ICWR stands for: means Impulsive/Corrective Wave Retracement. The ICWR forex method is a list of rules that traders use to determine when to enter and exit the forex market.

The ICWR forex method has been developed using a mix of the Elliott Wave Theory and Fibonacci ratios. Traders have discovered that corrective market movements have a predisposition to retrace the prior impulsive market movements by a Fibonacci ratio.

So what are corrective market movements? Corrective market movements are short-term corrections that move against the long-term market trend. The major market movements in the direction of the long-term market are referred to as impulsive market movements. Open up a chart of any major currency (say the GBP/USD) with the time frame set on daily and you will easily see the long-term trend, along with several corrective market movements.

The most frequent Fibonacci ratios observed in the ICWR forex method are 25%, 38%, 50%, 61% and 75%.

Most traders use the ICWR forex method with an existing entry method to assist with their exit strategy to extract the maximum gain possible out of the trade. In fact many traders have discovered that managing a trade and determining the time to exit is even more important than choosing an entry point and direction to trade in.

The ICWR forex method is very easy to use. Simply open up a chart of a time frame you wish to trade, find the prior impulsive wave (in the direction of the long-term trend) and compute the Fibonacci ratios. Now record the Fibonacci ratios on your chart. For example if the prior impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% place a line 25 pips below the maximum of the impulsive wave. Most charting packages come with a Fibonacci tool built in, calculating the ratios and marking the lines for you.

These Fibonacci ratios can then be put to use in several ways:

• move your stop loss with every impulsive wave in your favor to maximize gain and minimize risk (the 75% ratio is commonly used for this)

• determine when the corrective wave is probable to conclude in order to determine good entry points.

Traders often tend to despair when their trade is in gain and it begins to move against them. By using the ICWR forex method you will be better prepared to ride out the corrective market movements in order to extract the maximum gain from your trades.

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