Series of Fibonacci numbers is among one of the most questionable tools in trading, which divided market participants right into 2 opposing camps. Some investors totally trust Fibonacci magic numbers and always rely on them, while others are much besides this viewpoint.

Nevertheless, technique reveals that the marketplace participants utilize this sign typically enough as well as lots of techniques have been created on the basis of this indication. In this article, we will review one of such approaches, which is called Fibo limit trading.

The approach is relatively basic, as it does not need any type of added indications or complex market analysis. A trader positioned pending orders on pattern and his/her main task is to define the conclusion of the corrective price activity as well as return of the rate into trend.

Fibonacci grid is included in the common checklist of indications on trading platforms. This sign can not be called a genuine sign in full feeling, as it does not offer signals to open a trade; it just shows the crucial levels of assistance and resistance.

Some beginners discover it difficult to stretch the grid. We know that it is built from the low of the rate to a high or the other way around; however often an investor has a number of alternatives of stretching a grid.

Designers of Fibo limit trading strategy advise investors to start with the determining of the global trend direction. They can make use of easy moving average with a period 85 for this. If this line is downwards and the price is above it, we take care of the drop and also the other way around.

When the global trend is established, we can start to extend Fibonacci grid. In case of the sag, the grid shall be extended from the last high of the cost to the last low.

In Fibo limit trading strategy it is essential to define completion of the restorative activity. Trick levels in this strategy are 38.2 and also 61.8 and pending orders will certainly be put on them.

If the sag goes listed below the level 38, a trader can put a pending sell order on this level. The exact same type of order is put at the level of 61. One or both of these orders can be activated; stop loss for both professions is placed at the next level, which has the value of 80.

Default settings of Fibonacci grid may not have this level, so an investor has to install it. According to the concept of Fibonacci series numbers, the worth of this level numbers is 78.6, so we need to define this worth in the settings.

It is considered that specifying factors for placing protective orders is the primary uphill struggle in this method. If we make use of timeframes of one hr or greater, stop-loss level may be large distance away from the cost and also according to the money-management rules, take-profit orders will certainly be placed twice as far.

A trader might not position take-profit orders whatsoever as well as close professions manually, or use an option of tracking stop, which will transfer protective degree based on the rate activity.