The Truth About Fibonacci Trading
The Truth About Fibonacci Trading
The Truth About Fibonacci Trading
The truth about Fibonacci levels is that they are useful (like all trading
indicators). They do not work as a standalone system of trading and
they are certainly not the “holy grail”, but can be a very effective
component of your trading strategy.
But who is Fibonacci and how can he help you with your trading?
The ratios are derived by dividing any number in the series by the next
higher number, after 3 the ratio is always 0.625. After 89, it is always
0.618. If you divide any Fibonacci number by the preceding number,
after 2 the number is always 1.6 and after 144 the number is always
1.618. These ratios are referred to as the “golden mean.” Additional
ratios were then derived to create ratio sets as follows:
The first set of ratios is used as price retracement levels and is used in
trading as possible support and resistance levels. The reason we have
this expectation is that traders all over the world are watching these
levels and placing buy and sell orders at these levels which becomes a
self-fulfilling expectation.
The second set is used as price extension levels and is used in trading
as possible profit taking levels. Again, traders all over the world are
watching these levels and placing buy and sell orders to take profits at
these levels which becomes a self-fulfilling expectation.
Low is a short term low bar with at least two higher lows on both the
left and right of the low bar.
Example 1
Example 1.1
Example 1.1: Now let’s look at what actually happened after the
Swing High occurred. The market pulled back right through the 0.236
level and continued the next day through the 0.382 level before
finding support. After a few days, the market resumed its upward
move. Clearly buying at the 0.382 level would have been a good short
term trade.
Example 2.1: Now let’s look at what actually happened. The market
again pulled back right through the 0.236 level and continued to pull
back until it found temporary support at the 0.50 level (a lot of buyers
at this level). However, once the buying power was exhausted, the
market continued to retrace all the way down to the 0.764 level before
resuming its upward trend. In this case, buying at the 0.764 level
would have been a good short term trade.
Example 2
Example 2.1
© 2004 Profits Run, Inc. Rev 01-20041124
The Truth About Fibonacci Trading 8
Example 3
Example 3.1: Well, in this case the market found support at the 0.50
level. Buying at this level would have been a great trade as the
market gapped up a few days later.
Example 3.1
Example 4
Example 4.1: Whoops! The market gapped down through all levels
of support and never looked back. A long trade here would have been
a loser or at least an open lose position.
Example 4.1
You can see from these examples that the market often finds at least
temporary support at the Fibonacci Retracement Levels – not always,
but often. It should be apparent that there are a few problems to deal
with here. First, there is no way of knowing which level will provide
support. The 0.236 level seems to provide the weakest support, while
the other levels provide support with approximately the same
frequency. Second, the market will not always resume its uptrend
after finding temporary support, but instead continue to decline below
Example 5.1: Now let’s look at what actually happened after the
retracement Swing Low occurred. The market rallied making new
highs pausing at the 0.382 level and again at the 1.000 level after a
retracement down it rallied again going right through the 1.382 and
1.618 levels. Taking profits at the 0.382 level would have been
premature, but taking profits at the 1.000 level would have made a
nice trade.
Example 5
Example 5.1
Example 6
The Truth About Fibonacci Trading 16
Example 6.1: Now let’s look at what actually happened. The market
rallied, making new highs and pausing between the 0.382 level and
the 0.618 level, and then continued higher. This up move could well
continue up to at least the 1.000 level. Taking profits at the 0.382
level would have been premature and only time will tell if taking profits
at the 0.618 level was the optimal place to exit the long trade.
Example 6.1
Example 7
Example 7.1: Well in this case the market found resistance at the
0.382 level which would have been the place to take profits on any
long trades.
Example 7.1
Example 8.1
Example 8.1: Like the last example, the market found resistance at
the 0.382 level which would have been the place to take profits on any
long trades.
Example 8.1
You can see from these examples that the market often finds at least
temporary resistance at the Fibonacci Extension Levels - not always,
but often. As in the examples of the Retracement Levels, it should be
apparent that there are a few problems to deal with here as well.
First, there is no way of knowing which level will provide resistance.
The 0.382 level was a good level to cover any long trades in two of the
examples, but in the other examples taking profits at that level would
have been premature. Another problem is determining which Swing
Low to start from in creating the Fibonacci Extension Levels. One way
is from the last Swing Low as we did in the examples; another is from
the lowest Swing Low of the past 30 days. Again, the point is that
there is no one right way to do it, and consequently it becomes a
guessing game.
Alone, Fibonacci Levels will not make you rich. However, Fibonacci
Levels are definitely useful as part of an effective trading method that
includes other analysis and techniques. You see, the key to an
effective trading system is to integrate a few indicators (not too many)
that are applied in a way that is not obvious to most observers. All
successful traders know it’s how you use and integrate the indicators
(including Fibonacci) that makes the difference. The lesson learned
here is that Fibonacci Levels can be a useful tool, but never enter or
exit a trade based on Fibonacci Levels alone.
Good Trading,
P.S. If you’re really serious about learning how to use what you’ve
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Good Trading,
My preferred timeframe for this method is the 1h chart, but it is working on any timeframe.
To use Fibonacci you must know the High, Low and the retracement depth of a swing.
Sequence in a Upswing: Low -> High -> Retracement
Sequence in a Downswing: High -> Low -> Retracement
The next screenshots shows what we are looking for.
Important: Highs and Lows ARE ALWAYS the peaks, for retracements you can choice if you
take the peak or the candle body as the reference.
To draw the Fibonacci lines press the button left to the arrow. Then click on a Swing High, hold the
left-mouse button, move the cursor to the low and release the mouse-button.
After that double click on a Fibo line to open the properties and enter the values from the next
screenshot. Set it as default to have it in all charts.
The 233% Extension is strong level as well, that’s why I always include it into my charts.
Example: If the price retraces to the 61.8% Level I set my main Take Profit level near the 176.4%
Extension (a little bit below in an Upswing and a bit above in a Downswing).
In the above example the retracement low-peak was at the 50% level but the candle closed above the
61.8% level. In this case you can choice if you now place your take profit Levels at the 176.4% or the
161.8% level.
For a Downswing you have to draw the Fibo from Low to High.
Another downswing example in Tradestation:
Clustering the Fibos
You properly noted that the Extensions are often acting as Support and Resistance levels for further
price action.
A cluster appears when multiple extensions and/or retracement levels from other swings are near
each other, these levels are heavy barriers.
I hope you liked this tutorial, further examples are included in the manual which comes with our Excel
based Fibonacci Calculator downloadable here: http://www.aergo.ch/download/webFIBOcalc-v2.zip
~TEORI 123 ~
~ TEORI ELLIOT WAVE ~
~ FIBONACCI RATIO ~
Wave 1
Harga stock bergerak naik, disebabkan beberapa orang berpikiran
saatnya untuk BUY.
Wave 2
Harga stock turun, disebabkan beberapa orang merasa harga sudah
cukup tinggi dan waktunya untuk take profit.
Wave 3
Harga kembali naik, disebabkan orang ingin mengulangi profit saat wave 1 dan merasa stock
tersebut dapat menghasilkan profit. Biasanya harga bergerak lebih tinggi daripada wave 1.
Wave 4
Harga kembali turun, disebabkan harga sudah cukup tinggi dan saatnya untuk take profit.
Wave 5
Harga kembali naik, disebabkan orang-orang memburu stock tanpa alasan, setelah melebihi harga
wajar maka trend berubah menjadi pola ABC.
Kalau kita amati lebih jauh sebenarnya teori ini adalah pengembangan dari teori 123 dimana Elliot
menemukan bahwa dalam suatu pergerakan harga pola 123 terjadi 2 kali sebelum akhirnya berbalik
arah dan dilanjutkan dengan pola 123 kembali pada arah sebaliknya.
Fibonacci Ratio
Fibonacci Ratio adalah pengembangan dari teori 123 dan Elliot Wave dikombinasikan dengan
perhitungan Fibonacci Ratio yang berfungsi untuk menentukan level Support & Resistance.
Prinsip dasarnya sama dengan teori 123 yaitu dimana gelombang panjang (1-2) disebut swing akan
diikuti dengan gelombang pendek (2-3) disebut retracement. Dengan perhitungan Fibonacci kita
dapat mengetahui level support dan resistance dari pergerakan retracement.
Untuk menenentukan Fibonacci harus diidentifikasikan dulu Swing High dan Swing Low pada chart.
Ketiga teori di atas dapat diterapkan secara bersamaan dalam Time Frame berapa saja. Prinsip
dasar sebenarnya yaitu prinsip breakout strategi juga dimana secara psikologis harga akan
bergerak berkelanjutan jika berhasil menembus level high atau low sebelumnya.
Strategi 1 :
1. Tentukan dahulu swing harga yang sudah terjadi dengan sempurna (level High & Low) dan
pastikan harga sekarang ada di antara level High & Low.
2. Pasang order stop BUY pada level High + 2xspread, dan pasang order stop SELL pada level
Low – 2xspread.
3. Pasang Stop Loss untuk kedua order tersebut di level 50% Fibonacci atau pada posisi
high/low.
4. Jika anda ingin menggunakan Target Poin gunakan level Fibonacci Expantion sebagai target
poin. (Jika Anda tidak ingin menggunakan Target Poin bisa lanjutkan ke Strategi 2).
5. Pindahkan Entry Anda yang belum tersentuh ke level swing baru yang sudah terbentuk
sempurna. Hal ini berguna apabila Trend berubah dan harga berbalik arah sebelum
mencapai target poin.
Gunakanlah selalu Stop Loss (SL). Dan pindahkan SL jika target sudah tercapai.
Contoh :
C = harga saat ini
B = entry order Buy
A = entry order Sell
D = Prediksi Target Poin
Kalau kita lihat chart di atas seharusnya harga bergerak naik sesuai prinsip Elliot Wave tapi
kenyataannya zigzag malah terbentuk ke bawah.
Kelemahan lain teori ini adalah apabila terjadi gerak sideway (consolidasi). Biasanya gerak sideway
terjadi setelah adanya swing yang cukup panjang. Untuk mengetahui market sideway gunakan
indikator tambahan untuk melihat kekuatan momentumnya.
Contoh : (indikator MACD, Oscilator MA & Slow Stochastic)
Bila terjadi market sideway sebaiknya gunakan indikator untuk mengambil keputusan.
Pada contoh di atas harga menyentuh stop order Sell di D tetapi harga malah berbalik ke E.
Pindahkan stop order Buy di C dengan SL buy pada level 50% swing Fibo yang baru.
Harga kemudian bergerak kembali menuju F, pindahkan stop order Buy ke titik E dengan SL
buy pada 50% swing yang baru.
Saat harga menyentuh level E maka order Sell yang sudah aktif akan close terkena SL,
selanjutnya yang aktif adalah order Buy hingga mencapai titik G. Dalam trading ini Anda loss
kurang lebih 50% dan win kurang lebih 50% sehingga resiko Anda menjadi 0.
Untuk mengatasi kelemahan teori ini tetap harus didukung dengan indikator lainnya, support &
resistance. Dan jangan lupa tambahkan spread dalam entry order Anda.
Goldmaster