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Profit with the ICWR Forex Strategy

By : Jon Provencher
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ICWR stands for=means Impulsive/Corrective Wave Retracement. The ICWR forex system is a number of rules that traders use to determine when to enter and exit the forex market.

The ICWR forex system is based on a mix of the Elliott Wave Theory and Fibonacci ratios. Traders have discovered that corrective waves have a inclination to retrace the former impulsive waves by a Fibonacci ratio.

So what are corrective waves? Corrective waves are short-term corrections that go against the long-term market direction. The major waves in the direction of the long-term market are named impulsive waves. Bring up a chart of a major currency (say the GBP/USD) with the interval set on daily and you will easily see the long-term direction, along with several corrective waves.

The most recurring Fibonacci ratios observed in the ICWR forex system are 25%, 38%, 50%, 61% and 75%.

Many traders use the ICWR forex system with an existing entry system to assist with their exit strategy to take out the most gain possible from the trade. In fact many traders have discovered that managing a trade and determining the exit point is even more important than choosing an entry point and direction to trade in.

The ICWR forex system is very easy to use. Simply bring up a chart of an interval you want to trade, find the former impulsive wave (in the direction of the long-term direction) and compute the Fibonacci ratios. Now record the Fibonacci ratios on your chart. For example if the former impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% you will place a line 25 pips below the top of the impulsive wave. Many charting packages come with a Fibonacci utility built in, calculating the ratios and drawing in lines for you.

These Fibonacci levels can then be used in several ways: - go your stop loss with every impulsive wave in your favor to maximize gain and minimize risk (the 75% ratio is frequently used for this) - determine when the corrective wave is probable to end in order to determine good entry points.

Traders often tend to worry when their trade is in gain and it begins to go against them. By using the ICWR forex system you will be ready to ride out the corrective waves in order to take out the most gain from your trades.

For more information on trading forex visit the link below.

About the author:
Jon is the owner of iBlogForex, a blog about every aspect of the Forex market including Forex trading methods and strategies.


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