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How to trade with Fibonacci

Fibonacci software provides Fibonacci retracement patterns and its related aspects. It helps us trade successfully and innovatively on the Forex market. We just need to put in the high and low price and it effectively plots various price levels for us. Price levels are all fine but volatile stocks can quickly reverse at given time levels. The software insures players against such pitfalls. Simple- it predicts us related time levels as well.

The Fibonacci software foresees future dates at which the stocks can take a u-route. At this stage we can look for corresponding price and time and play for certain powerful reversals. Next time we trade, we can be our own technical experts. It would be quite easy to start with the fib grid graph and next level of retracement. If we understand the ethics of reversal, it will help us make greater forex benefits.

Elaborating at a layman’s level, the fib grids provide with pre-analyzed support and resistance areas. We can read the chart and read our own estimated levels. With the Fibonacci retracement line above the ARI, we can easily tell what the retracement percentage for a given trade can be, simply by analyzing the fib grid.

We have understood over a period of time that Fibonacci retracements can help swing traders make a profitable return from the forex market. Let’s try and get a little more elaborate with the Fibonacci sequences and the techniques of identifying the pattern.

What are Fibonacci numbers? Invented by Leonardo Finonacci, they are simply numbers which are the result of addition of previous two numbers. For instance, 4, 7, 11, 18, 29, 47, 76 is a Fibonacci sequence. Adding 4 to 7 brings us to the next digit 11. Similarly adding 11 to 7 brings us to the subsequent number 18. Understanding these numbers can help swing traders technically understand the patterns of Fibonacci retracements.

Before reversing, stocks generally pull back a little and retrace a nominal percentage. The Fibonacci retracements generally happen at three pre-defined levels, 38.2%, 50%, and 61.8%. 50% is not technically associated with Fibonacci but stocks generally reverse after retracing half the previous move. This makes the figure an important one to track.

Fib grid show opposite patterns for up trends and downtrends. These can be accordingly referred to for starting with long and short positions. It is an incorrect technique to buy stocks at average retracement levels. One must look out for the candlestick patterns ranging around the 38.2% levels. If there are no active signs, a trader should wait for the 50% levels. The stock might not reverse at these levels even.

No expert can predict when the forex stock would reverse, we can pin the area on the fib grid and look for the lines to go long or short.

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  1. Here’s a tip for those getting into trading using Fibonacci: learn what you will about Fibonacci retracements but you need to eventually get the hang of Parallel Projections and Expansions in order to fully unleash the power of Fibonacci in forex trading!

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