Guide To Day Trading – What Is? And How To Use Fibonacci

Share it with your friends Like

Thanks! Share it with your friends!

Close

Guide To Day Trading – What Is? and How To Use Fibonacci
For a complete guide to day trading visit http://daytradervideo.com

I’m going to give you the quick and easy breakdown to how I use Fibonacci extensions. In the past I’ve actually also used Fibonacci retracements, but because I typically judge the strength of pullbacks just by watching price plot I no longer have use for them.

Let’s first get into what exactly Fibonacci is and how to use it. Later we will discuss more about whether it really works or not. Just understand that a good portion of traders swear by it. So, I will expand on some overall tips on how to use it to both improve your trading and make you aware of what other traders might actually be thinking.

Guide To Day Trading Fibonacci

Fibonacci numbers are basically a group of numbers created by the mathematician. These numbers possess quite a bit of interrelationships but the primary one is the fact that each number is approximately 1.618 times the preceding number.

There’s a series of popular trading tools that are used based on these relationships. There’s a total of five types of trading tools that are based on Fibonacci’s discover. Those are arcs, fans, retracements, extensions and time zones.

Extensions which is what we are going to discuss are easily measure on your chart for any particular run and pullback. You can measure them using the F8 key on NinjaTrader. When you measure them you want to start a the beginning of the move and measure it to the end and then the end of the pullback. After it’s plotted on your chart what you’ll get is several Fibonacci areas.

It is popular opinion that these areas not only work a great deal of the time but they are actually areas that other traders swear by to make major trading decisions. Decisions like where to exit a trade. That’s exactly one of the factors that I look at concerning Fibonacci numbers. These areas are often looked at as support and resistance. If you notice much of the time when price actually reaches the area it will pause to respect the Fibonacci area.

So, overall what is my take on them. What I tend to do is use them in conjunction with other indicators to actually paint a picture of what the market is doing. If everything confirms my thoughts then I use them to make major decisions. But they do have to correlate with other things or I will just downright ignore them. Overall you have to make a decision as to how you are going to use them and just go with it.

Understand that this is just a guide to day trading and ultimately sometimes you just have to make a decision and test it out. Track your results and you’ll do far better than someone who relies on other people for all their information.

I want to teach you to fish, not just hand you the fish! 🙂