Edge or Continuation Trade
Looks needed to trade at the edge or after trigger lines roll at the edges
Many traders never focus on more than 3 charts. Those who intend to use multiple timeframes, must learn to effortlessly shift between the timeframes during the appropriate market conditions.
When only trend trading futures such as the S&P or Crude Oil, you will not need the use of a 21-3 chart for successful 5-1 trend trades or HVA trades. There are times when you will see users and the educator that are watching a very strong 21-3 chart to try to define Fibonacci edges that may be traded successfully.
The following is an example taken from the educational videos to be used as a guideline for which charts to watch together for different trades.
The general idea is that you always have your "larger chart" in a strong trend with strong trigger lines as if you are doing a 13-2 / 5-1 chart trend trade. The only difference is the charts are higher in the Fibonacci sequence. The following chart is a pre-setup look for a possible edge trade with a strong trend edge setup using a 13-2 and 21-3 chart. It is VERY IMPORTANT NOT TO SKIP 5-1 TERMINATION TRADES (with trend) if the market has gone parabolic. SEE THE TRADING A PARABOLIC STRONG TREND SECTION. This is very important so you do not miss opportunities to make money while waiting on a huge retracement for an edge trade that may never happen.
This short video will walk you through the process of executing an edge trade.
Edge trade short from Fibonacci (trade shortened for educational purposes)
The following example uses a 5-1 chart termination condition to enter an Edge trade position. Counter- trend trading is normally reserved for experienced traders. If you are not already making money trading Trend trades, HVA Trades after terminations, and Edge trades with the trend, leave this one alone until you are and spend time studying its effectiveness.
Edge trading using a 5-1 termination entry ( trade shortened for educational purposes)
The following chart is an example of using a 5-1 termination condition "PIVOT STOP OUT" to buy the edge of a 21-3 Fibonacci area that the triggers say should hold.
pivot top out entry at edge of Fibonacci support
Trading Fibonacci edges that hold will generate a large profit potential. In the following example (shown below), 1/2 of the contracts exited at first Fibonacci profit target and one-to-ones. Once the area broke, the next Fibonacci area becomes the target. At this point, the stop should be moved to break even plus for a no-loss trade. Here is an example trade in crude oil futures taken April 1, 2021.
taking some profit and moving stops to break even plus
If you are in a trade, and the trade rules become true a second time, you may add-on to your position.
add on to your existing position with a new signal
Finally, when the market continues up, the profit target areas at Fibonacci are reached for an exit on the way into the Fibonacci with preset targets.
Fibonacci targets reached
Entry timing of an edge trade may take several different forms. You must be willing to take whichever signal generates the entry at the areas you wish to trade. Generally, you will have a 5-1 Chart Termination Condition, Market Flow signal, or HVA LINE trade after the 8 range or 5-1 trigger lines roll. The chart below represents some of the 5-1 chart termination conditions you can use for long or short trades at Fibonacci areas when the large charts agree.
Continuation Trades – This is a great way for new traders to recognize the edges, but slow the entries down until the 5-1 chart small trigger lines have crossed favoring the continuation. This will provide many 2nd chance opportunities when the 21-3 chart and 13-2 Fibonacci and trigger line reading suggest the continuation of a trend is probable. Usually, the edges of the 13-2 and 21-3 charts will be "tested" by the market price after the 5-1 chart has β€œterminated” the high or medium probability trend trades. Wait for a 5-1 trigger line to roll and then attempt your trades at key areas. See the example pictures below.
After the 5-1 chart terminates, wait for 5-1 trigger lines to resume the trend
Keep in mind, doing a continuation trade, you do not need both large triggers to be crossed in the direction of the trade as in a trend trade.
Continuation after an edge holds on 13-2 or 21-3 chart
Remember that you may need to attempt a continuation/ trend trade multiple times. As long as the 13-2 and 21-3 chart favor the trading setups.
sometimes you may do the same trade at the same area multiple times
During a strong trend, you will use this type of trade to enter after the small triggers resume the trend.
strong trends typically give continuation opportunities
If for some reason you miss an entry, use the continuation look to enter the market. Nexgen refers to this type of entry as a "2nd chance" opportunity.
2nd chance entry if the low was missed
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