Candlesticks, Fibonacci, and Chart Pattern Trading Tools : a synergistic Strategy to Enhance Profits and Reduce Risk

TS: trailing stop).
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FIBONACCI PRICE CORRECTION LEVELS
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The underlying relevant trading parameters for generating entry
and exit signals are:
• Swing size of 30 basis points.
• Fibonacci correction level 61.8 percent.
• Market entry on 1-day high / low backward look after the correc-
tion level is reached.
• Stop-loss point at previous swing high or low; re-entry after
being stopped out.
• 3-day high / low trailing stop.
• Daily data; slippage and commission excluded.
Nine trading signals can be found for the S&P 500 Index between
December 2001 and April 2002 (as shown in Figure 6.3). They are
summarized in Table 6.3.
Working with an entry rule and reentry rule improves the trad-
ing results to an acceptable level. The entry rule ensures that we re-
ceive a short-term conf irmation of a trend change. The reentry rule
Table 6.3
Trading Signals 
Profit/
Loss in
#
Entry Rule
At
Exit Rule
At
Points
1
Sell short
1,140.00
Stop-loss
1,152.00
(12.00)
2
Re-sell short 
1,163.00
Buy reverse
1,146.00
17.00
3
Buy reverse
1,146.00
Stop-loss
1,124.00
(22.00)
4
Sell short
1,118.00
Buy reverse
1,094.00
24.00
5
Buy reverse
1,094.00
Sell reverse
1,112.00
18.00
6
Sell reverse
1,112.00
Buy reverse
1,101.00
11.00
7
Buy reverse
1,101.00
Trailing stop
1,156.00
55.00
8
Re-sell short
1,161.00
Trailing stop
1,153.00
8.00
9
Sell short
1,123.00
Open
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