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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