Quick Fibonacci Lesson

Hey traders! Giving a quick insight lesson into using the Fibonacci tool correctly (whats is drawn isn't accurate of a trade I have taken it's just to show).

I use it, as an added confluence to my set-ups to show me, entries, stop losses and target.

For me, I am a swing trader, so when calculating my SL, I put it about 10 pips above the next level, depending on where we are seeing rejections (in this case, finding resistance at 61.8% so my SL will be 10 pips above 78.6%). I also like to put my take profit targets just above the levels encase the spreads don't take me out.

I like to list my Fibonacci with; A, B, C and D:

(Downtrend example)
A = Previous Swing High
B = Support/First Low
C = Retracement Level/Entry
D = Extension/Take Profit Levels

D1 = Take Profit Target 1
D2 = Take Profit Target 2

I like to use two take profit levels as when we reach D1, I will take off 75% profit, and then let the rest run down to D2.

TIPS:

1) I want 3 touches/rejections at C before taking the trade, to know this is the retracement level.
2) The higher the time frame, the strong the tool.
3) If you can combine the Fibonacci retracement level along with previous pair resistance levels then it becomes an even stronger trade!


Hope people enjoyed this quick insight into the Fibonacci tool, let me know what you think :D