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Trading the Key Levels of Fibonacci Retracement Tools

The Fibonacci trading strategy is one of the most effective ways to ride the long term market trend. Even after having a little knowledge about the trading industry, you can easily ride the long term market trend and make a huge profit. Being a new trader in the Forex market, you need to consider a few important things. First of all, never start to trade the market with real money unless you demo trade the market for six months. The professional Singaporean traders often consider the demo trading account as a blessing for the novice trader. It allows them to learn to trade without even risking any real money.

In today’s article, we are going to discuss how to trade the key Fibonacci retracement levels with an extreme level of precision.

What are Fibonacci retracement tools?

This is nothing but a simple trading tool available in all trading platform. It allows the traders to find the end point of the market retracement. Those who are new to the trading profession might have difficulty understanding the topic. But there is nothing to worry about. We will make things clear. There are two basic types of market movements, uptrend and downtrend. This doesn’t mean the market will always exhibit upward or downward movement. Even during an extended bullish movement, you will find a bearish drop. This drop is known as a market retracement. The experienced traders use the market retracement to find the potential entry point.

Key Fibonacci retracement levels

There are many different ways to trade the Fibonacci retracement levels. The pro retail traders always prefer to trade the key levels. These are 38.2%, 50% and 61.8% Fibonacci retracement levels. Most of the time the aggressive traders execute the trade at the 38.2% and 50% retracement level. But the experienced and conservative traders prefer to execute the trade at 61.8% retracement level. But being a conservative trader, you will often miss some of the very best trends in the market. This is absolutely nothing when you compare it to the long term benefit of becoming a conservative trader.

Being a Fibonacci trader, you must have access to the best online trading account. Try to trade the market with a reliable broker like Saxo so that you can execute trade even at the extreme market condition. Trading the market with the low-end broker will always result in heavy loss. Never think you can change your life by without knowing the proper method of trading. To do so, you must trade with a well-regulated broker. Never forget to trade with the market trend as it drastically reduces the risk factors in the trading business.

Setting up the stop loss

Setting up the stop loss is fairly easy when it comes to Fibonacci retracement tools. Either you can use the price action confirmation signal or set the stop loss using the 61.8% retracement level. It’s true, if you use the 61.8% Fibonacci retracement level, you will have to use a wide stop loss. Due to this very reason, many retail traders prefer to use the price action confirmation signal to trade the key levels. It allows them to trade with a very tight stop loss. Most importantly, it helps them to find a high-risk reward trade setups in the Fibonacci trading strategy.

Dealing with the loss

Though a Fibonacci trading strategy could be a very profitable system, still you have to lose money. Never think you can win big trades without dealing with losing trades. At times the long term market trend often changes due to an event of high impact news. Thus, you need to have the mentality to embrace the losing orders. In addition, make sure you are not taking more than 2% risk even though the win rate of Fibonacci trading strategy is pretty high. Always try to trade the market from a safe stance so that you can protect your trading capital.

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