فوركس ساتو

BASIC STRATEGY - VARIATION 2
This variation of the basic strategy is use primarily when your
swing, or wave, is between 20 pips and 40 pips. In this variation we
start to use some Fibonacci techniques, but with a bit of a twist.
It is not my objective in this eBook to teach you everything about
how to use Fibs, but let me explain it very briefly here, and later in
this eBook I will explain in more detail. I’m not going to go in great
detail here. forex sato
Some Italian guy (Leonardo Fibonacci – he was a mathematician)
who lived hundreds of years ago discovered an interesting series of
numbers. He found that if you add a number to its previous number
in the sequence over and over again that you come up with a
mathematical numerical sequence. The number sequence goes on
like this – 1, 1, 2, 3, 5, 8, 13, 21… and so on. The next number of
this sequence would be 34 because if you add 21 to it’s previous
number of 13 then you get 34. He has demonstrated that nature uses
this numerical sequence series in many various ways, and it explains
the growth patterns of seashells, pinecones, sunflowers, trees, the
reproduction of rabbits, and many other things in nature (including
humans). If you are interested to learn more about him I’m sure you
can find links by doing a web search on “fibonacci”.
To make a really long story short, it’s been demonstrated that the
markets (FOREX, stocks, commodities… all of them) behave in
patterns corresponding with Fibonacci’s numerical sequence. Fibs
FOREX Surfing Draft  ....forex sato
are truly powerful to use to determine with a very high probability
where prices will turn around, and can be used to enter the market
very close to the lowest price that it’ll go, and exit the market very
close to the top price. This is truly an amazing technique, and I’d
say that it is very worthwhile learning as a FOREX trader. It is
especially powerful when you learn advanced Fib techniques
(Convergences and Gartley’s – dealt with in my other eBooks). I
will cover some more Fib techniques later in this eBook.
Back to the strategy variation #2. Again, this strategy is particularly
useful for waves that are between 20 to 35 pips.
With this variation we’re going to apply a bit more Fib principles.
When the wave you are looking at makes a new high (and it’s
between 20 to 40 pips from the last significant low) then this is what
you do.
First you add the price of the high to the price of the low, then you
divide the number by 2. If you have an odd number of pips then
round your divided number up to a full pip (i.e. 1.2033(high) +
1.2000(low) = 2.4033 then divide by 2 = 1.20165 = rounded up to
1.2017). What you have just done is you’ve figured out where 50%
of the swing is. 50% is one of the key Fib levels of support.
To those of you who already know how to use Fibs – I know that
typically you’ve learned to enter at the 61.8% level. This is true for
most trades that you would do using standard Fib theory, but please
keep in mind that we’re talking about a highly specialized trading
method on “Micro Trends”. Most often on a Micro Trend the prices
will bounce at the 38% or 50%, and if it goes down to a 62% or
even a 79% then it’s showing that your Micro Trend is running out
of steam and may soon start to reverse. If your swing is larger than
40 pips then feel free to use standard Fib trading methods.
Now what you do is you place an Entry Order to go long if the price
drops down to your 50% level.
For your stop you use the last significant low (the bottom of your
wave). This means that your risk is only 50% of the size of the
wave. So if your wave is 20 pips then your risk is only 10 pips. If
FOREX Surfing Draft
your wave is 30 pips then your risk is only 15. If your wave is 40
pips, the biggest wave you’d use with this strategy, then your
maximum risk is only 20 pips! (Read about Broker’s spreads
below).forex sato
Remember how I promised that you could trade with tiny risks!
Well now you understand how you could pull off trades with a
maximum risk of 20 pips! Many of you who read my website wrote
me asking how this is possible (usually “experienced” traders who
are used to 30 to 150 pip stops). Well now you know!!!
How about your limit? What you do is you figure out how many
pips your wave is then you add it to your entry price. That’s it. So
if your wave is 20 pips then you’ve got a 20 pip profit to 10 pip
stop. If your wave is 30 pips then you’re going for a 30 pip profit
with a 15 pip stop. If your wave is 40 pips then you’re going for a
40 pip profit with a 20 pip stop. You’ve got a 2:1 profit-to-loss ratio
here now.
From the example numbers we used above (high= 1.2033, low-
1.2000) you’ll see that this wave is 33 pips. We add 33 pips to the
50% number (1.2017) and we get 1.2050. So for this example you
would set your limit for 1.2050.
Well here is the cool part (remember how in the preface of this
eBook I said I tend to notice interesting things most people miss? I
bet you’ve never thought of this.) This part is for all of you reading
this who understand Fibs. What’s the standard extension for a 50%
bounce? If you said 1.618 then good for you. The 1.618 extension
for our example would be 1.2053, 3 pips above our limit order
which is of course what you’d want to do – exit a few pips before
extension level. Go ahead, try the math with a 20 to 35 pip swing…
works every time! So you see, the simplistic math I use for this
particular strategy works with the more difficult math of Fibs. Who
says that things have to be complicated to work?
Now this part is important. As soon as the market price reaches
back up to the high then what you do is you replace your stop to
your entry price. Now look at what you just did. You’ve just set
your loss to zero, so now the worst thing that can happen is that you
FOREX Surfing Draft
lose nothing but can gain 20 to 35 pips! Why? Remember the
General Principle is that it’s unlikely for it once it crosses the top for
it to go back to the bottom. Of course your stop may be a few pips
higher than the true bottom, but at this point if it goes back down
(after it’s crossed the top) then it’s better to risk zero than anything.forex sato