ICWR stands for Impulsive/Corrective Wave Retracement. The ICWR forex strategy is a list of conditions that traders use to determine entry and exit points in trading the forex market.

The ICWR forex strategy is based on a combination of the Elliott Wave Theory and Fibonacci ratios. Traders have found that corrective waves have a inclination to retrace the preceding impulsive waves by a Fibonacci ratio.

So what are corrective waves? Corrective waves are short-term corrections that move against the long-term market trend. The major waves in in alignment with the long-term market are called impulsive waves. Bring 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 trend, along with several corrective waves.

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

Most traders use the ICWR forex strategy with an existing entry strategy to help refine their exit strategy to get out the maximum profit possible out of the trade. In fact many traders have found that managing a trade and determining the exit point is more important than choosing an entry point and direction to trade in.

The ICWR forex strategy is very easy to use. Simply bring up a chart of an interval you wish to trade, find the preceding 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 preceding impulsive wave UP was 100 pips, for the Fibonacci ratio of 25% you will place a line 25 pips below the high of the impulsive wave. Most charting packages come with a Fibonacci tool built in, calculating the ratios and drawing in lines for you.

These Fibonacci ratios can then be used in a number of ways:
- move your stop loss with every impulsive wave in your favor to maximize profit and minimize risk (the 75% ratio is usually used for this)
- determine when the corrective wave is likely to conclude in order to determine good entry points.

Traders often tend to despair when their trade is in profit and it starts to move against them. By using the ICWR forex strategy you will be ready to ride out the corrective waves in order to get out the maximum profit from your trades.