The bread and butter trade setup I mostly use and spoke about in this post: My Update to My Trading Style is my Fibonacci Extension bread and butter trade. It has taken many years of trial and error to find out that this works for me. It is still evolving in order to fine tune it but this is the basis of it. From the link above I fined tuned it even more this week by discovering that when going short the exit is better at the 38% fib retracement level than the 50%.
The Basics
I’ve been a big fan of Fibonacci extensions and retracements so those are the focal point of my trading for my bread and butter trade setup. I started out using harmonic patterns that you can read about from these websites if you are unfamiliar with them:
https://www.babypips.com/learn/forex/3-steps-in-trading-harmonic-price-patterns
Harmonic Patterns the Right Way
https://www.tradingwithrayner.com/5-problems-harmonic-trading/
Fibonacci Extension Trade Levels
I started off using the main ones from the Harmonic Patterns and a good friend of mine showed me the levels he uses so I incorporated all of them into my initial extension levels. Then later on I read this article which is how I found the big move fib extension levels by dividing 89 into all of the numbers: Guide to fib levels
I used to have a lot more levels but now the main ones I have are the 127, 161, 261, 423, 685, 1109, 1794, and 2903. There are higher levels than those but those are the main ones I use.
Bread and Butter Chart Examples
Here are a couple of chart examples, all I do is use an indicator that helps show me the pivot points and draw the fib extension levels from there.
So as you can see there isn’t anything too difficult to my bread and butter setup. Find the pivot points you want to use and then have the Fibonacci Extension go from those points. In part 2 I will show the entries I use and a couple of filters I sometimes use to see if the trend is read for a retracement.
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