Welcome to the thread. Make your goal not to catch trends at the top or bottom, but some where between them. That’s what is so great with using a Fibonacci Retracement tool, because it helps you to get into the trade. Example. You do your analysis to find the trend. You apply your fib tool. You are looking for the bigger pullbacks rather than the small ones. So you look at your trend and enter on the 62% or 50% fib levels. One you have your entry, next you are looking for your exit, so you use the fib extension tool to find that If you’re not around make it zero, on the Retracement, If you are then using a trailing stop once market goes to zero on Retracement. Just in case your analysis is incorrect, Place your stop loss at the next fib level after your entry. So if you entered on the 50% level, you place your stop at the next level below your entry in this case would be 62% level, make the zero% on the retrace tool as your first profit target. You do this with a pending order so if you’re working or not around you can enter your trade at the right time.
The fib tool works on all time frames and there are pro;s and cons’s for each. So depending on what type of trader you are, will depend on the time frame you use. Example Matt uses mainly the daily. With the daily you’re in a longer term, you may have to wait a little longer for profit, you should move your stop loss 2 levels behind your entry, So if you enter at a 50% retrace, you may want to place your stop loss at the 70+ retrace level. I use the 1 hour and sometimes the 30min time frames. Whatever time frame I use to start with, Once I draw my fib retrace, I go up 1 time frame and down 1 time frame to see if my analysis needs to be tweaked. Rule of thumb, the shorter the time frame the more accurate your analysis and entry has to be.
You can also verify by drawing another fib on the 1 time frame above and 1 time frame below and and use the overlap as a zone. Example. Lets say you use the 50% fib level on the daily, 4 hour fib time frames. The area between the two 50% levels could be your entry zone. Your stop loss would be placed below your bottome 50% level
Try not to concern yourself with more trades. Look more to the longer term and trade quality trades. Example, If you follow this rule to the letter, enter between 50 and 60% retrace levels, put your stop loss at the next fib level below your entry and make your 1st take profit at the zero % retrace level, confirm your entry and exit with simple price action or with stochastic, macd , pivot points ADI, moving average cross, as well as any combination, it will be very hard to you’re your account. Do you know why? If you don’t before you proceed using the fib retrace strategy make sure you can answer that question and burn the answer into your mind and make sure you follow the answer every time.
Here is a video you can watch that will teach you everything you need to know about fibonacci. If you’re smart you will watch it a few times. I still watch it and learn something new everytime.
How to Trade with Fibonacci Levels - YouTube
Good Luck
Gp
