Fibonacci Trend Following with ATR Stops and Hedge Signals
Summary
This system combines Fibonacci retracement levels with trend, momentum, direction, and volume filters. It defines trend using price relative to a 50-period EMA over three consecutive candles, supported by higher-high/higher-low or lower-high/lower-low structure. ADX above 20 indicates sufficient trend strength, DMI provides directional confirmation, and volume above 1.2 times its 20-period average supplies an additional filter. Long and short signals are described near Fibonacci levels, with a bounce mode for reactions at support or resistance.
The described exits use two profit targets and an ATR-based stop, with half the position allocated to the first target. Hedge orders may be opened when an opposite signal appears, and a five-candle spacing rule is intended to limit repeated entries. The document includes strategy code fragments but no reported backtest outcomes, so its claims of signal quality or stability are not supported by measured results. It also notes parameter sensitivity, slippage, costs, and the possibility that hedged positions can both lose. The framework is complex and requires testing across markets and timeframes.
Key ideas
- The system uses Fibonacci levels as potential support and resistance areas for entries.
- A 50-period EMA, price structure, ADX, DMI, and volume jointly filter trend signals.
- Bounce entries supplement trend-following signals near support and resistance.
- Two profit targets and an ATR-based stop define partial exits and risk limits.
- Opposing signals can trigger hedge orders, which may add costs or compound losses.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.