FIBONACCI TRADING This page intentionally left blank FFIBONACCI TRADING How to Master the Time and Price Advantage C A R O LY N B O R O D E N New York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San Juan Seoul Singapore Sydney Toronto Copyright © 2008 by Carolyn Boroden. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-159673-9 The material in this eBook also appears in the print version of this title: 0-07-149815-X. All trademarks are trademarks of their respective owners. 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For more information about this title, click here CONTENTS FOREWORD vii ACKNOWLEDGMENTS ix INTRODUCTION xi Chapter 1: Fibonacci Numbers and the Golden Ratio 1 Chapter 2: Applying Fibonacci Ratios to the Price Axis of the Market 5 Chapter 3: Fibonacci Price Retracements 9 Chapter 4: Fibonacci Price Extensions 29 Chapter 5: Fibonacci Price Projections or Objectives 45 Chapter 6: Fibonacci Price Cluster Setups: Trade Setup 1 61 Chapter 7: Symmetry—The Power Tool: Trade Setup 2 97 v vi Contents Chapter 8: The Two-Step Pattern Setup: Trade Setup 3 127 Chapter 9: Choosing the Swings for Analysis 147 Chapter 10: Applying Fibonacci Ratios on the Time Axis of the Market 157 Chapter 11: Fibonacci Time Clusters 175 Chapter 12: Using Dynamic Trader Time Projection Reports and Histograms 193 Chapter 13: Time and Price Confluence 205 Chapter 14: Triggers and Indicators 217 Chapter 15: The Ideal Trade Setup 247 Chapter 16: From Analysis to Trade Entry—Putting It All Together 269 Chapter 17: Beating the Odds with a Trading Plan 285 INDEX 295 FOREWORD Most traders have been exposed to some aspect of what we call Fibonacci trading, mostly in reference to Fibonacci price retracements. Traders have been using these retracements for years to help identify them price sup- port and resistance. But Fibonacci retracements are just a beginner’s appli- cation of these important ratios for trading. It is how you use them in different trading situations that is important. In addition, there are other geometric and harmonic ratios that are equally important that you will learn about in this book. What most traders have never been taught is how to use these ratios for support and resistance time targets in the same manner as they are used for price targets. When you combine Fibonacci time and price pro- jections as part of a trading plan, you should have a powerful approach to identifying trade opportunities. I don’t think there is anyone who is more qualified to teach you about Fibonacci time and price trading strategies than the FibQueen herself (aka Carolyn Boroden). I first met Carolyn in 1989 at the first Gann-Elliott Magazine (since evolved into Traders World magazine) conference in Chicago. She was one of the first people to study my Gann Home Study Trading Course, which was first released at that conference. But she wasn’t new to the financial markets and trading in 1989. Unlike most trading educators, Carolyn has spent her entire adult life working with the financial markets, from floor runner as a teenager to fund advisor to day-trading mentor. While she has been a relentless student of the markets, she has also had years of practical experience in almost every phase of the trading business. vii Copyright © 2008 by Carolyn Boroden. Click here for terms of use. viii Foreword We kept in contact for several years after 1989, faxing charts, analysis, and trade strategies back and forth between Tucson and Chicago. In 1993, I convinced her to move to Tucson to work with me. She was soon wooed away by an offer to provide analysis and trade strategies for a fund for a whole lot more money than I was paying her, but we have remained friends and associates ever since. She has been a student of my Dynamic Trading methods for almost 20 years and has used my Dynamic Trading software, which you will see in this book, since Version 1 was released in 1997. There is no better exam- ple of a relationship in which the “student becomes the teacher” than that of Carolyn and me. In recent years, I’ve learned as much from her as she did from me in the early years, especially about her symmetry setups and trade strategies, which you will learn in this book. I’m very proud to have been her mentor in the early years and her friend forever, and I know that her book, which you hold in your hands, will be one of your most valuable reference books for your business of trading. ROBERT MINER Dynamic Traders Group, Inc. Steamboat Springs, CO