Fibonacci-based strategies: Use, mistakes, pitfalls

[Arafx]

remember that Fibonacci levels are subjective and can vary among traders. Don't blindly follow others' interpretations. Take the time to understand the concept and adapt it to your own trading strategy.

Right. Each trader's interpretation of Fibonacci levels should be tailored to their strategy.

 

[Arafx]

The Fibo grid very well determines the levels during corrections on almost all trading instruments, and especially Forex.

The Fibonacci grid is particularly useful in spotting correction levels during trading, enhancing decision-making.

 

[Arafx]

its not jus bout fibonacci or any single indicator U shouldn rely on one indicator rather U should cross reference it with several others and its important that while many traders R lookin at the same chart and usin the same indicator the results R vary from one person to another

Correct. Combining various indicators allows for a more informed and reliable analysis of market movements.

 

[Arafx]

If you are new to Fibs , Its a place to start.

Fibonacci Ratios with Pattern Recognition
By Larry Pesavento,

I've heard great things about Larry Pesavento's work on combining Fibonacci ratios with pattern recognition.

 

[bigdolly]

Can anyone share their experiences using Fibonacci-based strategies in Forex trading?

It is quite easy to use but also error-prone because if you add some margin to the Fib levels, (i.e. signal is triggered when price enters the zone around particular Fib level), then there is 80-90% probability that price will try to reverse at some level giving you a signal. Lots of false signals and you lose trust in that tool

 

[Arafx]

It is quite easy to use but also error-prone because if you add some margin to the Fib levels, (i.e. signal is triggered when price enters the zone around particular Fib level), then there is 80-90% probability that price will try to reverse at some level giving you a signal. Lots of false signals and you lose trust in that tool

Right. Using Fibonacci levels can be effective, but it's essential to combine them with other indicators and risk management techniques to filter out false signals.

 

[Sequence]

Trading levels using Fibonacci is a craft on its own, it is a predictive indicator used correctly, adding other indicators ( which are all lagging ) is a pointless exercise.

All indicators .RSI.MACD, SMA, and the rest tell you where you are NOW or have been in the past ,what is the use in that.?

 

[Painskin]

To apply Fibonacci properly you have to do it in conjunction with another strategy that will give you a synergy combining the two.
The most obvious example is to use it with pivot points and support/resistance levels. If you see the two signals align with each other then it’s a more or less reliable sign for action.

Or it goes well with wave analysis too. It’s easier to define the potential price points where impulse or correction will run out of steam.
But by the same token you java to always keep in mind that neither fibonacci nor any other tool can give you 100% probability, ever.

 

[Sequence]

To apply Fibonacci properly you have to do it in conjunction with another strategy that will give you a synergy combining the two.
The most obvious example is to use it with pivot points and support/resistance levels. If you see the two signals align with each other then it’s a more or less reliable sign for action.

Or it goes well with wave analysis too. It’s easier to define the potential price points where impulse or correction will run out of steam.
But by the same token you java to always keep in mind that neither fibonacci nor any other tool can give you 100% probability, ever.

Is it possible to post a chart or sample trade, as you seem very proficient in Fibonacci trading.