The use of the tool in the Fibonacci forex trading is one of the best ways to provide some movement in the market. But like most indicators, does not give the necessary certainty to the time of entry into operation.
We used 2 analysis to get away with false entries, and thus avoid the stop's caused by misinterpretation.
We know that this tool is used a lot waiting for a pause before continuing the trend cycle is called retraction, and the best entry points are obtained in 38.2%, 50% and 61.8%. These operations are areas used by different operating systems on the market.
But now, back to the question, and how we can get a higher hit probability at these points? How to identify the best retraction in?
With this question, let's look at the figure below:
In these examples we saw that hears a retraction in mind three points mentioned, but what point would we expect to operate?
- Let's look at the other retractions performed prior to the actual movement.
If we look now, we have seen previously that very spot there was a strong 50% reduction, in this case our input would be best at this point.
- Let's look at other models to have more clarity of the concept.
Seek in our entries point retraction, or an accumulation on the reverse side of the current movement, where it can make our traders more confident.
- Candles Confirmation:
As mentioned at the beginning of the text, there is another point we analyze to reduce margins of error.
After finding how best to enter retraction in favor of the trend, we expect the candles confirmation.
The candles of verification is the set of three candles where the candle is the second largest of the three, thus forming a pyramid. Below a picture to illustrate What did being mentioned.
With this confirmation we will immediately after the closing of the third candle, thus diminish false signals, we observe this training in the above examples:
The examples above show perfectly entry with confirmation of candles, after it hit the desired retraction.
- Stop Loss and Take Profit:
The stop loss is in the case of minimum buy is indicated in the 2nd candle and in case of sell the maximum of the 2nd candle.
The take profit is in agreement with the team frame and the goal of every trader. In my case I like to use my take profit equal to the size of my stop loss, with operations that have short and with good profit opportunities.
- Time Frame:
This strategy can be applied to any team frame, using the rules of stop loss and take profit.
- Concluding remarks:
- Do not use this strategy before any important news,
- Always use 5% margin for each operation.
- The take profit depends on the time frame, but will the psychology of each operator.