My experiment on fibonacci method
Trade In Nifty Using Fibonacci Proportion
This is one of the simplest and fantastic numeric techniques which once can follow with the help of simple calculator to make a wise trade decision in Nifty. In this technique one need to remember few simple Fibonacci ratios and investigate only the high and low price of the day.
In Fibonacci technique we often use few ratios 0.618, 0.82, 0.5, 0.786 and 0.888 after which 1.272 and 1.618. Though many know this ratio but quite few people use it efficiently. On my book on Fibonacci method I have elaborate many advanced concept of Fibonacci technique. However to make a trade decision in nifty future you need to understand the retracement technique.
Retracement technique is of 2 types:
- a. Growth when price raise from the low it is called growth retracement.
- b. Decay when price fall from the high it is called the decay retracement.
To apply this technique in nifty future trading I have made few small modification in the retracement technique. But I have not corrupted the very basic law of the principle.
- 1. I have calculated my long entry point and targets from the mid point of the High and low. Why so? The internal translation of my act of change map to the idea and them of the Elliot wave 3rd wave construction principle. You will find simplest approach to understand the Elliot wave on my Master’s course to Elliot wave principle literature.
- 2. I will keep the stop loss and 1st target at the 0.382 retracement level calculated from the mid point. By this act of change I my placing my trading system in a more secured zone. Technically these 2 points are the sensitive cluster point of Elliot wave-3 expansion in a small degree wave.
- 3. I will keep the maximum target of my entry at the 1.618 retracement level calculated from the 1st target and stop loss point.
- 4. To derive the intermediate targets of my entry I will calculate the mid points of last target and 1 st target and place my trailing stop loss positions.
That’s it … only 4 calculations are enough to pay me the reward.