A Fibonacci level in currency trading: common mistakes and best practices for building

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2018-04-01 02:51:08

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Almost every trader with even the most minimal experience in the trade, for once in my practice have tried to use this very useful tool. Usual Fibonacci used to determine the start points of a possible correction and prediction of future course of quotes. Also this tool can be used to confirm their predictions. Fibonacci level – great thing, giving excellent results, if strictly observe the rules of its construction. For those who hear about it first, let us describe first the main points that you should know.Fibonacci retracement

How to build a Fibonacci levels

First, we note that the higher you select the timeframe on which to analyze, the more accurate will be the desired line and the more credible the resulting points. First, define the top and bottom extreme point, and then the distance between them along the Y-axis, i.e. the number of points is divided in the ratio the world famous sequence of Pisa mathematics. If you use the MetaTrader platform, you will not have to do any calculations, because the developers of this terminal took care of the appropriate option. Enough to activate it: click the left mouse button on the leftmost extremum and, while holding down the key pull the cursor to the right extreme points. After that each Fibonacci level will be in its place, and you can begin the analysis of the current price movements on the chart. Despite the fact that the building is a no-brainer, there are some nuances that must be kept in mind to get good result in trading.how to build a Fibonacci

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What makes Fibonacci retracement Trade

Any movement in our world, typical of a cycle: after day comes night, the tide comes after low tide, and a strong movement quotes unavoidably gives way to a correction. Those who use the Ichimoku indicator, you know that a sharp pulse rates, as a rule, follows the rebound, reaching 50% of the previously traversed distance. The question arises, how, then, to calculate the point of no return, if instead of a single powerful jerk, we see a long series of alternating black and white candles, and it is noticeable that the current trend is nearing completion? This is what we tell the Fibonacci level. The most important lines are those which are marks the 38.2%, 50% and 61.8%.Fibonacci levels are used to

Typical mistakes

When a Fibonacci level fails, the reason usually are the following inaccuracies in the build:

  1. Wrong reference point. You can't move when drawing lines with the body on the shadow. For example, if the trend is upward and the first extremum is taken at the bottom of the candle (LOW), the second extremum must also be at its highest point the shadows (HIGH) and Vice versa. As an alternative you can also share prices of opening and closing.
  2. Ignoring the higher time frames. Beginners in Forex often doing scalping and trading on small time intervals. The overall picture of the market often goes unreported, and this increases the risk of trading against a strong trend.
  3. Analysis solely on Fibonacci levels. Despite the fact that it is simple, effective and easy to use tool, not rely on it when drawing up its forecast selected for the quote. The use of additional indicators, for example, such oscillators, like RSI or Awesome oscillator will increase the chances of successful transactions.

Comments (1)

2019-10-09 в 16:18:18

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I lost quite a large sum of money in my early days in trading due to some fake bots and strategy but i am happy that i am winning trades efficiently with the least of $500 daily from wins . You can reach me on my Whatsapp on +441613541049 or via email on the above

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