The Fibonacci trading strategy is very popular among binary options traders, as they can obtain good profits, when applying it. With the help of the Fibonacci retracement, investors may influence the prices of the assets on the market. Basically, the Fibonacci retracement represent a trading tool, which separates the charts in four parts, these being 23.6%, 38.2%, 50% and 61.8%.
How it is Applied
When trading using this strategy, the first step implies locating a swing, either upward or downward in a graph. The swing needs to be ending the power, but show signs of a beginning of lateralization or reversal of the movement or trend. Afterwards, you need to also locate the minimum and maximum points of the respective swing. Then, you take a look at the Fibonacci retracements from the platform of the broker you trade with and you will see that the graph will show several levels, namely the ones mentioned above. These are the levels that we expect to experience a temporary rebound trend of the price. Therefore, the next step involves selecting Call or Put. Well, if you find yourself in an upward swing, you have to open some trades, by selecting Call (up), with expiry times of only 60 seconds. If the opposite happens and you are in a downward swing, you open Put (down) options, also with expires of 60 seconds.
In the end, you will end up figuring out that the traced levels have to be tried in several occasions, as resistances, but as supports as well. Moreover, when you finalize exploring a swing, you are free to continue and retrace a new Fibonacci, in the case of the following swing, which may locate new signals for entering trades.
Tips for Using The Strategy
Choose trading on markets with high volatility, as those offer plenty of opportunities of being successful with this strategy. For example, the Forex market tends to be the one with a higher volatility, so do not hesitate to trade currencies with the use of Fibonacci retracements.
As for the time frames, it is recommended that you set them according to the expiry time of the trades you open. This will be very useful in accurately putting into practice the strategy.
Pay attention when making use of this strategy because, even though is a very popular one, it is also very risky. So, you should be aware of that and of the fact that like all other strategies, this one does not guarantee a 100% rate of success on every trade, so do not expect to be profitable each and every time. Unpredictable things can happen and you need to be prepared for the moment they occur.
For applying this technique, we also advise you to select a broker, allowing for quick response (you can try it with one of these brokers). Those offering the 60 Seconds Options trading type are the most suitable.
And the last, but not the least, make sure you clearly understand how the Fibonacci tool works. You can try it with a demo account, before actually applying the strategy, so that you get comfortable in using it.