How to Project Measured Move Flag Targets in TradeStation

Oct 18, 2008: 11:39 AM CST

If you’ve ever wanted an easy, three-click method for price projection targets from what you perceive to be bull or bear flag set-ups, check out this simple method using traditional Fibonacci tools in TradeStation (similar in other charting packages with the Fibonacci Projection Tool).

Let’s not discuss Fibonacci, but just the “100% Equal/Measured Move” of a prior impulse.  Flags target an ‘equal move’ of the pole, once a retracement has formed.  Search this blog for “Bull and Bear Flags” for more information, or check out any reference on bull/bear flags.

The Flag forms a clean retracement against an intial impulse (usually a sharp price swing) which often retraces to a key moving average or perhaps the 50% Fibonacci retracement.  Once you believe that price has broken OUT of the mini-channel that a flag forms, THEN it’s time to enter and project a price target for how far the move is expected to travel (for purposes of risk/reward and trade management).

Here’s how I do it in TradeStation:

Once you identify a possible flag breakout (we’ll discuss bull flags here), then click on the “Fibonacci Price Extension” lines under the “Drawing” tab.

Your cursor will change to the extension tool, and your objective is to click on the BOTTOM of the Flag Pole, then click at the TOP of the Flag Pole (the “Impulse Swing” move), and finally make your third click at the BOTTOM of the perceived flag.

Keep in mind you’ll need to do this AFTER price has broken above the trendline to the upside so that you’ll have a confirmed break to the upside.  Failing to wait for the break could cause a premature projection, and the price may travel a little lower than where your projection started… but if this happens, simply re-draw the Projection.

The program then draws multiple lines on the graph, but you’ll need to cull it down a bit for clarity.  Double-Click on the Fibonacci lines drawn and open up the Editor tool for the Price Extension.

Uncheck everything EXCEPT fot the 100% retracement line (this is really the most important step).

After this, you can change the color or thickness of the lines – which is of secondary importance.  Here is a screencap of what this looks like:

Once you make these changes, you’ll wind up with a grid that only projects the 100% projection, which is an exact measured move of the “Pole” that begins (is added) at the bottom of the Flag you chose.

I’ve cheated a bit and given you a complete projection, and sometimes you’ll need to drag your chart (scale) to see the actual projection.  Click for larger image:

TradeStation gives you the EXACT price of the target, which will help give you an exact idea in mind and will help in Risk/Reward calculations (as your stop will be an exact number as well – placed just beneath the lower-trendline of the flag).

The Blue Line (100%) was drawn by TradeStation, and what you’ll find more times than not is that price at least pauses and sometimes totally reverses at the 100% projection, or exact Measured Move of prior impulses.  Whatever the reason (those are all debatable), it sets up an excellent trading opportunity with low risk (tight stop) and larger target (100% Projection).

Try it out and see what additional insights you can find with this very useful tool.

12 Responses to “How to Project Measured Move Flag Targets in TradeStation”

1. Anonymous Says:

2. Large Scale Elliott and Fibonacci Insights on GE | Afraid to Trade.com Blog Says:

[…] using TradeStation’s Fibonacci Extension Tool (see my educational post “How to Project a Flag’s Measured Move“) to arrive at a final target.  I start with the 2000 high, draw to the 2003 closing log and […]

3. Shannon Norrell Says:

Excellent, awesome post on how to use a key TradeStation tool. Keep 'em coming man!

4. Shannon Norrell Says:

Excellent, awesome post on how to use a key TradeStation tool. Keep 'em coming man!

5. Lessons from Oct 13 Morning Ideal Bear Flag | Afraid to Trade.com Blog Says:

[…] I like to take a 100% Fibonacci Price Extension/Projection (as shown in my prior post on “How to Project the Measured Move of a Bull Flag“) from the top of the Flag to project a minimum objective.  In this case, the minimum […]

6. Lessons from Oct 13 Morning Ideal Bear Flag | Penny Stock Trading System Blog Says:

[…] I like to take a 100% Fibonacci Price Extension/Projection (as shown in my prior post on “How to Project the Measured Move of a Bull Flag“) from the top of the Flag to project a minimum objective.  In this case, the minimum […]

7. Intraday SPY Fibonacci Projection and Retracement Example Dec 28 | Afraid to Trade.com Blog Says:

[…] “How to Project the Measured Move of a Bull Flag” […]

8. Intraday SPY Fibonacci Projection and Retracement Example Dec 28 | Penny Stock Trading System Blog Says:

[…] “How to Project the Measured Move of a Bull Flag” […]

9. Perfect Bear Flag Example Intraday SPY Jan 29 | Penny Stock Trading System Blog Says:

[…] How to Project a Measured Move of a Bull Flag. […]

10. nike air jordan Says:

Thanks for the update.

11. HeistLab 1 » Blog Archive » Intraday SPY Fibonacci Projection and Retracement Example Dec 28 Says:

[…] “How to Project the Measured Move of a Bull Flag” […]

12. Dusty Relic Says:

You cannot discuss numbers like “100%” and “50%” without discussing Fibonacci numbers because these ratios come directly out of the Fibonacci series.

The series, if you will recall, starts out with 0,1,1,2,3,5 and so on. The Fibonacci price and retracement levels are not based on the numbers of the Fibonacci series but on the ratio between the numbers of the series. As the numbers increase the ratio converges towards “the golden ration” which is ~ .6106. But in the beginning of the series the ratios are pretty far from that number. For example, the first two numbers of the series comprise the 0/1, which equals 0 and not .6106. Can you guess what the next two ratios in the series would be? (Hint: they can be written 1/1 and 1/2.)