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Forex Fundamental Article:

Learn About The Icwr Forex System
By Jon Provencher
ICWR stands for means Impulsive/Corrective Wave Retracement. The ICWR system is a number of conditions that traders use to determine entry and exit points in trading the market.

The ICWR system is based on a combination of the Elliott Wave Theory and Fibonacci ratios. Traders have discovered that corrective market movements have a inclination to retrace the prior impulsive market movements by a Fibonacci ratio.

So what are corrective market movements? Corrective market movements are short-term corrections that go against the long-term market trend. The major market movements in in alignment with the long-term market are named impulsive market movements. Bring up a chart of any major currency (say the GBP/USD) with the interval set on daily and you will see clearly the long-term trend, along with several corrective market movements.

The most common Fibonacci ratios observed in the ICWR system are 25%, 38%, 50%, 61% and 75%.

Many traders use the ICWR system with an existing entry system to help refine their exit strategy to take out the maximum gain possible out of the trade. Many traders have discovered that managing a trade and determining the time to exit
is more important than selecting an entry point and direction to trade in.

The ICWR system is very easy to use. Simply open up a chart of a time frame you would like to trade, find the prior impulsive wave (in the direction of the long-term trend) and compute the Fibonacci ratios. Now record the Fibonacci ratios on your chart. For example if the prior impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% place a line 25 pips below the maximum of the impulsive wave. Many charting packages come with a Fibonacci function built in, calculating the ratios and drawing in lines for you.

These Fibonacci ratios can then be put to use in a number of ways:
- go your stop loss with every impulsive wave in your favor to maximize gain and minimize risk (the 75% ratio is often used for this)
- estimate when the corrective wave is likely to end in order to estimate the best entry points.

Traders often tend to worry when their trade is in gain and it begins to go against them. By using the ICWR system you will be ready to ride out the corrective market movements in order to take out the maximum gain from your trades.

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