There are many different tools and trading strategy in the financial market. It totally depends up to up which method you will follow and how you will trade the market. But there are certain things that the professional trader in the financial market follow and if you want to become a professional trader then you need to know the things which are being widely used by the professional trader. However, in this article, we will discuss how to trade with the Fibonacci retracement tools. Fibonacci retracement tools are widely used by many professionals in the world since it allows them to execute high-quality trades in the market. Even the long-term position traders in the financial market often use this tools as their prime trading arsenal due to an extreme level of profit potential. So let’s begin our journey and master the art of Fibonacci trading.
The important retracement level: There are many different retracement levels which you can trade when you use the Fibonacci retracement tools. Most of the professional traders trade currency market by using the major retracement levels only. In the eyes of trained professional 38.2 %, 50 %, and 61.8 % retracement levels are considered to be the most profitable levels. Most of the novice traders in the financial market fails to achieve success in the forex trading by using the Fibonacci retracement tools since they don’t know how to draw the perfect Fibonacci levels in the market. As a profession trader, you should know how to identify the key swing highs and lows in the market since these are the important point from which you will draw your Fibonacci retracement levels.
Use price action confirmation signal: Price action trading strategy is considered to be the most profitable trading strategy in the world. If you are relatively new in forex trading then you might be using other trading strategies which are based on indicators reading. But as a professional trader, you should not execute your orders in the market based on indicators reading only. If you look at the expert traders than you will see they trade currency market using price action confirmations signal and use the price action confirmation signal to execute their orders. So when you use the Fibonacci retracement tools wait for price action confirmation signals in the market to execute your orders in the market. But before you use the price action confirmation signal make sure that you use the higher time frame in the market to find the key retracement levels in the market. As a professional trader, you must know that you will often have some losing orders in the market. So make sure that you use proper risk management factors while executing the orders.
Fundamental analysis: Most of the novice traders in the financial market fails to achieve success in the financial market since they don’t know how to do the fundamental analysis or they ignore it intentionally. Some of the traders even think that the fundamental analysis is not required to trade currency market. But if you execute your orders in the important Fibonacci retracement levels without doing the fundamental analysis than chances are very high that the trade will hit your potential stop loss. Fibonacci retracement tool trading strategy is based on trend following trading strategy. But during the event of the high impact news release in the market, the long-term prevailing trend in any currency pair might get changed. To be precise without doing the fundamental analysis you will never be able to execute high-quality trades in the market. So make sure that you learn the price action trading strategy along with fundamental analysis since both of them are extremely important for trading the Fibonacci retracement levels.
Summary: Fibonacci trading strategy is very much popular in the financial market. If you truly want to become a profitable trader in the financial market then it’s highly imperative that you learn the art of price action trading strategy. Once you learn the art of price action trading strategy you will look for price action confirmation signal at the key support and resistance level in the market which confluence with the Fibonacci retracement levels. Once all the parameters are full filled execute your orders in the market by using proper risk management factors.