This is interesting and maybe my style of trading. I am trying it out on demo. Some observations and questions.
The legs are subjective. Do you include minor retracements with the general swing? I guess it's all arbitrary, the larger the reference swing, the longer the position holding time will be. If you do fibs on a small swing, then the trading window is shorter, stops are closer and less reliable.
If it already bounced at the 38.2% mark, do I discount the setup already? Or do I still wait if the bounce fizzles out (not breaking the Fib high/low) and goes further down to 50%?
You seem to be betting on both sides of the market going long and short with no opinion on whether it's a continuation of a long uptrend, a reversal, or a short pause. You just take either long or short positions whenever a 50% bounce happens at whatever level. Is this right? Wouldn't it be better to bet just on the side of the longer trend? At the back of my mind, I kept thinking if I was actually betting against the market, hoping for a reversal instead of riding a continuation. Does anyone supplement this system with another long-term indicator?