Effective Ways to Use Fibonacci Tools

Effective Ways to Use Fibonacci Tools


Fibonacci tools, particularly retracement and extension, are some of the most important tools at a professional trader's disposal. This article will discuss: what is Fibonacci？ Fibonacci sequence levels, Fibonacci Fan strategy, and how to use fibonacci tools properly with three different methods that will boost the effectiveness of your trading strategy, as well as some other important topics that are useful in relation to Fibonacci tools.To get more news about WikiFX, you can visit wikifx.com official website.

　　Leonardo Bonacci aka Fibonacci

　　Leonardo Bonacci aka Fibonacci was born in Pisa around 1170, as the son of a wealthy merchant. He was an Italian mathematician considered to be the most talented western mathematician of the Middle Ages. His book 'Liber Abaci' introduced the Hindu-Arabic numeral system.

　　 What is Fibonacci？

　　The Fibonacci Sequence (or just simply 'Fibonacci') refers to a set of numbers that begins with either the number 1 or the number 0, succeeded by another number 1, and then the pattern continues based on the rule which states that: all subsequent numbers (or Fibonacci numbers) will be equal to the amount of the two numbers that preceded them (or the sum of the two previous numbers).

　　Nowadays, Fibonacci levels are used in all types of trading including stocks, futures, commodities, cryptocurrencies, and also Forex trading. The Fibonacci levels, with its retracements and targets, are one of the best tools in the entire field of technical analysis. Its strong support & resistance levels are exact and explicit. Most importantly, Fibonacci offers very defined and precise entry and exit spots. The Fibonacci levels (or just Fibs) are derived from the Fibonacci sequence numbers.

　　Fibonacci Sequence Levels

　　The Fibonacci sequence numbers are as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, etc. This series of numbers is created by always adding the last two numbers together:　　Very often, the main supporting level on the Fibonacci Fan is the 61.8%. By applying the following rule, we might have a good chance for an entry purely based on Fibonacci Fan trading. Fibonacci Fan is the default indicator on MetaTrader 4 (MT4) and MetaTrader 5 (MT5), and you can assess it directly. Once the price breaks the 38.2% level, it will usually go to the 61.8% level. We can make an entry at 38.2, aiming for 61.8. This rule works best in a trending environment, but it can also be used in a countertrend.

　　Fibonacci Expansion is a default tool available in MetaTrader, which is also crucial for price actiontargets. We will now introduce the essential Fibonacci Expansion levels that you might want to use with different trading strategies. In order to add custom levels to the Fibonacci Expansion tool, you first need to select the tool from the drop-down menu in MetaTrader 4. This is how you do it: