There are many ways to trade using the Fibonacci Retracement Tool, but we have found that one of the best ways to trade Fibonacci is by focusing on the golden ratio 1.618 or 0.618 which is probably one of the most important numbers in mathematics. and in ours. everyday life too. Fibonacci numbers involve a lot of mystery and we will have a lot of fun explaining them to the average trader. Now, what we're going to do is we're going to go through the Fibonacci sequence and take each number in the series and divide by the previous number in the sequence and plot our answer on the same axis.
Now if you want to go even deeper, we have something called the Fibonacci Spiral which is made up of the Fibonacci numbers. You can find the Fibonacci spiral in many places in nature, such as in a grain of wheat or sunflowers and even in a single cell or human DNA. Although the Fibonacci sequence is applicable in so many parts of our daily lives, many market practitioners have found that the financial markets respect the Fibonacci numbers and especially the golden ratio.
What if we told you that there is a simple way to plot the Fibonacci retracement levels on your price chart. Well, our team at Trading Strategy Guides has developed a proprietary Fibonacci Golden Zone indicator that, once placed on the chart, will instantly plot the Fibonacci. Note * The Fibonacci Golden Zone indicator is compatible with the most popular trading platform used by Forex traders such as NT7, NT8, MT4 and MT5.
I know it's not a Fibonacci retracement sequence number, but it's still useful to have a clear and precise idea of how far each swing has moved.
Trading Tools for the Fibonacci Golden Zone Strategy
But that's not all, the Fibonacci Golden Zone Dashboard will also show you the golden zone on each individual timeframe. This is great because being in the golden zone on multiple time frames increases our probabilities of winning. Because of this, the levels are watched by many traders, which is why the Fibonacci Golden Zone strategy can make a difference to your trading success.
Now that we know the importance of Fibonacci retracement levels and why they work in financial market analysis, let's take a look at the rules of the Fibonacci Golden Zone strategy. To test and show you the power of the Fibonacci Golden Zone strategy, we will first highlight a sell trade. The same rules of the Fibonacci Golden Zone strategy can be applied to all time frames.
In the figure below we have the AUD/USD 1h chart trading in a downtrend and price has already reached the golden zone of the Fibonacci Golden Zone indicator. An interesting feature of the Fibonacci Golden Zone Dashboard is that it shows for each individual timeframe whether the price is trading above the golden zone or below the golden zone. Rule #3: Look for the Fibonacci Golden Zone Dashboard to show the price trading below the Golden Zone in most Time Frames.
Fibonacci Golden Zone Dashboard is quite intuitive to use and has in this regard. The dashboard shows a red rectangle in front of the time frame where the price is trading below the golden zone, which is a bearish signal. The dashboard shows a green rectangle in front of the timeframe where the price is trading above the golden zone, which is a bullish signal.
Obviously, for the buy trade idea, we want the Fibonacci Golden Zone dashboard to show most of the time frames above the golden zone. It's time to find our entry catalyst that takes us to the next step of the Fibonacci Golden Zone strategy. Rule no. 4: Wait for a retest of the 61.8% Fibonacci retracement, but enter only if we close below the golden cut.
As I said, the market tends to follow the Fibonacci sequence, but sometimes it will fake traders out and they will end up losing a lot of money when it breaks the trend
If it breaks the golden ratio and continues, then the trend is definitely broken and you should look elsewhere because a trade with this strategy would be devalued at that time. Next, we need to determine where to take profits, which is just as important as entry and stop loss placement. Since we are focusing on a sell trading example, we have as a rule of thumb to take our profit just below the previous swing low.
Conversely, if we were talking about an example of a buy trade, we would have taken our profits above the previous swing high. If the market doesn't break below the previous high/low swing, but the Fibonacci Golden Zone Dashboard shows the majority of time frames trading on the other side of our trade, we want to exit early. In our example, we see the market struggling to break below the previous swing low and at the same time, the Fibonacci Golden Zone Dashboard shows the majority of time frames trading above the Golden Zone, showing a shift in sentiment. .
In this regard, we want to close our trade on the market and take the profits. There is no point in forcing the market, even if it might try to get below the swing low later. The Fibonacci Golden Zone Strategy is one of the most advanced strategies that uses the golden ratio.
What makes it unique is our proprietary Fibonacci trading indicators that will help you have a better experience using Fibonacci retracement levels. With our proprietary indicators Fibonacci Golden Zone Dashboard and Fibonacci Golden Zone Indicator you can win the markets once. With so many currency pairs and so many time frames, it can be a daunting task to keep track of each one and it can be very stressful to watch these fast moving markets while making quick trading decisions.
Another way to find a dominant trend is to look at the daily time frame and see if we are trading above the gold zone or below the gold zone. You don't need to change the time frame, just look at the Fibonacci Golden Zone indicator on the dashboard. Use the rules from Step #2 to Step #7 to enter a trade, stop loss and take profit.
Majority of the time frames are bearish and on the daily time frame we are trading below the golden zone which means we are only going to trade in the direction of the bearish trend. You will notice that for each individual timeframe, the Fibonacci Golden Zone Dashboard will issue buy and sell signals. Depending on your preferred time frame, you can choose which signals to take.
In fact, we have a buy signal also issued on the 30-minute time frame, but we have chosen to take the daily signal. From here on we can apply the same rules described in the Fibonacci Golden Zone Strategy. On rare occasions, when the Fibonacci Indicator Golden Zone Panel will show bullish signals on all time frames, that is one of the most powerful trading signals you will receive.
In the example below, the Gold chart is showing a bullish signal on all time frames. In this situation, it is better to enter somewhere between the golden zone, because the golden ratio 61.8 will rarely be hit as the prevailing trend is too strong to provide us with such a deep change. The rules of the Fibonacci Golden Zone Strategy remain the same in this example as well.
When the price is in the gold zones, an alert will appear on your screen, notifying you in advance to prepare for a possible trade. If the Fibonacci Golden Zone Indicator gives a buy/sell signal at the same time – in our case we have a sell signal on the 30 minute TF – you are ready to enter the market.
Rules of the Fibonacci Golden Zone Strategy
Fibonacci Golden Zone Strategy
