The Advantages Of Fibonacci Forex Trading Techniques Methods. As a trader, surely you are familiar with Fibonacci, right? Fibonacci forex trading techniques don’t just happen. In 1170, a man named Leonardo Fibonacci was born in Italy. During his growth period, he was very interested in calculation and mathematics, he also studied Arabic and Hindu numerical systems. After learning, according to Leonardo, the number system is even simpler than the Roman system and also the calculation is much easier. In 1202, Leonardo popularized the Arabic-Hindu numerical system to the European Continent.
Do you know who popularized 10 digits, commas, decimals, and other number symbols? Leonardo Fibonacci is the person who popularized it. Actually there are many types of calculations that are triggered and popularized by him. But the most famous is the Fibonacci sequence. The Fibonacci sequence consists of: 1,1,2,3,5,8,13,21,34,55,89144.
These Fibonacci numbers, it turns out, are very useful in forex trading. To use Fibonacci as a calculation of a trading strategy, you do not need to calculate or formulate its value because a certain Fibonacci value has been obtained, namely:
Fibonacci retracement levels: 0.236, 0.382, 0.500, 0.618, 0.764.
Fibonacci Expansion Levels: 0, 0.382, 0.618, 1,000, 1.382, 1.618.
Because Fibonacci is very popular among traders, there are now many trading platforms that provide Fibonacci calculators, so you only need to calculate it.
FIBONACCI RETURN LEVEL
Fibonacci levels serve as info about support and resistance, where traders will open/close positions when prices approach that level.
FIBONACCI EXTENSION LEVEL
At this level, traders will usually make this as a reference for profit.
In using Fibonacci there are several things that must be considered, including:
- Fibonacci levels that you can count on when the trend is in progress
- To use Fibonacci, the first step is to determine the price range from lowest to highest.
STILL MUCH FALSE BY USING FIBONACCI
Although Fibonacci is already popular and often used by traders as a tool, but in practice, there are still many who use it wrong. What are the mistakes of traders in using Fibonacci?
NOT RECOMMENDED TO USE A JOIN REFERENCE POINT
Retracement is a correction of an ongoing trend. In Fibonacci theory, at the same retracement level as the ratio figure is the support/resistance level used to enter or exit a reference. This retracement level is determined by various types of reference points. The highest reference point is known as the high swing, while the lowest level point is known as the low swing. The reference points for both swing highs and low lows can be determined through candlestick closing prices/extreme (high or lowest) candlestick prices.
If a trader uses the closing price as a reference for a high swing in the body of the candlestick, the low swing reference point must be right at the closing price. The same thing if there are traders who use extreme points when the high swing is at the highest point of the candlestick bar, the low swing must also be at the lowest point of the bar.
You must remember that relative support and resistance levels. But by setting a fixed reference point on the Fibonacci retracement, traders can get more accurate references about support and resistance. Or traders can try with a collection of reference points located at the closing price of the candlestick (body to body).
DO NOT COLLECT LONG TERM TRENDS
Traders who use Fibonacci Retracement are strongly advised NOT to ignore trends and always check trends that occur within the current time frame or larger time frame. Unless you are accustomed to trading on a high time frame. This method is very important to do so that you can avoid mistakes in predicting long-term trends that can later lead to trading errors, so the edges will disappear again.
WE USE AND MAKE ADDITIONAL INDICATORS AS CONFIRMATORS
In order not to be mistaken in the position entry, traders can use additional indicators as confirmation for Fibonacci retracement levels. Examples of indicators that can be used are MACD, Stochastic, or RSI.
DO NOT USE THE RETURN OF FIBONACCI IN A SMALL TIMEFRAME
A small/low time frame usually appears noise or in other words signals that seem unreliable. Volatility is also quite large and Fibonacci retracement support levels that support the resulting resistance are VERY inaccurate. So later you cannot predict the price direction accurately and it will be very difficult to find the exit level because the pip movement is very small
SO, WHAT’S THE SOLUTION?
Although there are many forex trading techniques spread throughout the forex industry, Fibonacci is very “strong” and can really help users in providing accurate trading signals. It doesn’t feel like a trader if you don’t master Fibonacci retracement trading techniques, and for those of you who want to learn this technique, I will be happy to give you an electronic book to learn Fibonacci trading strategies with their application examples and there are also free demo account exercises. The Oiya Fibonacci e-book is free, so you can directly download it without having to register first.