Spud’s MTF FIB Breakout System Trading

Spud’s MTF FIB Breakout System
Ever since I learned about Fibonacci numbers they have interested my pure mathematical statistical side into a compulsiveness. Having said that, it seems for such a simple sequence of numbers they can lead to very complicated methods of trading.Here’s a simple day trade system with stochastics and Fibonacci numbers that may give you a winning edge in your trades.
Spud's MTF FIB Breakout System Trading 1Indicators:

Stochastics 5,3,3 and 14,3,3 (high/low, simple) ….use only %K line and overlay in one indicator window.

Fibonacci set levels to:
0 label as 100
.764 label as 23.6
.681 label as 38.2
.500 label as 50.0
.382 label as 61,8
.236 label as 76.4
1 label as 0
Always draw the Fib line from the previous days low to high.

At the close of the trading day (call this the previous day since this day is now over) draw you Fib line from the previous day’s low to the high and draw it so the level lines extend into today (i.e. set your chart up with a shift)

Look for the price to break the 100 or 0 level of the Fib. You can do this by watching or setting a long order a little above the 100 level or a short order a little below the 0 level. You want the price to pass the 100/0 level not just touch it.

Meanwhile…..take a look at the stochastics….when/prior to/or just after the price breaks the 100 Fib line you can almost be certain the stoch is breaking the 80 line or higher….well we want it to be or we will wait for it to do it and then we enter the trade. Similarily if the price breaks the 0 line we want the stochastic in the 20 or below area.

You can take a few more risks. In a long; if the stochastics are climbing together after a down move and a turn up; or if the stochastics have crossed 20 and are moving up.

When the price breaks 100 (long as an example), move your FIB line up so that the 0 line is where the 100 line was. Exit when you hit 23.6 (123.6), 38.2 (138.2) and/or so on.
Let the stochastics be your guide….if they both or one stays above 80 keep riding the trade.
The 14,3,3 stochastic has more bearing on the trade than the 5,3,3, however both together is perfect harmony.

What’s MTF and Where is It?

MTF = multiple time frame and it is in the 5,3,3 and 14,3,3 stochastic.

Time Frame
I use the 1H chart for daily. You can use the 4H chart but then you are trading weekly then. I would not use a smaller time frame than 1H as you start to lose the reliability of the Fib.

This is universal, but I love the GBPJPY. You want pairs that have some good daily range as you want wide Fib numbers so you can make some pips!
If you are trading the smaller day range pairs, use the 4H/weekly fib.

Umm..Isn’t This Just A Breakout Above Yesterday’s Hi/Lo?

Well it is if you just trade the breakout and use the stochs….but ohhhh laddie there is sooo much more to this simple system……
The Fib levels give you exit targets, use the Fib/stochs and get used to it….you won’t be sorry and you’ll understand what comes next (in a little while) a whole lot better.

Here’s a picture…hopefully it speaks a 1,000 words:

Attached Image
Spud's MTF FIB Breakout System Trading 2
Here’s another long example…notice the stochastic exit indication.Also I’ve added a few Fib levels to make life easier. The Fib levels are now:
-1 label as 200
-.764 label as 176.4
-.681 label as 168.1
-.500 label as 150.0
-.382 label as 138.2
-.236 label as 123.6
0 label as 100
.236 label as 76.4
.382 label as 61.8
.5 label as 50.0
.681 label as 38.2
.764 label as 76.4
1 label as 0
1.236 label as -23.6
1.382 label as -38.2
1.500 label as -50.0
1.618 label as -61.8
1.764 label as -76.4
2 label as -100
Attached Image
Spud's MTF FIB Breakout System Trading 3
The following 3 charts on next 3 posts are for 3 consecutive days…show how you can follow a continuous down trend…like could this be any easier!Notice on this chart there is a fake break above 100…see the stochastic…stochastics never lie (well most of the time).
Attached Image
Spud's MTF FIB Breakout System Trading 4
Attached File
File Type: mq4 #SpudFibo.mq4   8 KB | 395 downloads
File Type: mq4 Average Daily Range.mq4   5 KB | 498 downloads
File Type: ex4 Average Daily Range.ex4   6 KB | 346 downloads


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