Fibonacci great advantages
1. Fibonacci defines entry pointsTake a look how Fibonacci tool was applied on the chart below. (From point A, dragging all the way to point B. Done!) The trading platform will automatically calculate Fibonacci levels for you and draw lines of retracement and extension levels.
If you need to do calculations manually, read How to calculate Fibonacci levels or download Free Forex Fibonacci Calculator.
Once all Fibonacci levels are in place we will look and wait for some good point C to place our BUY order.
Three Fibonacci retracement levels: 0.382, 0.500 and 0.618 — are used as points to enter the trade. Looking at any chart it's obvious that the best entry position would be at the lowest possible swing — e.g. at 0.618 retracement level.
But the price tends to choose different levels to take U-turn from: it can hit 0.382 and go straight back, sometimes it gets to 0.500, and at times it even moves further than 0.618 level before turning back. But still, if the price chooses to respect Fibonacci rules it'll stop at one of those levels and makes its nice U-turn; and Fibonacci traders will already be waiting for this opportunity to enter the trade.
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