percentage of finding a winning trade. The natural law of the Fibonacci
numerical sequence is not capricious, it works on every time frame and in
every market. It is just as valid in the Forex as it is in the stock or
commodity markets. As a matter of fact, anywhere you can pull up a
financial chart, on any time frame, you will see the Fibonaccis in action.
I will never forget one class I taught in Sydney, Australia, when I met an
older gentleman, named John, who introduced himself to the class by stating:
“I have come to take your course because three years ago, I bought $250,000
worth of Qantas stock at $2.00 a share. I told myself when it hits $5.00 a share,
I’m selling.” He proceeded, saying, “That #@*#@* stock went to $4.90 cents
a share, looked at all my sell orders, laughed in my face, then U-turned and is
now back around $2.00 a share. I came here to figure out what happened and
why I was so greedy and didn’t sell at $4.90 a share. That was my retirement
money.” This reminded me of a saying my dear friend and mentor Fred
Gronbacher taught me, it goes something like this: “The ignorant must suffer.”
I told John, and the class, “After I teach you how the markets work, on
the last day of the class, we will pull up a chart and look at Qantas stock.
Mark my words, and write this down right now.” Everyone grabbed a piece
of paper and started writing. “On Saturday, when we pull up the chart, at
$4.90 there will be a bearish candlestick formation at a D Fibonacci extension
level followed by an uptrend line break, the reversal will create a
bearish ‘king’s crown,’ and the market will begin to make down A, B, C, D
all the way down to $2.00 a share.” I would have showed all of them at that
moment what I was talking about, but it would have been of no value until
they finished the course.
After class on the third day, we pulled up a Qantas chart and, sure
enough, right before everyone’s eyes was one of the most beautiful evening
stars at a D Fibonacci extension level. This was followed by an uptrendline
break, a bearish king’s crown, and down A, B, C, D’s. John jumped up out
of his seat as he was sitting on the first row and, in front of 45 people,
grabbed me, gave me a bear hug, and kissed me on my cheek. The class
began to laugh, but as John pulled away, he looked at me with a tear in his
eye, whispering “Thank you, chief!”
It has been from countless moments like these, shared by great people
like John, that I have found my true destiny in life. I have learned we make
a living by what we get, but we make a life by what we give.
CONCLUSION
Knowing where to get into the market and where to get out, and why, is
about as close to the holy grail that you’ll ever get. Understanding that
nature exists in the market, and how it works, places the trader at a huge
advantage. It allows a trader to wait for the retracement bounce at a preprojected
retracement number, having the market move in their direction
from entry, which is every trader’s dream, then riding it to the preprojected
corresponding Fibonacci extension.
As you read the step-by-step rules of trading a trend, try to envision the
movement of the market and the trading process. This methodology works
on all time frames and in all markets.
Read More : The Value Of Adding The Fibonacci Numbers To Our Trading Systems
