Are you struggling with how to use Fibonacci to day trade? Do you find yourself staring at your computer screen, wondering where to enter and exit your trades? Have you tried to day trade in the past only to fail time and time again? Are you starting to feel like others know a secret about day trading that you still haven’t figured out? The truth is successful traders do know a secret. It’s called Fibonacci, and in this week’s video, we will be discussing how to use Fibonacci to day trade the forex and futures markets.
Now you may be thinking that you don’t even know what Fibonacci is, how are you supposed to learn how to use Fibonacci to day trade? That’s okay. In the first video of this series, I cover the basics of Fibonacci. If you happened to miss last week’s video, click here to access it now. Once you’ve watched the first video, then come back and learn how to apply it to your day trading.
For those of you that already have a basic understanding of Fibonacci, let’s take a look at one way you can use Fibonacci to improve your trading.
There is a tool we will be using called the Fibonacci extension tool. This tool is designed to calculate a measured move in the market.
Below is an illustrative example of the Fibonacci extension tool.
The first area that I start to look for a possible reversal to go long in the market is at the 100% level. The next level would be at the 127.2% level. I never have a resting order at these levels. Instead, I set up alerts to notify me when price touches one of these levels.
The next step is to wait for the price to confirm that the forex pair or futures contract want to trade higher. Once this is confirmed, I place a buy stop order to enter the market and a stop-loss order just below the most recent swing low in the market. Finally, I set a take profit order twice the amount I’m willing to risk.
Fibonacci, combined with proper money management, can improve most traders’ p&l.
In closing, I would like to once again remind everyone about the FREE live streams, hosted by myself each week. These live streams are an excellent opportunity for traders of all skill levels to ask questions and interact with me live. Again, this experience is entirely FREE to you. So if you haven’t already signed up, why are you waiting? Fill out the form below to be notified before any of my future live streams.