We have learned all the chapters about Fibonacci, now time for a summary Fibonacci.
The history of Fibonacci begins with a man named Leonardo da pizza, he is a mathematician from Italy.
Through his rabbit experiments, he discovered something surprising because of the growth of rabbits that make up the golden ratio.
He called it the Fibonacci sequence which appears in series 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and so on.
The series is to add the numbers 1 + 1 = 2, then add 2 + 3 = 5, 5 + 8 = 13, etc.
What is meant by the golden ratio? that is when we divide the first and second letters, it will produce an average ratio value is 0.618.
For example 2: 3 = 0.667, 3: 5 = 0.600, 5: 8 = 0.625, 8:13 = 0.615, 13:21 = 0.619, 21: 34 = 0.618, 34: 55 = 0.618.55: 89 = 0.618, 89 : 144 = 0.618.
And if the method of division is reversed it will get an average golden ratio value of 1.62, for example 13: 8 = 1,625, 21:13 = 1.62, 144: 89 = 1.62
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Summary Fibonacci Trading
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Traders use Fibonacci retracement levels as areas that reflect support and resistance.
After a trader draws a Fibonacci retracement by taking swing high points with a swing low.
The Fibonacci level will appear automatically on the trading platform.
Fibonacci retracement level
The key Fibonacci levels to be the main concern of the traders are 23.6%, 38.2%, 50.0%, 61.8%, and 76.4% levels.
And some of the most frequently achieved levels are 38.2%, 50.0%, and 76.4%.
Usually, these levels will be entered as default settings in a Fibonacci retracement software.
You can add another level by editing the indicator.
If our trading software doesn’t have a Fibonacci tool, we can still use the Fibonacci calculator instead.
Considering there will be a number of other traders who pay attention to the same levels (because retracement levels considered as support and resistance area)
And apply the same buy and sell placement methods to us, the estimated support and resistance levels can be fulfilled by themselves.
In practice, traders use the Fibonacci retracement level to find and determine whether it is the best price to enter the market, the 50% level is considered the best level for the retracement before the price returns to the initial trend.
Using Fibonacci retracement itself sometimes gives failure, and to minimize the failure the trader combines Fibonacci with support and resistance.
Then the second way is to combine using the trend line.
And the third way is to combine using Japanese candlesticks
Fibonacci extension level
Fibonacci extensions or also called Fibonacci expansion, use the golden ratio to determine the target profit.
The key Fibonacci extension levels are 38.2%, 50.0%, 61.8%, 100%, 138.2% and 161.8%.
Traders use Fibonacci extension levels as potential resistance and support areas to set profit targets.
Same with, Fibonacci Retracement, Fibonacci extensions can also meet our expectations because many traders use the same calculations as us.
The key to applying Fibonacci levels to charts is to determine the exact swing high and swing low points.
Swing High is a candlestick with at least two lower heights on both the left and right sides of itself.
Whereas the swing low is a candlestick with at least two higher low levels on both the left and right sides of a candle.
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Apply Fibonacci in financial markets
Fibonacci is one of the popular trading tools, many trading platforms that support the use of this indicator including MetaTrader 4 and MetaTrader 5.
Many traders use the Fibs indicator to assist them in making one trading decision on the forex, CFD and Crypto trading markets.
This tool is among the simplest and easiest ways to use it, but the success or profitability of this system is dependent on the experience of each trader.
When a trader pulls from a swing high to a swing low at a different timeframe, it will certainly produce a different level of fibs.
So to find the best way to trade using Fibonacci is to experiment with certain timeframes for several months.
Applying Fibonacci to forex in the same way as applying to the Crypto and CFD markets
Even though you might be able to calculate Fibs levels manually, most platforms have given them automatically.
Thus the discussion about Fibonacci, you have learned many things about this one tool, and the only summary Fibonacci.
If you are proficient in using this tool, you must be disciplined with trading rules and also loyal to money management and risk management.
The forex market may hold a million mysteries, even with the Golden Fibonacci ratio there may still be a failure, so you need to prepare with risk trading, and also is a good way to follow news politics and economy in the world
That way there will still be another chance to try again because forex trading is about possibility rather than certainty.
For the next chapter we will review the moving average, this is an advanced level of study at forex schools.