So What Are Corrective Market Movements

Category: Finance, Currency Trading.

ICWR stands for: means Impulsive/ Corrective Wave Retracement. The ICWR forex system has been developed using a mix of the Elliott Wave Theory and Fibonacci ratios.

The ICWR forex system is a set of conditions that traders use to determine when to enter and exit the forex market. Traders have found that corrective market movements have a inclination to retrace the preceding impulsive market movements by a Fibonacci ratio. Corrective market movements are short- term corrections that move against the long- term market direction. So what are corrective market movements? The major market movements in in alignment with the long- term market are called impulsive market movements. The most frequent Fibonacci ratios observed in the ICWR forex system are 25% , 38% , 50% , 61% and 75% .

Open up a chart of a major currency( say the GBP/ USD) with the time frame set on daily and you will easily see the long- term direction, along with several corrective market movements. Most traders use the ICWR forex system with an existing entry system to assist with their exit strategy to get out the most gain possible out of the trade. The ICWR forex system is very simple to use. In fact many traders have found that managing a trade and determining the exit level is more important than choosing an entry point and direction to trade in. Simply open up a chart of a time frame you would like to trade, find the preceding impulsive wave( in the direction of the long- term direction) and calculate the Fibonacci ratios. For example if the preceding impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% you will place a line 25 pips below the maximum of the impulsive wave.

Now enter the Fibonacci ratios on your chart. Most charting packages come with a Fibonacci function built in, calculating the ratios and marking the lines for you. Traders often tend to worry when their trade is in gain and it starts to move against them. These Fibonacci levels can then be used in a number of ways: - move your stop loss with every impulsive wave in your favor to maximize gain and minimize risk( the 75% ratio is often used for this) - determine when the corrective wave is likely to conclude in order to determine the best entry points. By using the ICWR forex system you will be better prepared to ride out the corrective market movements in order to get out the most gain from your trades. For more information on trading forex visit the link below.

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