roughbert
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Maybe a bit of a curiosity but there's a tool here Free Analysis Tools for Investors and Traders which can draw a Fib retracement over any chart - like a Yahoo! chart, for example.
Hi Bennie,
I do not know if this will answer your question.
There is always an overriding trend. It depends on how you want to slice it. A single candle on one timeframe can be a trend on a lower timeframe.
If for example on the daily chart there is a single candle, on a lower time frame chart like the 5 minute you can usually find a trend. Generally I like about a 25 or 30 pip move for a fib but have drawn fibs on smaller moves. It depends on the timeframe. Personally I believe the larger the move the better. Others may have differing opinions based on their experience. I have drawn fibs on single candles as well. Generally I do not trade the lower timeframes but do use lower timeframes to enter a trade on a larger timeframe.
Even within a range on the daily chart, if I feel the range is wide enough, I will use fibs treating the moves within the range as a smaller trend. As a rule I do not trade a ranging issue. You need to understand my trading strategy is most likely a bit different from yours. I am an abc guy who usually swing trades. The context of the different timeframes, as well as the timeframe traded, and context of the patterns themselves………. the big and small picture, is extremely important. So if I see a specific set up in a range I can effectively trade as a trend, I may try to take a few pips out of it, if it still fits my trading plan. In this situation I am usually looking for a wave 1 to develop understanding the range may not be broken. I trade specific types of abc’s which meet my criteria, not every abc that forms. I may play the different abc’s and their sub components differently depending on the overall context at the time. I use fibs on these different legs of the patterns to help determine if the pattern(s) meet my criteria, and to filter out trades which do not fit into my trading plan. Fibs are only one component of my plan. So within the context limited to the daily chart, there may not be an overriding trend since it is a consolidation phase, but under the proper circumstances fibs will still work. So the answer to your question concerning an overriding trend, from my point of view, is both yes and no. It depends on your perspective.
Using fibs my experience is as follows;
1. Determine very clearly what you are trying to accomplish. This is the most important part and the first step.
2. Context is second. Context is a subject all its own, and one I am not going to get into. Context is extremely important and will determine if what you are trying to accomplish is worth pursuing.
3. The method you trade is a distant third. Without 1 and 2 properly sorted out you should never even consider entering into a trade.
4. Fibs are only a tool within the method, and important in technically significant areas, or assisting in determining significant areas. They are used as effective filters to help keep you out of bad trades. At times I may use fibs or failed fibs as a precursor to a trigger to enter into a trade. Others use failed fibs or fibs themselves as the actual trigger. I may use fibs as a stop to exit both good and bad trades, depending on the type of trade and situation. Fibs used properly can help keep your stops closer than using other techniques at times. Fibs also assist in managing trades. Just drawing fibs is a waste of time. You need a purpose in order to use them effectively.
“D”
I do not know if this will answer your question.
There is always an overriding trend. It depends on how you want to slice it. A single candle on one timeframe can be a trend on a lower timeframe.
If for example on the daily chart there is a single candle, on a lower time frame chart like the 5 minute you can usually find a trend. Generally I like about a 25 or 30 pip move for a fib but have drawn fibs on smaller moves. It depends on the timeframe. Personally I believe the larger the move the better. Others may have differing opinions based on their experience. I have drawn fibs on single candles as well. Generally I do not trade the lower timeframes but do use lower timeframes to enter a trade on a larger timeframe.
Even within a range on the daily chart, if I feel the range is wide enough, I will use fibs treating the moves within the range as a smaller trend. As a rule I do not trade a ranging issue. You need to understand my trading strategy is most likely a bit different from yours. I am an abc guy who usually swing trades. The context of the different timeframes, as well as the timeframe traded, and context of the patterns themselves………. the big and small picture, is extremely important. So if I see a specific set up in a range I can effectively trade as a trend, I may try to take a few pips out of it, if it still fits my trading plan. In this situation I am usually looking for a wave 1 to develop understanding the range may not be broken. I trade specific types of abc’s which meet my criteria, not every abc that forms. I may play the different abc’s and their sub components differently depending on the overall context at the time. I use fibs on these different legs of the patterns to help determine if the pattern(s) meet my criteria, and to filter out trades which do not fit into my trading plan. Fibs are only one component of my plan. So within the context limited to the daily chart, there may not be an overriding trend since it is a consolidation phase, but under the proper circumstances fibs will still work. So the answer to your question concerning an overriding trend, from my point of view, is both yes and no. It depends on your perspective.
Using fibs my experience is as follows;
1. Determine very clearly what you are trying to accomplish. This is the most important part and the first step.
2. Context is second. Context is a subject all its own, and one I am not going to get into. Context is extremely important and will determine if what you are trying to accomplish is worth pursuing.
3. The method you trade is a distant third. Without 1 and 2 properly sorted out you should never even consider entering into a trade.
4. Fibs are only a tool within the method, and important in technically significant areas, or assisting in determining significant areas. They are used as effective filters to help keep you out of bad trades. At times I may use fibs or failed fibs as a precursor to a trigger to enter into a trade. Others use failed fibs or fibs themselves as the actual trigger. I may use fibs as a stop to exit both good and bad trades, depending on the type of trade and situation. Fibs used properly can help keep your stops closer than using other techniques at times. Fibs also assist in managing trades. Just drawing fibs is a waste of time. You need a purpose in order to use them effectively.
“D”
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