Almost every trader has even the most minimal experience in the trade, at least once in their practice try to use this very useful tool.Usually Fibonacci levels used to determine the points of origin and possible correction prediction of further rate quotes.Also, this tool can be used to confirm their predictions.Fibonacci level - a great thing that gives excellent results if strictly abide by the rules of its construction.For those who have heard about this tool for the first time, we first describe the main points that you should know to apply it.
How to build Fibonacci
First, we note that the higher the selected timeframe, which will be the analysis, the more accurate will get the desired line, and the more credible data points.First, define the upper and lower extreme points and then the distance between them along the axis Y, that. E. The number of points is divided in relation to the well-known around the world Pisa math sequence.If you are using the classic Metatrader platform, you do not have to do any calculations, because the developers have taken care of the terminal on the relevant option.It is enough to activate it: click the left mouse button on the left-extremum and hold the key, move the mouse to the right at the point.After that, each Fibonacci level would be in his place, and you can begin to analyze the dynamics of the current price on the chart.Despite the fact that the very construction is elementary simple, there are some nuances that are sure to keep in mind to get a good result in the trade.
What gives Fibonacci level in trade
any movement in our world which is characterized by cyclical: after a day comes the night comes after ebb tide and a strong movement inevitably gives way quotes correction.Those who use Ichimoku indicator, know that a sharp pulse rates tend to be rebound, reaching 50% of the distance traveled before.The question arises, how then calculate the point of no return, if instead of one powerful leap, we see a long series of alternating white and black candles, and clearly that the current trend is coming to an end?Just tell it to us and Fibonacci level.The most significant lines are those which are markers of 38.2%, 50% and 61.8%.
Common Mistakes When
Fibonacci level does not work, the reason for this are usually following error when building:
- incorrect reference points.You can not move when placing the body lines with candles in the shade.For example, if the trend is upward and the first extremum is taken at the lowest point of the candle (LOW), the second extremum must also be at the upper point shadows (HIGH) and vice versa.As an alternative, you can also share the opening and closing prices.
- Ignoring higher timeframes.Beginners often engage in Forex scalping and trading at short time intervals.The overall picture of the market often goes unreported, and this increases the risk of trading against a strong trend.
- analysis solely on Fibonacci levels.Despite the fact that it is simple, effective and easy-to-use tool, you should not rely on it when drawing up its forecast for the selected trading quote.The use of additional indicators, for example, oscillators such as RSI or Awesome oscillator, increases the chances of successful transactions.
