7 Fibonacci Retracement Tips Trading Strategy

Tips on Trading With Fibonacci Retracement Tool.

Fibonacci trading strategy is really easy as long as you understand the market. Within the metatrader trading platform, there are also fibonacci tools to make forex analysis and forex entry.`

In this article, there are few simple tips that you can improve you trading analysis with using fibonacci retracement tools.

1. Determine Market Direction Before Using Fibonacci Retracement Tools

The most important thing in forex trading is to know the market trending.

Where the market goes?

Tips to know the market direction is to understand how the market movement.

The market is moving in high and low condition.

You will know where the market goes,“higher high”, “higher low” and what’s next?

it must be “higher high”.

In this case, you know that the market is moving in upward direction.

Because it is finding it’s new high.

What you should do if you want to use fibonacci retracement?

Drag the fibonacci tool and use the retracement level to make the entry position.

If you not sure about the entry position, check this article.

The retracement area of fibonacci retracement.

In the article there will be 3 fibonacci levels that you need to know.

2. Use Stop Loss

There are trader does not use stop loss such as forex scalper.

But in this fibonacci retracement strategy, stop loss is very important. With stop loss, you can define how much money you want to put into risk.

Therefore, stop loss is important in fibonacci trading.

Where to put the stop loss?

In fibonacci retracement , you will determine the market trending, and then you know the market direction.

The stop loss to put is 10pips from the high or low market structure.Or can also put on 0% fibonacci retracement.

For instance,

Market Trending is Uptrend.
Market Structure is Higher High, Higher Low and Higher High
Stop Loss is 0% fibonacci retracement.

The Market is uptrend and you go buy for the entry setup.

What if it hit the stop loss?

That does not matter if only you follow your own trading plan.

You need to define your stop loss. How much money you can afford to loose.

It hit your stop loss and continue the movement.

What if you don’t put your stop loss?Your entry will float!

That is the use of stop loss.It prevent your account from floating. Your money management strategy will grow your money if you set your reward greater from the risk.

3. Entry Level On the Retracement Area

In market trending structure, the market movement is moving up and down, in a high and low condition. In a zig-zag pattern.

But if you see the market structure, there will be market retracement before market continue trending.

The idea to trade fibonacci retracement is to trade on the retracement area.

First thing to do is to know the trend, know the direction.

Then,you can find the entry on the retracement area.

There are 3 entry level that you have to look on the retracement area.

161.8 Target Profit 2
100.0 Target Profit 1

50.0 Entry 1
38.2 Entry 2
23.6 Entry 3

0.0 Stop loss
Those entry level you can you use to make the entry setup.

4. Target Profits Level On Fibonacci Retracement

there are 2 fibonacci level target profits that i use to make entry with.

161.8 Target Profits 1
100.0 Target Profits 2

Both can give you profits. But the level 161.8 are giving more profits and it also risky if not hitting the target profits and get reverse.

While level 100.0, is more secure to set the target profit and price are easy to reach the target. But the profits is less than the level 161.8.

Whatever it is, you can set 2 entry setup with using this 2 target profits level.

Just diversify your target profits with 2 setup.

5.Golden Ratio In Fibonacci Retracement Trading

the money management is simple but it can affects your account.

is it Grow or Destroy?

Im sure that when talking about risk to reward. Traders know about the ratio

1 risk : 2 reward
1 risk : 3 reward

These are the most effective money management strategy. Because your profits

can cover your loss.

It is easy to calculate if you set your maximum stop loss is 50pips, then the rewards would be 100pips.

But how if your stop loss is 35pips, or 21pips?im not saying that the ratio is not good.

it is good.

But You can also use the fibonacci golden ratio by using the fibonacci retracement indicator.

Your reward would also be greater than your stop loss.Your stop loss, your entry and your target profits can be determined easily with using the fibonacci level.

Make sure that you put the stop loss and the target profits in the right way. For instance:

161.8 Target Profit 2
100.0 Target Profit 1

50.0 Enrty 1
38.2 Entry 2
23.6 Entry 3

0.0 Stop loss

6. Diversify Your Entry Strategy

Fibonacci retracement trading is we use the fibonacci retracement tool to find the fibonacci level within the retracement area. The idea is, we find the entry position at the retracement area with using the fibonacci numbers.


With using the fibonacci retracement tool, we can find the stop loss, the retracement entry level and also the target profits.

About the entry strategy. You can set the entry setup into fews. Like in the same fibonacci retracement, there will be different target profits and entry level right?

So, what you can do is to set the entry or target profits into 2 or 3 entry setup.

For example,

Setup 1
100.0 Target Profit
38.2 Entry
0.0 Stop loss

Setup 2
161.8 Target Profit
38.2 Entry
0.0 Stop loss

In this case, you have 2 entry setup in 1 retracement condition. You can divide your entry lot with 2.

I hope this strategy can give you idea how you can benefits with 2 or 3 entry in one retracement setup area.


Trading fibonacci retracement with using the fibonacci retracement tool would be easy if you understand when to use the fibonacci tools.

What you need to understand is the market structure. How it move and know how to project the market direction.

Know the market direction. Put the entry on the retracement area. The retracement area can be determine by using the fibonacci retracement tool.

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