[Christian Harris]

Here’s a SPY trade I’m currently in to demonstrate a trade setup using one of my favourite technical analysis tools, Fibonacci retracement.

Trade Setup

• 4-hour timeframe for a swing trade
• Fibonacci retracement level hit 100% level ($590.50), which is a complete reversal of the original price before the move
• SPY is in an uptrend, so I entered a long (buy) position
• I set my take profit at a key Fibonacci level ($601.87)
• I set my stop loss at a key Fibonacci level ($576.45)
• I am risking 14.05 points (-2.38%) to make 11.37 points (+1.93%)

Advanced Risk Management

• I could adjust my stop-loss as the trade moves in my favour

Alternative Trade Setup

• I could have entered multiple long positions to target multiple Fibonacci levels, but this would have increased my risk. As a conservative trader, I prefer to enter only one position per price level in case my analysis is wrong.

Disclaimer: This example is for informational and educational purposes only and should not be considered financial advice or a recommendation to buy or sell any security. Trading involves significant risk, and past performance does not guarantee future results. Conduct your own research and consult with a financial professional. The information discussed here is personal to the author and may not be suitable for all traders.

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[Ollie]

Hey, great to see a trade mapped out and the thinking behind it.

Besides Fibonacci, did you use any confluence factors (I’m thinking volume, moving averages, RSI) to confirm your entry?

I just set up a TradingView subscription – loving it!

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[Christian Harris]

Although I greatly value RSI, this is an example of a Fibonacci retracement trade, so I didn’t use any other confluence.

I like to keep my charts as simple as possible to avoid analysis paralysis.

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[Janus]

How do you decide when to adjust your stop loss? Do you use a trailing stop or wait for a key price action signal?

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[Christian Harris]

I don’t adjust my SL. I let the trade play out. Why? Because the Nasdaq-100 can have crazy pre-market moves that can easily hit an SL.

However, if you wanted to use an SL, you could:

• Use a trailing stop
• Move your SL to the bottom of a candle/wick on a daily chart (after the close of the US session).

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[Author]

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