Saturday, January 19, 2008

Fibs Don't Work For Me (Q & A Part II)

Continuing the Q & A series of posts:

Suresh asks: Do you use Fibonacci retracement levels for your break-out pull back and earning set up trade ? (I remember seeing DCO was at at 38% FR level when you pulled the trigger)

Market Speculator answers: While I do trade retracements (pullbacks), I do not use Fibonacci numbers. Rather, I look to enter on orderly pullbacks to support.

Before I use a system, I demo trade and analyze my results. Over the span of three months I made over 100 trades using Fibonacci retracements. I also demo traded the same stocks using my normal pullback method. While both groups made gains, the Fib group trailed my pullback system by over seventy percent.

This does not mean Fibs don't work. However, I have no use for them in my own trading.

Suresh: Apart from price and volume action, what oscillators/indicators that 'ALWAYS' you validate before getting into a trade?

Market Speculator: See the previous Q & A. Short answer is I don't need any indicators for validation, though I do pay attention to stochastic and obv.

On the day before you take a trade, do you check 5-min or 60-min
charts for arriving at the right entry price?

Market Speculator:
It depends on the trading setup and time frame. When I trade very short term strategies (hours to 2 days), I'll look at intraday charts. However, for most of the trades I make here, I am only looking at the daily.

No comments: