I’m going through the babypips.com school and I’m stuck on the fibonacci extensions. I’m using Interbank FX Trader 4 and I was told to use fibonacci expansion in place of extension but I don’t know if this is correct. it doesn’t seem to work the same as Raghee demonstration. Also her demonstration tells me to right click and drag but everytime I right click it takes the tool (fibonacci expansion) out of my hands. Someone please help. I don’t want to give up because of something stupid like this

maybe someone can recommend a different demo download that has extension included in it

Hi rupert

MT4 has both extension & expansion but not knowing Raghee application of them, I can only explain them in general as I’ve used them.

The extensions are the fib levels beyond the AB 0 & 100% levels of the fib retracement tool.

Expansion tool is separate and you click on point A & B, then you have to double click on the fib line to be able move (click & drag) the little arm to point C from which it projects the AB fib levels.

Hope that helps

thanks for the reply. It helped on the expansion tool but if there is an extension tool in mt4 I can’t find it. your explanation of the extension must be way over my head

There isn’t a fib tool called extension…it’s called retracement.

The fib retracements levels you are probably familiar with are the 38.2, 50, 61.8% etc. The extension levels are the 127.2, 161.8% etc levels.

One use of them is after you see a move retrace to say the 61.8% level, you can place your order there, and set the take profit to the extension level of 127.2 or more.

yeah, most platforms have a expansion tool, but mt4 incorporates into the rtracement tool.

Correction…MT4 does have an expansion tool, and it incorporates retracements and extensions into 1 tool.

Hello guys,

i really was confused with those extension levels and expansion levels in Mt4.

It took me 2 days to understand how to draw them in Mt4.

But now i hope i understand it. Pleasy check if i am right.

So the extension levels are:

0, 0.382, 0.618, 1.000, 1.382, 1.618

0%, 38,2%, 61,8%, 100%, 138,2% and 161,8%

at 0% it begins at the lower retracement lvl and goes up in this steps 38,2% and so on.

Right?

I had to add this lines in my mt4 software manually and please have a look if i did it correctly.

I just choose the 50% Retracementlvl to show you all the lines.

[B]SETUP:[/B]

[B]CHART:[/B]

http://img694.imageshack.us/img694/8296/fib1.gif

http://img408.imageshack.us/img408/4918/fib2.gif

Hi dan,

The way Babypips explains them makes it confusing too.

Have you got 2 fibs overlapping in your chart (2 colors)? Also, the expansion arm in your chart don’t seem to be anchored to any swing point.

The expansion fibs are basically used with 3 swing points where you measure the length of Point A to Point B, and then expands that measurment from a Point C…all the fib levels could then be considered expansions of the AB swing, and “projected” from point C. That is very useful in determining if AB=CD.

The retracement/extension fib tool is basically used with 2 swing points and measures from Point A to Point B. Any fib level within the 0 to 100% is called a retracement of the AB swing, and any level outside that is called an extension of AB.

Basic geometry. Hope that helps

Yes that helps but is confusing me a little bit more and shows me that i did not understand it at all

Okay back to Topic. I will try to explain how i draw this in my mt4.

With the Retracement tool i worked as you can see it in your schoolvideo.

I took a swing low (a) and draw it to a swing high (b). Then i get the retracement levels. This are the yellow lines in my chart.

To get the expension or extension levels i did the same.

So i took the expansion tool, took point A and B, from swing low to swing high. Then i have to put the line at the right place for Point C. In my chart it is the red line which goes to the 50% retracement line.

Normaly i had chosed the 38,2% and the first candle for my C.

In this example i choosed the 50% line because i want you to check if i set up the extension lvls right cause i did this manualy.

Of course i can do the same just with the expension tool.

Than i would look like this:

http://img39.imageshack.us/img39/7690/justexp2.gif

http://img185.imageshack.us/img185/7871/justexp.gif

yes thank you

Babypips illustrates the Expansion tool, but calls them Extensions…go figure……I have asked them to consider changing that a while ago, but no response so far.

If you draw the Retracement tool from A to B, then actually moved it so that the 0% is placed at your C point, that is exactly the same thing as using the Expansion tool.

[B]Retracement ratio numbers [/B]are used to measure the [B]internal area [/B]of a range between 0 & 100% (38.2%, 50%, 61.8%, 78.6% etc)

[B]Extension ratio numbers [/B]are used to measure the [B]exterior area [/B]of that same range beyond the 0 & 100% (127.2%, 150%, 161.8%, 261.8% etc)

[B]Expansion tool uses both[/B] retracement (internal) & extension (external) ratios of one range to compare a 2nd range to that first range.

Now the only thing to be concerned with as far as the tools go is how they want you too enter the ratios …ie 61.8, or .618, or 127.2, or 1.272 etc…you can even put a negative sign in to get the extension ratios below the 0% line. ;)…and to get the price to show up on the line you can enter $% after the fib ratio number.

Okay thank you very much that you try to explain me.

So have a look at my example i drawed.

All the levels between 0 and 100% are the retracement levels.

The broken red line which goes to C is the pullback arm.

C should be the swing low.

When i draw with the expension tool at C it begins again with 0% and then goes up till 161,8% for example. This are the expansion levels.

Please tell me NOW i undertand it otherwise i will kill myself and throw my PC outside the window:D

Well we can’t have you doing that…lol…yes it sounds like you understand now.

Yes, the expansion arm, when anchored to C, “copies” the “pip range” of AB and starts it as 0 from C. So if AB is 48 pips, then it will project a 48 pip range from C.

The the 48th pip from C will be 100% and is your D point. It even copies the “angle” of that AB range which gives you a “time” factor for when price from C could hit that D point…if it’s a perfectly symmetrical AB=CD pattern that is, but they aren’t always. However it gives you something to go by.

The idea is that price swings of the same direction will move proportionately to one another so as to anticipate where price will reverse, and then you can take advantage of that. However, used by themselves they not as powerful as using a few fibs together for example various timeframes or opposite directions to see if any of the lines group or cluster together around a particular price area, or if they also align with a major support or resistance level.

A good resource to see multiple fibs in action is the “30 pips a day” thread where they are used to detect fib based chart patterns called Gartleys and Butterflies…the AB=CD, & variants of it, is the base of those patterns.

very detailed. thanks a lot

btw how can you throw your pc out the window if you kill yourself first?

Yeah now i am sure that i understood ALL, because now i unterstand everything you wrote today

Thx a lot sweet peep.

Even I understand all i am not 100% sure if my extension lvls (the orange one’s in my charts) are correctly. Can you have a last look on that and tell me if they look ok?

Hmm you are right, that would be a problem.

Well, lets say i jump out of the window with my PC. On my way down i leave him alone and on the floor when i try to catch him i will die

so i throw out my pc and killed myself