If you want to become the richest person in the world, it’s enough to know two things. When will the trend begin and when it will end.
HOW TO GET THE BEST TRADING SIGNALS?
Knowledge when the trend begins and ends is critical for trader. As a rule, most of the loss of a trader is due to the fact that the trader bet on the fact that the trend will continue. There is a change in the market and the trader loses. The presence of information about the turning points on market will allow you to significantly improve your trading result. The precise trading signal is the basis of your trading success.
For predict the behaviour of the market it is necessary to determine what rules is major for forex market. What affects him? To begin with, we are recognize the fact that the market has a human nature. Forex market are driven by human emotions – fear, greed and euphoria. Accordingly, the market should obey the basic laws of human nature. If this is true then market must comply the basic rules that describe our world. And one of these rules is – golden ratio.
The golden ratio is a universal rule of the world! This is a ratio that reflects the structure and order of our world. The most complete definition of the golden ratio shows: two quantities are in the golden ratio if their ratio is the same as the ratio of their sum to the larger of the two quantities. Approximately its value is 1,618. For practical use using the ratio of 62% to 38%. This relationship is valid in the forms of space and time.
GOLDEN RATIO AS A SOURCE OF FOREX TRADING SIGNALS?
For example, take a USDCAD trading pair. Select daily time frame. Make two time-marker with ratio of 1 / 0,618. This is corresponds to the Golden ratio.
Denote the two extreme highs in blue. Let’s make a projection at a distance of 0.618 the distance between two top point. Perform the same procedure with two low point (red line). Accordingly, we received two lines at a distance of 0.618 from our chosen time bands corresponding to the top and bottom. Chart 2 shows how the market reacted. The local maximum and minimum for trade pair USDCAD hit in points that we designed. In fact, we received trading signals to enter the market.
Building a new time intervals. Through new high and bottom.
The market, accordingly, makes a new maximum and a minimum at these points and forming new trading signals.
Again we select new time intervals. For based select new highs and bottom of the market.
Result we are get new trading signals for trading.
You could make sure that we accurately identified six turning points for the USDCAD currency pair. Following this logic, you can further analyze the market and receive good trading signals. You can scale it to any time frame. (If selected higher time range you choose, the higher the accuracy.) For another use, you can also predict the price level – but this is the topic of another article. As you can see – the golden ratio is a very powerful universal tool for analyzing and forecasting the critical points for trading pairs in the forex market. Also, this tool can be used for the analysis of other markets as it is a universal powerful tool for market forecasting, which is based on the natural basis.
WHAT IS THE DIFFICULTY OF USING “FIBONACCI GOLDEN RATIO” FOR ACCURATE TRADING SIGNALS?
Quite often the market creates combinations of ambiguities. What does it mean? Quite often, when using this tool, a combination of tops and bottoms is made up in one point. This is a point of uncertainty. Another situation is when the “Fibonacci Golden Ratio” time stretch that passes through two bottom point gives the third lowest point (and not the top as we saw in the examples). What to do in such cases? Go to a larger time interval?
Also call your attention that will correctly noted that “Fibonacci Golden Ratio” determines no minimum or maximum point in the market. “Fibonacci Golden Ratio” defines the market reaction point – the turning point. And what it will be – the minimum or maximum you will determine when you wait for the onset of an event. That is, you have to analyze the market before the event and define that you wait – top or bottom.
HOW TO SET UP FIBONACCI GOLDEN RATIO IN METATRADER4?
To start using the “Fibonacci Golden Ratio” you must properly configure time zones Fibonacci rule to match golden ratio. To do this, run the MetaTrader4 trading terminal (other configuration terminals may differ). Go to the Fibonacci settings.
Leave levels 0 and 1. Add a new level of 1,612
Remove all other levels. This will make it easier for you to do further work. Save the settings. Now you have the right tool Fibonacci Golden Ratio is ready to work.
Now select Insert – Fibonacci – Time zone you will be available tool “Fibonacci Golden Ratio” under name Fibo TimeZones.
Also, I want to emphasize the fact that the tool “Fibonacci Golden Ratio” is not a golden Grail. There is also some complexity and uncertainty when using it. But Fibonacci Golden Ratio can serve as a powerful tool for identifying critical points on the Forex market, which allows you to get good trading signals to enter the market.
For work in the Forex market I directly use this tool. This has a positive effect on my trade. You can see the results of trading on this link. If you are interested in the results of my trading, you can copy my trading signals. Then all transactions will be automatically copied to your account.
If you find this information useful – do not forget to tell it to your friends through social networks. You can also leave your comment on the information provided above.