FIBONACCI RETRACE LESSON
Posted: Fri Apr 24, 2009 12:45 am
FIBONACCI RETRACE LESSON
If got caught short and wondered if price would come back, then use the TRO DYNAMIC FIBS SR indicator on a D1 chart.
Price usually retraces back at least 23%. So if your breakeven is between current price and the 23% retrace level, you should get a chance to get out even.
FREE MT4 versions of TRO DYNAMIC FIBS SR, including SOURCE CODE and template, attached.
PLEASE DO NOT POST MY CODE ON OTHER FORUMS.
THIS IS A DEAD LINK:
http://www.nss-t3.com/PREDICTING%20TURN ... ONACCI.pdf
THAT IS WHY I LIKE TO COPY/PASTE THE INFORMATION.
Fibonacci Projections and Retracements defined
Fibonacci price projections and retracements are very powerful ratios that can be used as a leading indicator. They use the current underlying structure of the market to attempt to predict where the market may go in the future.
Fibonacci ratios are common in almost everything in nature from flowers, to the human body, seashells etc. Our intention is to show you how you can use these powerful ratios to assist you in your trading. The basics of market price action are determined by supply and demand. This supply and demand can be measured in waves or swings with charts and graphs. Elliot wave technicians attempt to predict turns by counting waves and projecting them into the future.
The downside and the challenge to this methodology is that Elliot wave is extremely ambiguous and often too difficult for most traders to implement into their trading strategy with any degree of consistency. Fibonacci ratios however are just as, if not more powerful and can be done under a more rigid set of rules. After all, rules and discipline are the building blocks for successful trading. Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one pivot to the next and add or subtract the ratios. Simple. Many traders now use spreadsheets and simple charts and graphs to do basic fibonacci ratios. Some common ratios are .382, .500, .618 1.00 1.382, 1.618, 2.00 and 2.618. These ratios also as they get larger tend to have more exhaustive qualities. Where this takes a powerful turn is when you assemble a ? CONFLUENCE? or grouping of these fibonacci ratios in a narrow well-defined area.
Then, when you are able to take that one step further and apply a confluence of ratios from multiple timeframes and multiple areas within the same chart, the confluence area develops into a powerful synergistic area that can be effectively traded to or off of depending upon your personal trading style.
Types of fibonacci ratios that you can calculate
There are 4 main types of Fibonacci Price projections that can be done.
1. Extensions
2. Alternates
3. Expansions
4. Retracements
1. Extensions take the range from point #1 to Point #2 and multiplying that distance by a Fibonacci number, add the two numbers together and project into the future where a possible turning point could be.
2. Alternates take the distance between point #1 and point #2 and adding that distance to point #3 to give you another type of projection into the future.
3. Expansions take the distance from the # 3 pivot to the #2 pivot and then multiply that distance by Fibonacci numbers and add that range to the #3 pivot.
4. Retracements take the distance from one pivot to the next. Preferably a #1 to a #2 pivot and take a portion of that range that is generally 100% or less. Common ratios to calculate retracements are .382, .500, .618, and .786.
If got caught short and wondered if price would come back, then use the TRO DYNAMIC FIBS SR indicator on a D1 chart.
Price usually retraces back at least 23%. So if your breakeven is between current price and the 23% retrace level, you should get a chance to get out even.
FREE MT4 versions of TRO DYNAMIC FIBS SR, including SOURCE CODE and template, attached.
PLEASE DO NOT POST MY CODE ON OTHER FORUMS.
THIS IS A DEAD LINK:
http://www.nss-t3.com/PREDICTING%20TURN ... ONACCI.pdf
THAT IS WHY I LIKE TO COPY/PASTE THE INFORMATION.
Fibonacci Projections and Retracements defined
Fibonacci price projections and retracements are very powerful ratios that can be used as a leading indicator. They use the current underlying structure of the market to attempt to predict where the market may go in the future.
Fibonacci ratios are common in almost everything in nature from flowers, to the human body, seashells etc. Our intention is to show you how you can use these powerful ratios to assist you in your trading. The basics of market price action are determined by supply and demand. This supply and demand can be measured in waves or swings with charts and graphs. Elliot wave technicians attempt to predict turns by counting waves and projecting them into the future.
The downside and the challenge to this methodology is that Elliot wave is extremely ambiguous and often too difficult for most traders to implement into their trading strategy with any degree of consistency. Fibonacci ratios however are just as, if not more powerful and can be done under a more rigid set of rules. After all, rules and discipline are the building blocks for successful trading. Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one pivot to the next and add or subtract the ratios. Simple. Many traders now use spreadsheets and simple charts and graphs to do basic fibonacci ratios. Some common ratios are .382, .500, .618 1.00 1.382, 1.618, 2.00 and 2.618. These ratios also as they get larger tend to have more exhaustive qualities. Where this takes a powerful turn is when you assemble a ? CONFLUENCE? or grouping of these fibonacci ratios in a narrow well-defined area.
Then, when you are able to take that one step further and apply a confluence of ratios from multiple timeframes and multiple areas within the same chart, the confluence area develops into a powerful synergistic area that can be effectively traded to or off of depending upon your personal trading style.
Types of fibonacci ratios that you can calculate
There are 4 main types of Fibonacci Price projections that can be done.
1. Extensions
2. Alternates
3. Expansions
4. Retracements
1. Extensions take the range from point #1 to Point #2 and multiplying that distance by a Fibonacci number, add the two numbers together and project into the future where a possible turning point could be.
2. Alternates take the distance between point #1 and point #2 and adding that distance to point #3 to give you another type of projection into the future.
3. Expansions take the distance from the # 3 pivot to the #2 pivot and then multiply that distance by Fibonacci numbers and add that range to the #3 pivot.
4. Retracements take the distance from one pivot to the next. Preferably a #1 to a #2 pivot and take a portion of that range that is generally 100% or less. Common ratios to calculate retracements are .382, .500, .618, and .786.
TRO you're the man:
