Fibonacci Trading (Everything Important You NEED To Know)

is there such a thing as a perfect number yes there is and this is it it is known as the golden ratio and sometimes the divine ratio why divine well this mysterious number seemingly sits at the core of everything we understand about the universe you'll find it in the formation of galaxies the shape of a flower it is hidden in the faces of people you know and in the relative sizes and proportions of the human body we find objects proportioned with it aesthetically pleasing so it's no surprise that is even found in great works of art music architecture product design and scientific and physical principles all through time it seems that there is very little in the natural world that doesn't have this number hidden in the workings somewhere and that includes the world financial markets how is it possible but a single recurring sequence of numbers seems to be at the heart of nature's design is the entire universe bending to its whims and most importantly can we use this information to our advantage when placing trades you may be surprised to know the answer is yes yes we can but have well that's coming up right here right now welcome back once again to the trading den thanks by the way for all of your recent comments are participating in our most recent quest we've had some incredible feedback and my team are truly grateful to all of you for the valuable contributions you've made I really believe we are growing something special here today we are going to be talking about Fibonacci levels the golden ratio and how we can use these concepts to help choose our entries take profit and most importantly our stop loss levels now if you've seen any of my other videos you'll know the name of this game is knowing where to get in and where to get out anything we can do to fine tune these three price levels potentially gonna benefit us now for all of you Holy Grail seekers out there I don't want you to get the impression that this is gonna be the Holy Grail just because of some mysterious origin of the tool that we're talking about like I've said many times on this channel there really is no Holy Grail in the world of trade in fact if there was everyone would be using it and they would very quickly stop being a Holy Grail precisely because everybody was doing it I do however have a consolation prize for the Holy Grail seekers out there and that is the fact that if there ever was a Holy Grail in trading then it would be the instructions on how to follow a structured well-thought-out trading plan and explain how you can get started on that in this video here so what is the golden ratio and the Fibonacci sequence well to answer that we're gonna need to do some complex maths in mathematics two-point systems are in the golden ratio if their ratio is the same as the ratio of their sum to the larger two constants the finger on my right illustrates the geometric relationship expressed algebraically quantities a and B where a is greater than B B is greater than zero here the Greek letter pi represents the gon ratio it's but if anybody by N's in those terms then the identity made it above safe why do I speed that section up because you don't need to know any of that stuff in truth trading is really about understanding between basic concepts such as risk management support resistance chart patterns and combining them to start out small your greatest leaps forward are gonna come from the practical application of these concepts not from the understanding of the maths behind them you could spend years crunching numbers and equations buying every book you can find on theory and spend your entire life studying them all without ever placing a single trade you won't go far with that approach however learn the tools learn the strategies and find out which one resonates with you put them in a trading plan that you create on your own with the help of a mentor then follow that plan that I promise you is the quickest road to success the key things you need to take away are that the Fibonacci sequence is really just the golden ratio in a sequence numeric form that fibonacci tools are based on the Fibonacci sequence and they are useful aids in attempting to predict where a market is likely to reverse now these things are real they exist are used by traders all around the world and that is important why well when hundreds of thousands of people are using the same series of levels to make buying or selling decisions there is a propensity for those levels to become real that is to say that markets are more likely to turn at those levels precisely because so many are looking at those levels and this is sometimes called a self-fulfilling prophecy so the assumption we make is that if a particular method has a large number of proponents that is a method we should be looking at let's have a look on smart charts the Fibonacci tools there inside of smart is quite extensive if you're already a smartass user you're gonna find a fully-featured suite of tools that you can access by clicking the drawing tools icon like this now click here and voila there's one two three four five six tools currently available there's Fibonacci arcs ellipses extensions fans retracements and time zones now you can do all sorts of crazy things with these but the specific tool I want to talk about today is this the retracement tool now the really great thing about smart charts is that it's very simple for a beginner to use it has an e-learning section visual trading and the drag-and-drop markers however as you progress further along the path and start to grow as a trader you're gonna find it has all the tools you need as an advanced user like for example these fibonacci tools that you can park as a beginner but then come back and explore when the time is right it's not the case here that you need to start with something overly simple and then jump platforms when you outgrow them then you have to go through a learning curve all over again smart charts is something you can grow with throughout your entire trading career so we now understand the origins of these tools and why they're important to learn and where to find them in smart charts now let's talk a bit about retracement all markets move in phases and cycles and I've talked about this before in earlier videos but it's a quick recap no market will ever move in one direction there is a constant ebb and flow in back and forth this is because there are constant cycles of buying and selling even when a market is moving steadily upwards major players will be looking to take profits on their positions causing the market to fall for a while before the next wave of buyers jumps in we therefore tend to see a pattern of higher highs and higher lows in a market that is moving upwards and that is how we identify an uptrending markets the game then becomes how do we know when this temporary movement against the overall market direction is about to end signalling a resumption of movement in the major price direct now in the past I've gone through quite a few price action signals we can look for that may indicate a price resuming to its major price direction I'd highly recommend that you look at some of the earlier content on this channel if you want to go through some of those signals today let's look at how we can use the Fibonacci retracement tool that this purpose okay so let's have a look in context at how we would use the Fibonacci retracement tool we really use it to understand how far a position can go and most importantly where to get into position so I want you to look first of all and I've made the chart look as naked as possible because I don't want the confusion of any indicator or anything else there for you to focus on I just want you to look at price we're looking on a one-hour chart perfect of dibban Archy we look at euro sterling and i want to give you some context that I'm a trader that is bearish on the euro sterling so I'm looking for short entry position I may have been short before and closed my trade or I may be looking to go into the position short but I can see this high point on the chart I can see this low point on the chart and I can see that the market from that low point has started to rally back up now I could say well yes it's in line with it's still in a downtrend this is a phase to move when you remember that phase one was the prevailing movement the phase of the movement down is moving with the trend because phase one movement is when the market is moving consistent with the overriding trend meaning if this is a short market and the euro is falling down then this is really phase one phase two is when the market then pulls against them this is the retracement if you will against the trend but then we want to know well when does the prevailing trend resume that downtrend when do we get in short obviously we don't have the problem with placing a short trade here's what happens if the market rallies well then we're going to lose money how do we know that there is enough traders looking at this short entry and how can we use that Fibonacci sequence of numbers on a euro sterling one-hour chart that all the currency traders around the world this is a classic usage of the tool as I said before the most important usage of two Bonacci is the retracement because it's helpful you can all fans and arks everywhere you like but when you use the retracement tool it shows you specifically where the market is going to get most resistance if you are looking to enter this kind of position so let's go into drawing let's go to Fibonacci now you'll see as we went through before all of their relative tools that we have is the retracement is the powerful one that we want so we take Fibonacci retracements now I take that high point notice how I put the crosshair at the top and as I start and I hold my mouse down so I like to use an external mouse sometimes and I drag it down to the bottom low point now you'll notice how those numbers are changing on smart charts and as I move that line up and down of course those relative Fibonacci numbers which of course is 0 23% 38% 5060 117 and all the way back up to 100 draw on the chart in real time and of course the relative values which of course that would be in terms of the euro to Sterling rate on the chart is written in brackets next to those Fibonacci sequence numbers so I'm gonna go from the high point here I can put my dot right on the low point but I actually gonna stretch out to the side here there's a reason for that as long as my dot at the bottom there is consistent with the low point you can see that by the shadowing I want to make sure I'm right on the low point but I want it to the right so I can use it so I'm going to drop it just there and then you can certainly see now we can see the market from a high here to the low point here this is the 23% we've got the 38 and the 50% now we expect many traders to be looking at that 50% line and we expect to get a fair level of resistance on that line there for that line when combined for example with an 80 our 10 which is a volatility measurement of 10 periods which tells us it's the mark how much the markets moving around if we use a bit of a TR 10 which tells us where to place our stop loss the other side of the 50% line we can see that we are clearly getting a reaction here off the 50% you can see we're also is interestingly enough how these lines seem to match up with price action but a 50 percents what I want you to focus on the 50% says very simply this and this is your key message if we cross the 50% and get to the 61 and get through the 61 the probability for a fibonacci trailer to get back 200% is strong we would not look to be taking short positions therefore but we're looking to go short here on your Stirling valleys our gameplay so we expect the resistance at 50% we're getting the resistance of 50% that confirms to us as expected that many traders are looking to continue this short push and so therefore we'd be looking to take a short position notwithstanding keeping the stop outside of ATR ten to make sure we don't get stopped out so our stock would be above our entry would be below and we would be looking at a minimum a minimum to run to of course our 23% line or of course our 0% line but our first port of call is our 23% now and you can see the profitability between where we would enter on this 50% line with our profit target down to the 23% line we've got a fair movement there for a very short amount of risk or very small amount of risk and that's critical that's where the pairing Fibonacci's the key with successful currency trading is first of all know where the herd are making their decision have a place you can put your stop loss which is protected which of course look at the protection you're getting off a 50% decline on a one-hour chart on your a sterling massive and then look at the predictability of where we can run to so this does the job for you it tells you number one first of all are we getting the resistance as expected the 50% yes we are so I've got a short trade on yes we have where can I place my stock that's protected above that 50% line factory an ATR ten I'll give you a little bit of breathing space then how do I plan the profitability my trade when you plan that by targeting that 23% line and looking smart just dead simple we go should take place a short position you just now drag these lines as simple as that consistent with the lines on the China so I put my 23 percent line here I've got my entry just below here that's now plugged everything in I then hit the green button and that trade is now play worse after it agreed to the reduced risk the trade is on so the real rule of thumb there with this retracement tool of course we draw it diagonally from the top and the book wish you can use it both ways round but here I'm using it from it from a short perspective I'm looking and focusing on that 50 because if I get a rejection off that and will resume in that phase one movement of a short trade gives me a beautiful place to put my stop glass a great place to put my target profit and of course I've got that heard behind me that are making the same decisions around the 50% now you may also remember that I am a trader that loves to use pivots and something has been if you haven't seen my videos on pivots there's a video there you can click and see how I do my early-morning pivot trading pivot points are mathematical calculations which help us understand the high and the low of the previous day's trading activities and then what it does is it transposes that into the current day's trading session and really gives you an understanding of where the floor is where the ceiling is of the market and they're defined by the main pivot point line as I'm sure you're aware and then the r1 r2 and r3 and of course the s1 s2 and s3 lines those lines should I say can be vastly improved if they are combined with Fibonacci now most trading platforms don't have that tool most professional trading the floors that I have worked on around the world with precision Fibonacci traders and if you use pivot points use Fibonacci adjusted pivot points now very difficult tool to get hold of however we did build it in smart charts and we'll show you where that lives right now so if I can take you to my pivot area you can see that the pivot points I'm using on this are not normal pivot points they are Fibonacci adjusted pivot point imma show you where you can put those in on the chart so again this time I'm gonna go to indicators and I'm gonna go to see I've got Fibonacci pivots on the chart and what it's done is its amended its upgraded those pivot point lines in line with Fibonacci sequence does it improve your pivot point trading listen we wouldn't have built it if it didn't so what it effectively it does it gives you much stronger line in fact if somebody that's not used to using pivot points and haven't used those in the past I suggest you watch one of my pivot trading videos from this channel' shows you exactly when to get in when to get out pivot trading is powerful because of course it shows you in context regardless of time frame but we normally place this on the 5-minute or 15-minute chart and then we use the fibonacci pivot point lines to show it really where those major r1 r2 r3 levels are if we're going long or where those 1 s 2 s 3 levels are if we're going short so it's incredibly powerful tool it's already built into its already built into smart charts as you know and when you place that on there you're getting better adjusted lines you can see that because look look at the Fibonacci we've got a Fibonacci r2 level here it's praying a hell of a lot of resistance on the Eurodollar right now a contrarian trading strategy for this could well be in conjunction with the MACD signal confirming a short position from this r2 line back down to the blue line so it's basically pivot points upgraded as a takeaway guy's Fibonacci tools are used by a lot of traders in the financial markets in fact if you go into any professional trading floor you're gonna see Fibonacci tools especially being used on the major currency pairs remember the Fibonacci sequence is less powerful with those big exotic pairs so you made use your a sterling all the Euro pairs dollar pairs that's where you're gonna have the action circular sterling as well they're helpful in finding where the market may resume its major market direction which is this example we just did with your sterling remember the 50% line that's the key level if that gets breached and we get to the 61 we're gonna turn that trend and remember this this easy to implement a smart chart all the works been done for you and if you're somebody loves pivot trading which I recommend everybody do is my favorite trading strategy to have those pivot points upgraded to the Fibonacci sequence really gives you a cutting edge ok remember for my youtube subscribers I'm giving you an exclusive 7 day trial of smart choice that's my gift to you and you can grab that by clicking the link in the description and seven days includes the strategies the tools and the free access to many hours of educational content that is included on the platform and let me tell you if you like what I can do on this channel you're gonna love what I've spent two years sweating under hot studio lights to create in smart charts the training is clear its structured and it takes you on a journey from start to finish using the 6 step trader cycle with hundreds of pages of supporting documentation and it's free of charge for 7 days take it with my blessing I ask is you leave me a comment in the channel telling me what you thought of it and listen if you love this video don't forget it like if you noticed scriber already get yourself on the subscription list and until then I look forward to seeing you in the trade again by a lot of traders position and stomach Emily so let's just as and such as euro sterling you're honest time piping very difficult or plastic

Channel: Greg Secker - Learn To Trade

Views: 43,704

Rating: 4.7734203 out of 5

Keywords: Fibonacci, fibonacci trading, fibonacci trading strategy, forex, fibonacci trading strategies, forex trading, fibonacci retracement, technical analysis, fibonacci trading forex, fibonacci tradingview, fibonacci forex, trading with fibonacci, fibonacci retracement strategy, fibonacci day trading, what is fibonacci retracement, how to use fibonacci, fibonacci retracement forex, fibonacci retracement explained, how to draw fibonacci retracement, forex fibonacci for beginners

Id: -TTKkZoIFbk

Length: 19min 25sec (1165 seconds)

Published: Fri May 29 2020