ICWR phenomenon example part 1

Here is an example of a GBP/USD trade exit by using our strategy.

The purpose of the example below is to give you a glimpse into the exit part of the strategy. Suppose we entered the market short at point A buying 10,000 USD at the entry price of 1.9075. For the first moment the market moved into our direction and reached the point B. At that point the market reached a value of 1.9028. That means 48 pips in our direction. So far, so good.

However, after the point B the market starts an upward movement. What to do now?

Inexperienced trader would close the position as a scared rabbit, happy to take even small profit from the trade. But this would be the wrong decision. Why?

Remember,we have to “let the profits run”, if we want to make trading profitable in the long run.
So what do we do?

The essential question is:

When do we decide that our trade has run out of steam and should be exited ?

This is where our strategy comes into play. By using the “Impulsive/Corrective Wave Retracement Trading Rules” we will find the best possible time to exit the trade and extract maximum profit from each trade.

In order to apply our trading strategy the following trading setup has to be done. First of all the highest and the lowest value of the downward movement are determined. In our case the extreme values of the downward movement are point A and point B. We will connect them with the thick blue line.

Further on we draw the Fibonacci levels using the lowest value of the downward movement (point B) as the starting point (level 0.000) and the highest value of the downward movement (point A) as the ending point (level 1.000). As we are only interested in the 0.000, 0.250, 0.382, 0.618, 0.750 and 1.000 levels, only these levels will be drawn.

We are going to exit the position only in the case that the price goes beyond the 0.750 level, i.e. if it happens that a whole candlestick is above the 0.750 Fibonacci level.
The upward movement retraced at the 0.618 Fibonacci level approximately at point E. As the price didn’t move beyond the 0.750 Fibonacci level we remain in the market. Let’s look what happens next.

Continue to ICWR phenomenon example part 2
Read again about ICWR phenomenon system
Read one of the most famous forex signal WolfWave
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