In this article, I want to share with you my trading strategy. It will work almost always because it is based on the psychology of crowd behavior in the market.
I developed this strategy through trial and error, based on other strategies, as well as combinations of various strategies of other traders.
Let me begin in order:
First, you must find a sharp impulse on the chart of price movements, best of all if it’s sharp with large candles, and it doesn’t matter which way up or down.
Then after the impulse, there should be a consolidation, and the longer the better.
After that, it is followed by approximately the same impulse that was before the consolidation. Here is an example of how it should look like:
As you can see, the large arrows indicate the impulse and the small arrows indicate internal price movements. But let’s look at this on a price chart using the example of cryptocurrency $XRP
After we have found a shape similar to the “staircase”, which corresponds to the picture above, we start scattering the Fibonacci grid. How do you draw it correctly?
Find the middle of the consolidation.
Draw a line from the end point of the consolidation support line to the beginning of the first momentum.
Disable all unnecessary values on the instrument (leave only the main Fibo numbers — 1.618, 0.618, 0.236…) and call the main lines gold, thus emphasizing the golden ratio.
Now we see that the price has touched or is still moving sharply to the lower gold section (in this case it is the value of 1.618).
Important! If the impulse is weak or small, it means that the figure is broken and we do not consider this situation.
What is the basis for this strategy?
This strategy is based on the fact that we will catch the price bounce from the bottom line and in most cases, the price corrects back to the middle of the consolidation after the impulse.
Risk/profit is 1:4
This means that one successful trade can be equal to four losing trades, which is 75% of profitable trades if we count the numbers.
Here’s another example with $FIL
The principle is the same — find our pattern and conduct Fibo, wait for a rebound.
But if the price did not reach the level (the second impulse), it doesn't mean that you drew the wrong Fibonacci, it means that there is a different situation and this strategy is no longer under consideration.
One of the disadvantages of this strategy is that it is rare to find such situations, but they often work. Also, remember there is no one strategy for 100% profit, you need to consider many factors at once and combine them for confirmation, especially good if there are a few figures and confirmations at once for your planned situation.
If you're still here, I'm glad you have a craving for knowledge and are expanding your horizons. Don't stop learning and improving!