Advanced system #2 (Fibonacci Trading)
Submitted by Edward Revy on May 6, 2007 - 04:39.
The fact that Fibonacci numbers have found their way to Forex trading is hard to deny.
Moreover, trading currencies with Fibonacci tool for many traders have become the bread and butter of their whole trading career.
So, shall we look at the one of such good Forex trading systems today?
Trading setup and tools we need:
Time frame: 3 hour (or 4 hour).
Currency pairs: any.
Indicators:
Fibonacci tool - our main tool
EMA 100 – green (visual guidance)
SMA 150 – red (visual guidance)
RSI (14) on a daily chart
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Hi Michael,
This strategy works 24/7.
I'd recommend EURUSD, USDJPY and GBPUSD.
Fibonacci tool on any trading platform has the levels, you've just named. You'll need to add 75 and 25 level manually. Do do that:
- add Fibonacci retracement to the chart first;
- right click on the indicator until you see "Fibo properties" menu. (If you can't call this menu, then right click on the chart and choose "Object List" -> from the list choose "Fibo" -> Edit -> where you'll add 75 and 25vfibo levels.)
Regards,
Edward
Hello Edward,
I have been scanning this strategy for some time and I hope you can spare some moments to clear my doubts.
When we pull the Fibo lines i.e. swing up for uptrend and swing down for down trend. Is this correct?
I am testing this strategy on 1hr TF. Also notice that if we wait for the price to close completely inside 75 or 25 territory, sometimes the trnd is already ending? Don't you think so?
Thanks /Snowhyte
Hi Snowhyte,
We pull fibs from swing high to swing low or vise versa. It doesn't actually matter in which direction to pull, since 25% and 75% fib lines are located equal distance from each side of the swing.
When price closes inside 25 and 75 channel, it is a retracement move, which is expected. When price breaks outside 25/75 channel, it may indeed travel not too log on the first run, but, what we want to see here is a long term trend, that's why I prefer looking at 3 or 4 hour charts and higher.
Regards,
Edward
Hi Ed
I am really struggling understanding fibanacci, how do you create these retacements with the fibanacci tool..i am a newbie so please pardon my ignorance...everthing sounds so technical . maybe expained in laymans language
Barry
Hi Barry,
Fibonacci may take time to master for a beginner. Just keep on going in case you can't understand something in the beginning; you'll learn it with time.
For now, take a look at this source, which explains Fibonacci basics: Forex Fibonacci ebook
Regards,
Edward
hey all..
can i know from where to download
Fibonacci tool
THANKxX
Fibonacci tool is not "downloadable". It is a must have tool for any Forex trading platform. Which one do yo use?
Try asking your broker to help you find this tool on your trading platform.
Hi Edward,
What does it mean "since entry we had to reset Fibonacci 4 times" written on the chart?
Thank you
Nique
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