400 years old

Fibonacci Sequence - Created "In the beginning" discovered by man recently in

1202

In our previous article Fibonacci Tips For Emini Futures Trading we covered the
basics of Fibonacci Retracements in the context of an uptrend. In this article we
will use the same concept and approach; we will simply apply them in the context of
a down trend. This is a large part of why Daytrading Emini Futures is so
attractive. Unlike investing in a company where you often wait weeks, months, even
years for the stock to appreciate, with Emini Futures, profit opportunities are as
readily available in a downtrend as they are in an uptrend.

Sidebar:

Pattern day-trading rules do not apply to Emini Futures. You are not required to
maintain a minimum $25k account balance as you are when trading Stocks and ETF's.
Check with a licensed broker to make sure you understand the margin requirements
for trades held beyond 3:15PM Central. (866-928-3310)

Fibonacci Retracements In A Down Trend

In a down trend, the basic idea is to be a seller in the market as price pulls back
to a Fib Resistance level. In the examples below we will use both volume and time
based charts. However, just as when we applied Fibonacci Retracements to an
uptrend, any of the following chart types are acceptable.

Volume

Price

Time

Range

Tick

As long as you are using the same swing low and swing high price when calculating
and/or drawing your levels, the style of chart is not relevant. Different charts
serve different purposes, but that is a broad subject unto itself and well beyond
the scope of this article. Suffice it to say, whatever style of charting you are
most comfortable with is the one you should use as we lay your foundational
understanding of Fibonacci and its application in trading.

In the down trending examples you will use your built in fib tool and simply click
the swing high and drag your cursor to the swing low and release your mouse button.
You are simply reversing the steps covered in Part 1. Let's get Fibbing!

The first chart we will use is a Volume Chart

(ES) SP500 Fib Levels

We drew from the swing high at 1459.75 down to the then current swing low at
1451.25. There was no way to know for sure that 1451.25 would be the swing low, but
with each candle that closes lower you simply continue to measure until you reach a
level where you get a minimum 38% retracement. In this example price pulled back to
1454.50 which was a perfect 38% retracement to the tick. In this example the
difference between the 38% and the 61.8% retracement was 2 points as opposed to our
previous example which was 2 ticks. The entire area from the 38% to the 62%, or
1454.50 to 1456.50 is an "area" and quite suitable for this example.

We of course have the benefit of using a historical chart to present the perfect
"textbook" example. In real time when trading live you must be able to think on
your seat. (Unless you trade standing) From the 38% pull back @ 1454.50 we had an
initial drop to 1449.75 or 4.75 points. If we measure the entire move after the
secondary pull back we drop to 1447.75 and have a potential maximum profit of 6.75
points.

Keep in mind, we had the luxury of locating a perfect "textbook" example after the
fact. If we had sold the 38% retracement on "blind faith" what was our risk? A draw
down to the 50% level would have been 1 point. A draw down to the 62% level would
have been 2 points. A draw down to just above the swing high would have been 5.75
points if we want to maintain the integrity of being at least 2 ticks above the
swing high which is what we recommend. The question you have to ask yourself is
"Does my account size and risk profile allow me to risk 5.75 points on one trade?

Although this trade ultimately made a very nice move down to 1447.75, the initial
target in real time would have been the previous swing low at 1451.25. This reality
check changes the dynamics. From the 38% retracement entry at 1454.50 to the
previous swing low is 3.25 points. Please understand, 3.25 points profit is a very
nice trade indeed, in fact it's what we call "A Day's Work". If you are trading 1
contract, as you should be if you are new to trading, the potential income from
this trade would be $162.50 before commissions.

Sidebar:

If you are a self directed trader who executes your own trades via an electronic
platform, your transaction cost per trade should not exceed $7. That figure
includes the cost to enter and exit the market per contract. This figure must be
factored in as you write your Business Plan. This is a fixed cost of doing business
and will also affect your written Trading Plan. In the absence of both a written
Business Plan as well as a Trading Plan, you do not yet have a business, you have a
hobby.

The difference between trading 1 contract and 10 has nothing to do with money by
the way, it has everything to do with your maturity as a trader. Just as earning
$1,625.00 on 10 contracts might seem easy on the surface, losing $1,625.00 is the
alternate reality and potentially far more devastating psychologically than
financially. If you are willing to risk 5.75 points for a potential profit of 3.25
points I suggest you rethink your business plan as well as your trading plan. A
risk to reward ratio negatively skewed will make it very difficult to keep the
doors open on your Emini Trading business. Sometimes we simply have to pass on the
most picturesque opportunity because the numbers don't line up. As I mentioned in
Part 1 of this discussion, moving from Retail Trader to Professional Trader will
require you to recognize that no position is a valid position.

I have now wandered far outside the scope of this article so let me reign it in and
get back to helping you master Fibonacci as an Emini Trading Tool. Let's look at
another perfect textbook example on a time based chart.

(ES) SP500 Fibs - Hourly Chart

Using an hourly chart we are able to readily identify a significant swing high at
1439.25 and a swing low at 1427.25. The initial pull back was to the 38% level. The
38% level failed to hold and price pulled up to the 50% retracement. The 50% level
held briefly but ultimately the market rallied to the 61.8% level before reversing.
Since we are on an hourly chart it is not surprising, but expected that the price
range between levels will be significantly larger.

If you sold the 38% level on "blind faith" your draw down in this example would be
from 1431.75 (rounding down as the market only trades in 1/4 point increments) up
to 1434.50 or a total of 2.75 points. Courtesy of this historical chart we can see
after the fact that was all the risk we needed. In real time the story is somewhat
different. Whether we entered at the 38/50 or 62% level, a stop based on our
methodology would need to be a minimum of 2 ticks above the swing high or 1439.75.

The difference between 1439.75 and 1431.75 is 8 points. In a live market our
initial target would be the original swing low that got us into the trade -
1427.75. If you entered at the 38% level your anticipated profit on 1 contract
would be 4.5 points. An entry at the 50% level presents a potential profit of 6
points. If you were extremely patient and waited for the 62% level to enter, your
potential profit was 7.25 points. Because we teach, train and trade an aggressive
risk management methodology, the risk/reward ratio would not have met our criteria.
Interestingly enough, price sailed right through 1427.25 all the way down to
1416.50. Were we shocked, stunned, dismayed, and discouraged? Did we wind up in a
fetal position on the cold concrete floor of our War-Strategy-Break Room?

Not this time. We have a Business Plan and a Trading Plan which we do not deviate
from. As a result, we will miss opportunities from time to time which in the rear
view mirror look very handsome. The good news is, within short order an equally
appealing trade that ticks every single box on our plan will come along and we will
be prepared to act confidently and without hesitation.

Let's move on to a "not so perfect" textbook example:

(ES) Fibs Hourly Downtrend 62% Retracement

Our swing high is clearly established at 1434.50. Our swing low is equally as clear
at 1416.50. This a significant move of 18 points and a great place to draw some
Fibs. The 38% level at 1423.38 offers no resistance. The 50% retracement at 1425.50
also offers no resistance. In this example, one hourly candle moves all the way up
to the 62% retracement at 1427.62 (round it down to 1427.50) before we run into any
resistance whatsoever. Price not only meets resistance, it appears to be spell
bound as it remains trapped in a 2 point range for the next 4 hours. If I were
looking for a place to put "blind faith" to work, this would be the spot. Let's see
what happens next -

(ES) 62% Retracement Fails To Hold

Clearly without a hard stop in place it would take very few trades such as this one
to take you out of the ball game for good. Your business plan and your trading plan
must both clearly address the use of a hard stop to prevent just this type of
catastrophe. A few ticks above the swing high would have put your stop at 1435. We
can clearly see that this was no simple pullback in a down trend, this was a stone
cold reversal that rocketed all the way up to 1450 and beyond. That would be a 15
point draw down or $750 on just 1 contract. You may be thinking, "Surely it can't
go any higher, it'll come back".

Those are some famous oft-spoken "last words".

(ES) Pull Back Becomes A Reversal

Other than simply using a hard stop, was there any other way to address this setup?
Of course, there always will be. However, no matter how many back up plans or
clever ideas you have, nothing can offer the sense of safety and security that
comes with having a hard stop in place on every single trade. It is the cheapest
disaster insurance you will ever purchase. Don't leave home without it.

In this lesson we have learned how to draw Fibs in the context of a down trend and
how to execute while maintaining a proper stop loss. We have also evaluated how to
determine if a specific setup that the market is offering meets our risk profile
criteria, or whether we should be content to wait for the next opportunity to come
along. We also know exactly what it looks like when a pull back is no longer a pull
back, but instead has become a reversal.

In the 3rd and final installment of this series we will address Fibonacci
Extensions and how they can assist us in projecting price targets in our Emini
Futures Trading.

Sunday Night "Real-Time" Globex

We have used historical examples to teach you the principles of using Fibonacci
Retracements in your Emini Trading business. Tonight we have the opportunity to
show you a real time chart. We will update it through the night to give you a
better idea of what it means to "think on your seat".

(ES) Real Time Fibbing

At this point 4:39PM PDT, we do not know for certain if 1421.00 will indeed be the
swing low. Our job now is to be patient and wait to see if price pulls back to one
of the fib levels highlighted on the chart. If price trades lower before giving us
a minimum 38% retracement, then we will know that we have not yet established the
swing low. Before we can take any action we must be certain that we have a clearly
defined swing high and swing low.

Stay tuned... we will post additional charts as the session progresses.

8:30PM PDT Update

(ES) 50% Retracement In Real-Time

As of 8:30PM PDT we not only have a clearly defined swing low, we also have a pull-
back in a down trend to the 50% Fib Retracement Level. Do you sell here? If so,
where should your stop be? Where should your target be? We will continue to update
this chart as the session progresses and we will discuss the trade and field your
questions tomorrow morning in the Live Trading Room and on the Daily Radio
Broadcast.

10:06PM PDT Update

(ES) 62% Fib Retracement Level Challenged

Price appears to have "blown through" the 62% retracement level and has now reached
1428.75. If you sold the market on "blind faith" at the 38% level or 1424.75 (you
have to round down to the nearest 1/4 point tick) you would currently be in a
drawdown of 4 points. Had you entered at the 50% Fib level you would be in a 2.75
point draw down? If you waited for the 62% Fib level at 1427.25 your draw down is
1.5 points.

No matter where you entered, where is your hard stop, your target? We will be back
with another update as the session progresses.

11:23PM PDT Update

(ES) Late Night Fib Check - Hourly Chart

Throughout the Live Blogging Event we have used a volume chart. Price seems to have
now taken a breather for the past 90 minutes at the 1428.75 area. To gain some
clarity let's increase our altitude. Using an hourly chart we are able to clearly
define Thursday's high of 1459.75 as our swing high. We have pulled fibs down
across Friday's price action and into tonight's Globex activity.

As you can see from this vantage point we do not yet have a clearly defined swing
low on an hourly chart. To reach the 38% Fib Retracement Level, price will need to
continue climbing to 1435.65 (1435.50 as we round down to the nearest tick). Go
back to the previous chart and look for 1435.50. It's "off the chart" as they say.

We have spent the bulk of this exercise tonight in real time, seeking a spot to
potentially sell the market. Correct? There is another term for that - "Tunnel
Vision". The only way to make you truly see it, was to blind side you with it. On
the hourly chart where I have placed the yellow arrow, this represents the first
hourly close above our primary indicator as discussed in our first lesson on
Fibonacci. On every chart after a substantial move, I anticipate at least a 38%
retracement.

Define Substantial Move: The current Daily ATR for this market is 15.4. From
Thursday's high to tonight's low the market has dropped 39 points or roughly 2.5
times the daily ATR. However we are talking about 2 days, Thursday and Friday,
along with the 8 hours the market has been open tonight. The math gets a bit tricky
but spread out over 2 1/3 days and we are very close to that ATR figure of 15.4.
Keep in mind, Average True Range has no directional bias. It is simply a measuring
stick that reaches from the high of the day to the low of the day. The default
"look back" window for the "average" part of the ATR formula on most platforms is
14 days.

If 1420.75 really is our swing low, by entering long at 1424.75 our initial target
is 1435.50 which represents a potential 10.75 point rally. Our stop loss would need
to be at least 2 ticks below the current swing low. The risk then is 4.5 points. Am
I comfortable risking 4.5 points for a shot at 10.75? Yes. In this example we would
have utilized aggressive risk management so our stop loss would now be 1 tick above
our entry or we could have exited with a 4.75 point profit. This means if we chose
to remain in the trade we would now have zero risk and have also insured that the
cost of the transaction was covered with the 1 tick of profit.

If we pursued that strategy, the worst thing that could happen is we break even or
if the London open rallies we wake up smiling as our bracket order will have taken
us out at our target. There is also the possibility that we could wake up and still
be in the trade. Either way, with a hard stop in place and a live target in play,
there's no need to toss and turn.

While we are increasing altitude let's also check on the daily chart. We have been
building an ascending price channel since May 16th. Tonight we are bouncing off the
bottom of that channel which is one more thing to consider when deciding which side
of the market you want to be on.

UNDERSTANDING FIBONACCI EXTENSIONS FOR EMINI TRADING

In our first article Fibonacci Tips for Emini Futures Trading we discussed the
application of Fibonacci Retracements in the context of an uptrend. In the second
article of the series Fib Tips For Emini Traders - Part 2 we discussed the same
principles with a focus on their application in the context of a down trend. Both
articles are complete with chart examples and in Part 2 we also used a Live
Blogging format during the Sunday night Globex open. The purpose of the exercise
was to move away from a purely historical chart and give you real world exposure to
the Hard Right Edge.

In the third and final installment of this series we will take a look beyond the
hard right edge and examine how we might use Fibonacci to help project possible
targets for the next leg of an uptrend or a down trend. Fib extension levels, are
based on the Golden Ratio just as our retracements were and we will plot them as
horizontal lines either above or below current price action.

Fibonacci Extensions In An Uptrend

In an uptrend your goal is to establish potential points for taking profits at

Fibonacci Extension Levels. To determine the levels that you will use:

#1) Click on a significant Swing Low

#2) Drag your cursor up and click on the most recent Swing High.

#3) The final step is to drag your cursor down and click on the retracement Swing
Low.

Your Fibonacci Extension Tool which is built into dtPro and most other trading
platforms, will now display each of the targets including the ratio as well as the
corresponding price level. Here is an example:

(ES) S&P 500 - Fibonacci Extensions

In the chart above we can see that out significant swing low was at 1450.75. Price
rallied to 1454.25 which became the significant swing high prior to the
retracement. Remember, we want to see at least a 38% retracement. There is a
shallow retracement level at .236 which you may choose to use in your Emini Trading
Business. We have found that retracements which fall between the 38% and 62% levels
create the best opportunities for our trading model. With a little patience and
experimentation you will decide whether or not you want to include this level on
your chart or not. Adding it is very simple, simply double click on one of the fib
levels and the Properties dialog box will open.

Using our Fibonacci Retracement Tool we have already established that from the
swing low to the swing high, 1452.50 represents a 50% retracement. Once the
retracement is in, we use our Fib Extension Tool to calculate likely price targets
for our long trades based on the Golden Ratio or Fibonacci sequence. Since we are
dealing with a 50% retracement, a 50% fib extension takes up right back to the
swing high at 1454.25. In this example that would be a move of 1.75 points. A 62%
fib extension says the market can rally to 1454.70. A 100% fib extension which is
equal to the distance from the swing low to the swing high would send price up to
1456.00 which in this example is exactly what happened. This represents a move of
3.5 points.

This example is on a smaller time frame, in fact this is the standard volume chart
that we trade from in the Live Trading Room. While 3.5 points may or may not seem
like a substantial move to you, any day that we capture 2 points net is considered
a day well done. We have an occasional guest on our Daily Radio Program who
averages trading 10k Emini Contracts per day. When asked on live radio what he
considered to be a "good day" in the market, his reply was that any day he netted 2
points in the S&P Emini he considered that to be a great day. If you would like to
listen to some of the archived interviews Google - "Michael X CFRN" or "Trader X
CFRN". He is a very low key and likeable guy, not what you might typically expect
from someone who has a daily goal of earning a million dollars.
Back to my point, whether or not you understand the power of 2 points net per day,
compounded on a consistent basis, let's simply look at the trade above based on its
own merits. How big was the risk required? Because we are in a smaller time frame,
we have the luxury of placing a buy limit at the 38% retracement level. What if it
retraces to the 50 or 62% level? Look at the numbers:

38% = 1452.92 which rounded up to the nearest tick is 1453

50% = 1452.50 we don't need to round this number

62% = 1452.09 which we will round down to the nearest tick at 1452

Here's my point, from the 38% level all the way down to the 62% level is exactly 1
point. We always like to have at least a couple of ticks for "breathing room" as
they call it, so in this example placing a limit order to buy at 1453 would have
allowed you place your stop loss 2 ticks under the 62% level so the total risk on
the trade would be 1.5 points. Anytime I spot an opportunity in the market to risk
1.5 points for a potential profit of 3.5 points is a situation that I find very
compelling because if there is any sign of weakness beyond the 1.5 to 2 point mark
I can gracefully exit the market with pep in my step and a profit in my pocket.

If we look farther up the chart there is another fib extension at 161.8%. Is it

possible the market could actually move that far on a trade where you have
skillfully reduced your risk to a mere 1.5 points? Great question! Let's have a
look -

(ES) S&P 500 - Fibonacci Extension 161.8%

The answer is obviously a resounding Yes! Are there extensions above the 161.8%
level? Yes there is. Did we skip over the 138.2% level? Yes we did. I would like
you to attempt to re-create this chart or a similar chart and project price targets
using the Fib Extension Tools. I also want you to open the properties of the tool
as previously discussed and include the 138.2% level. If you will complete this
simple exercise, you will be well on your way to learning to use Fibonacci as both
a confirmation and projection tool in your Emini Trading Business. One final note
on this chart, once the rally was over, look at the candlestick that marked the end
of the advance; our friend the Doji.

Fibonacci Extensions In A Down Trend

I will now show you an example of using the Fib Extension Tool to project potential
price targets in a down trend. All steps are simply reversed. First we use our Fib
Retracement Tool to determine at what price we might anticipate the market
reversing the counter trend move and continuing with the down trend. If you need
help with the steps, refer to the previous 2 articles referenced at the beginning
of this post or give us a call.

(ES) S&P 500 - .618% Retracement

We have clearly established that our swing high is 1411.75 and our swing low is
1404.25, a total move of 7.5 points. Without even using the tool we can quickly
calculate in our head that 50% of 7.5 is 3.75 points. On the first leg up price
does in fact run right to the 50% fib level, stumbles a bit, and then resumes the
move right up to the 62% fib level. The 62% retracement is 1408.88. The swing high
of the retracement is 1409.50.
The distance between the 38% level and the 62% level is roughly 2 points as both
numbers need to be rounded to the nearest tick. If you entered at the 38% level on
a limit, and placed your stop 2 ticks above the 62% level, you would have been
stopped out "to the tick". Notice again that our friend, the Doji, signals that the
party is over, for now. You will ultimately need to assess you own risk profile.
You must determine based on your account size, experience and temperament, how much
you are willing to risk on any one trade. If you would like some help fine tuning
your risk profile call Burt or Leslie at 866-928-3310 and they will be happy to
assist you.

If you used stop 3 ticks above the 62% level you're still in the trade. If you
entered at the 50% level, the market actually moved down 2.5 points before it
completed the pull back to the 62% level. Now that we have 3 key pieces of
information -

Swing High

Swing Low

Retracement High

We are ready to project our price targets on the down side. This is where you will
shift to your Fibonacci Extension Tool and follow the instructions above by simply
reversing the order. When you are done it should look something like this -

(ES) S&P 500 Fibonacci 100% Extension

We know that price pulled all the way up to the 62% fib retracement level at
1409.50. Here are our targets on the way down -

38% extension = 1406.75 or 2.75 points

50% extension = 1405.75 or 3.75 points

62% extension = 1405.00 or 4.50 points

100% extension = 1402.00 or 7.50 points

Does 7.5 points sound familiar? That was the size of the original move down from
the swing high to the swing low. A 100% fib extension simply duplicates the size of
the original leg. Is there more?

(ES) S&P 500 Fibonacci Down Trend Extension 161.8%

Price bounces around the 100% fib extension at 1402 and then moves back up to the
61.8% extension at 1405. Look left and notice how we are challenging not only the
original swing low but also the area created by the original move down to the 61.8%
level. This is an example of Support becoming resistance as detailed in our article
Learn to Trade Emini Futures - Support And Resistance. From the 62% fib retracement
level to the 161.8% fib extension level the market dropped a total of 12 points.

This completes our 3rd and final installment of Fibonacci Tips For Emini Futures
Trading. If you have any questions or would like to arrange private instruction
please give us a call or drop us an email. I will leave you with a chart on the
hard right edge of the current market. The markets are closed for the weekend so be
sure to watch the Globex open Sunday night and see what happens to the following
fib retracements and projections.
(ES) S&P 500 Emini Futures - Fib Retracements and Price Targets

THE SPECIAL OFFER

If you need a platform and charts to watch the Globex open, DOWNLOAD IT HERE.

About DeWayne Reeves

DeWayne Reeves is the founder of CFRN and host of a popular radio program heard
daily in over 20 countries. A former equities trader, he has focused primarily on
the S&P 500 Emini Futures Market for the past 10 years. His insights and trading
methodology are a blend of traditional technical analysis and the strategic use of
proprietary indicators. He is the founding director of New Hope Orphanage and
Primary School in Kampala Uganda East Africa which is home to over 800 orphans. Mr.
Reeves currently resides with his wife in Phoenix, Arizona, where he actively
trades his personal account.

Back to Table of Contents

Powered By ClickFunnels.com