To those who do, how do you use Fibonacci in your trading?
There are many ways to use a tool so profound as Fibonacci but to answer your question in short I draw them in extension form to help build a case for a entry/exit point. For example if i think a certain phase of the market is about to reverse i would first draw my fibs to see if there is any special ratio number happening there. Then along with wave structure analysis i make a decision.
Have a look at these articles
Top 4 Fibonacci Retracement Mistakes To Avoid
Hope you find them helpful… Good luck
Get into the habit of buying and selling 50 and 38.2 retracements and exiting at the 161.8 or 132.8. This is a simplified idea but one way to use it.
I do, generally on the higher time-frames (e.g. monthly) to see which retracement levels I can get
from a MAJOR move in the currency pair, going forward…
Then, I compare these levels with my own Support/Resistance ones (or, I should say, Supply and Demand
levels), to see where the two sets match, or differ, and this can help me refine my own analysis…
I do not rely on Fib. retracements on shorter time-frames, where I just use my own S/R levels…
Cheers.
I use fibonacci retracements on daily TF and go up to weekly TF to draw the major S&R and zoom into daily TF to see if there’s any important area thats left out. And I buy or sell above or below 38.2%.
My analysis is not purely technical though. So you might want to have some other confluence not just blindly rely on fibs.
I do take them into consideration, but by themselves I do not act on Fibo levels. They can be a good indicator of S/R on higher TF’s and give you one additional trading signal in order to better gauge your entry/exit levels if it fits with your overall strategy. When it comes to analyzing charts you should never act on a single signal alone.
I called almost every trade using fib alone with Elliott wave principle. The simplicity of the approach mean’t I decided to incorporate it into an existing S and R model. It was what traders do… We like complexity.
The logic is if you keep blindly buying retraces your risk reduces as stops come under the 0 or above 100. If you target 161.8 and 132.8 more often than not you will gain more and loose less.
Back test the theory. I know many won’t agree but it is an observation.