See the actual example of a Fib trade a short while ago. The yellow line is the 38.2% retracement and on this two minute chart it had two bars that touched the line almost exactly and with the red pinbar and a lower close below the prior 6 bars it was a perfect entry. I was hoping for a quick retest of the 3643 low but I just took profit when it acted up and did not fully cooperate.
Correct way:- Incorrect way (even though 50% helped ... this time):- Again if one is using fibs the wrong way test results will be wrong. I let my PnL provide me my "test" results. Others can theorize to their hearts content.
Hi sun trader, can i ask why you took your level from the second high? also why was it the correct way.
Compare wave 3 to wave 1 (I forgot to label them) it is more impulsive faster moving, no overlapping and longer in time and price. All that is to say cleaner looking, which Fibonacci techniques are more effective on. Any high to low will work some of the time. Odds are better when using markers that better reflect what is happening. Impulse is best, then corrective but lastly chop/rangebound/channels I leave alone.
Exactly. Fibs are 100 percent right 61.8 percent of the time. “We’re right 50.75 percent of the time . . . but we’re 100 percent right 50.75 percent of the time,” Mercer told a friend. “You can make billions that way.” The Man Who Solved the Markets, by Gregory Zuckerman.
A lot less than 61.8% of traders know how to use them the right way. But then again it is the same with RSI, Stoch, Trendlines, MA's, BBands, etc Just slap them on a chart and expect dollars to overfill your account.
Thank you for your explanation, can i ask do you average into a position at agreed fib levels,averaging your position away from your tp, and use a hard agreed stop, and tp ? Off subject , holidays in country's around the world make so much difference to trading setups as today. I am based in the UK, the European and uk open were ok.now set ups are either flat or go to extremes.