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Tuesday, February 12, 2013

Internal Fibs Indicator for Ninjatrader

The Internal Fibs Ratios provide very important information that we can use to define New Trade Setups

Today we are going to cover the definitions of Internal Fibs and explain two very easy to follow setups :

Definition : Given a Time Interval ( it may be a number of bars into the past, or today's price action ), we take the High, the Low, and then we calculate a percentage inside that range.

If for example we are using the 78.6 % fib ratio, we have 2 levels :
  • The 78.6% of the High
  • The 78.6% of the Low ( or 100-78.6 = 21.4% of the High)
The most useful values to follow are the 50% ( the middle of the range ) and the 78.8%

One setup we can try is the 50-Vwap Trade ;
It consists on looking at the confluence of the Vwap ( Volume Weighted Price Average ) and the 50% retracement of today's Range.

This is a very easy to follow setup, we just need a fib tool and a Vwap.

If we want to have a dedicated indicator to keep adjusted the high and low of the session and plot the real time 50%, we can use the indicator TIS_Int_Fibs

Another setup, called ITS and designed to be used on 1 Min Index Futures ( like ES ) is as follows :
We plot the 78.6% Internal Fib and count bars above the upper line or below the lower line.
When we have N bars in row outside the fib line, we have a signal ; if we are above the upper fib line, we have a long signal. If we are below the lower fib line we have a short signal.
The Entry ? ....I use a previous low pivot, for that purpose I plot a Donchian channel to follow the last pivot....but each one can use its own ideas...

On this picture we can see an example of the ITS Trade Setup on YM ( Dow Jones )

On this example we have the trade setup detection when the count of bars below the lower 786 reaches 8. Then on the zoomed portion of the screen we can see how to trade the setup shorting a previous low pivot.

Please post your questions, ideas or suggestions here
Best wishes !
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