ArticleMap.com

Maximise profits with the ICWR Forex Strategy

ICWR stands for means Impulsive/Corrective Wave Retracement. The ICWR forex method is a number of conditions that traders use to determine entry and exit points in trading the forex market.

The ICWR forex method is based on a combination of the Elliott Wave Theory and Fibonacci ratios. Traders have found 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 trend. The major waves in in alignment with the long-term market are called impulsive waves. Bring up a chart of any major currency (say the GBP/USD) with the interval set on daily and you will easily see the long-term trend, along with several corrective waves.

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

Many traders use the ICWR forex method with an existing entry method to help refine their exit strategy to extract the maximum gain possible from the trade. Many traders have found that managing a trade and determining the exit level is even more important than selecting an entry point and direction to trade in.

The ICWR forex method 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 trend) and compute the Fibonacci ratios. Now enter 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 maximum of the impulsive wave. Many charting packages come with a Fibonacci tool built in, calculating the ratios and drawing in lines for you.

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

Many traders tend to worry when their trade is in gain and it begins to go against them. By using the ICWR forex method you will be better prepared to ride out the corrective waves in order to extract the maximum gain from your trades.

For more information on trading forex visit the link below.

Article Source: http://www.articlemap.com

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

Please Rate this Article