Stock Trading Retracement Strategy
How Do I Use Stocks Trading Fibonacci in Stocks Trading?
A good stock trading retracement strategy to use is the fibonacci retracement indicator. Fibonacci retracement indicator is used by many stock traders as a stock retracement strategy trading indicator.
The fibonacci retracement indicator is placed on a stock chart and this Stock Trading Fibonacci Retracement indicator then calculates the retracement levels on the stock charts.
Stocks Trading Fibonacci Retracement Strategy Examples on Upward Stocks Trend and Downwards Stocks Trend
Stock Trading Retracement Strategy
In the Stock Trading Retracement Strategy example illustrated and explained below the stocks price is moving up between chart point 1 & chart point 2 then after chart point 2 it retraces down to 50.0% retracement level then stocks price continues moving up in the original upward stocks trend. Note that this stock retracement indicator is drawn from point 1 to point 2 in direction of the Stock trend (Upward Direction).
Because we know this is just a retracement based on our stock chart stock trend - using this retracement indicator, we put a buy order just between the levels 38.2% and 50.0% & our stop-loss just below 61.8% pull back mark. If you had put buy at this point in trade example illustrated and explained below you would have made a lot of pips after the stocks price retracement reached the Fibonacci 50.0% level and then continued moving in the original upward stocks trend.
How to Trade Retracement on Upward Stock Trend - Stock Trading Retracement Strategy
Explanation for the Above Stocks Trading Retracement Strategy Examples
Once the stocks price hit the 50.0% retracement level, this retracement level provided a lot of support for stock price, & afterwards stocks market then resumed the original upward stock trend & continued to move upwards.
23.6% retracement level provides minimum support & is not an ideal place to set a stock trade order.
38.20% retracement level provides some support but stocks price in this example continued to retrace up to the 50% zone.
50.0% retracement level provides a lot of support & in this example, this was the ideal place to place a buy stock trade order.
For this Stock Trading Retracement Strategy example, the stocks price retracement reached the 50.0% retracement level, but most of the time the stocks market will retrace up to 38.2% retracement level and therefore most of the time stock traders set their buy limit stock orders at the 38.2% Fibonacci retracement level, while at the same time placing a stop just below 61.8% Fibonacci retracement level.
Stock Trading Retracement Strategy
In the Stock Trading Retracement Strategy example illustrated and explained below the stocks market is moving down between chart point 1 & chart point 2, then after chart point 2 the stocks price then retraces up to 38.20% retracement level then it continues heading downward in the original downward stocks trend. Note that this stock retracement indicator is drawn from point 1 to point 2 in direction of the Stock trend (Downward Direction).
Because we know this is just a retracement based on the stock chart stock trend we put a sell order at 38.2% retracement level and a stop loss just above 61.8% retracement level.
If you had put sell order at the 38.2% retracement level as shown on the trade below you would have made a lot of pips afterwards after the stocks price reached the 38.2% retracement level and then resumed the downward stocks trend.
In this trade the retracement of stocks price reached 38.20% retracement level and did not get to 50.0% retracement level. It is always good to use 38.2% retracement level because most times the stocks price retracement does not always get to 50.0% retracement level.
How to Trade Retracement on Downward Stock Trend - Stock Trading Retracement Strategy
Explanation for the Above Stocks Trading Retracement Strategy Examples
The above Stock Trading Retracement Strategy example is a stock retracement trading setup where the stocks price retraces immediately after touching the 38.2% Stocks Chart Fibonacci Retracement Level.
This Stock Trading Retracement level provided a lot of resistance for the stocks price retracement, this was the best place for a trader to set a sell limit stock order as the stocks market quickly moved down after hitting this retracement level.
