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asiaforexmentor

Forex Trading Strategies – Fibonacci

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Forex Trading Strategies – Fibonacci

fib.gif

 

Alot of guys out there have enquires on how to draw a proper fibonacci in forex trading.

Whether they are drawing in the right direction?

And how do they know that the fibonacci is drawn correctly?

This video will show you how to go about it.

(I apologise for the poor resolution quality which i had set wrongly, the next video will be better!)

 

[ame=http://www.youtube.com/watch?v=bF6XYAeNYM0&feature=player_embedded]forex trading system, price action forex, forex trading strategies - YouTube[/ame]

 

If you like this post, don’t forget to comment on it.

 

Ezekiel Chew:haha:

Asia's #1 Forex Mentor

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I see some confusing conflicts with the video you presented:

 

1) Drawing Fibonacci Lines top and bottom are subjective the way you present it (and the way most people present it). It is all relative which "top" or which "bottom" you use.

 

2) It is a lagging indicator when done this way, because you must wait for a retracement has taken place before making any trading decisions.

 

3) the pin bar that you describe is relative to the timeframe and broker that you are using. It appeared you were using 4 hr timeframe. But what if you were using 1 hr? Or 4 hr timeframe, but a different broker?

 

4) You are using moving averages (lagging) as an additional filter. Why? Isn't the properly drawn fibonacci enough.

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I see some confusing conflicts with the video you presented:

 

1) Drawing Fibonacci Lines top and bottom are subjective the way you present it (and the way most people present it). It is all relative which "top" or which "bottom" you use.

 

2) It is a lagging indicator when done this way, because you must wait for a retracement has taken place before making any trading decisions.

 

3) the pin bar that you describe is relative to the timeframe and broker that you are using. It appeared you were using 4 hr timeframe. But what if you were using 1 hr? Or 4 hr timeframe, but a different broker?

 

4) You are using moving averages (lagging) as an additional filter. Why? Isn't the properly drawn fibonacci enough.

 

I will offer my .02 cents/rupis/ZAR/(your fx of choice :))

 

1) Yes, it is all relative and subjective. Just be consistent and if doesn't work, choose differently. Partly to answer (4), some people take the high/low on both sides of an MA. I use the most recent action for that timeframe that is reasonable.

 

2) Yes, in most cases there must be a retracement. However, in almost everything you trade exlcuding newly issued IPOs, there would have been a retracement and probably multiple retracements. You can also use the Fib Projection / Extensions as well.

 

3) Yes, that is right. However, you should know on which timeframe you are entering your trade. I assume he is trading off the 4 hour chart. Even comparing 4 hr vs 1 hr, a pinbar on the 4 hr would show as price rejection on a 1 hr. As far as different brokers showing different prices, I would say try more brokers and see which are most in-line with each other and drop the outliers. Between the 2 brokers I use, differences are typically around 1.5 pips max on majors. I have seen as much as 8 pips IIRC, but on a 4 hr pinbar, 8 pips is moderately negligible depending on the fx.

 

4) Is any single indicator enough? I would say no :D In my experience one should use at least 2 indicators that measure different things. There is a school of thinking that uses MAs to reinforce the validity of Fib levels. Another is to use Fib confluences on multiple timeframes.

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