Podcast:

Do You Struggle to Understand Fibonacci Levels

In this video:

00:23 – Difficulties with trading using Fibonacci levels – plus the US Election

00:56 – People struggle with using Fib levels in real time

02:11 – Big traders and banks use Fibonacci levels

02:45 – Fibs give me a great retracement entry

04:15 – No guessing with my entry and exit levels

05:05 – Drawdowns are kept to a minimum

05:54 – The US Election – Hilary or Don, who will win?

Do you have a problem understanding Fibonacci levels? If you do, listen up. I've got some great information and of course, news about the upcoming U.S. election, so let's get into it.

Hi Forex traders, its Andrew Mitchem here, the owner of The Forex Trading Coach.

Difficulties with trading using Fibonacci levels – plus the US Election

In today's video and podcast which is number 202, I want to talk about difficulties about trading with Fibonacci levels and of course, next week, we have the long anticipated and really, at this stage, who knows what the outcome's going to be, the U.S. election, so let's talk about the trading side of things first, and Fibonacci levels.

People struggle with using Fib levels in real time

Last week I said at the end of the video and podcast, “Drop me an email with questions that you have about your trading,” and an overwhelming majority of people, a huge number of people, wrote and said, “Andrew, can you help us with understanding Fib levels, Fibonacci levels?”

I'm not going to explain the whole “what are the Fib's, how are they calculated?” You can find that all online elsewhere, but the big problem that I found years ago when I started trading with Fibs is that they work beautifully in hindsight, a little bit like Elliott waves, if you have tried Elliott waves. You can see them all plotted on your charts, extensions and retracements and waves, et cetera, whichever you traded, Fib levels or Elliott wave, and you can see it all in hindsight because you know exactly where to draw your levels from and to and in hindsight, absolutely wonderful, but the problem that I found, anyway, is that in real time, I just didn't know where I was drawing levels.

Am I at a swing high now or maybe at a couple bars later I might be at a new swing high, so therefore my levels are wrong, and to me it was an absolutely nightmare. I found it real difficult. Although I like the concept, in reality and trading from the right hand side of the chart, making the decision right now as the market's moving up and down, I found it virtually impossible to trade either of those 2 principles.

Big traders and banks use Fibonacci levels

But, as you know, if you've been trading for a long period of time, a huge number of technical traders in big institutions, big banks, et cetera, they use Fibonacci levels, so I was determined to try and find a better way of trading that suited me using Fib levels all those years ago, and today when I found something that worked, I still trade exactly the same way today, and that's exactly how I help and teach my coaching clients using the way that I have discovered and found Fibonacci levels worked for me.

Fibs give me a great retracement entry

What I love about Fib levels, the way that I use them, is that they give me a fantastic retracement entry, so it means I'm buying below the current price or selling above the current price, so I'm using limit orders, buy limits or sell limits. What that does is if the price retraces to my entry level, it gives me a far greater reward to risk on my trade, rather than just jumping in straight away on the close of the candle at the market, I'm waiting … Let's say I'm buying. Rather than jumping in up here, I'm waiting for the price to retrace to a set level using my Fibon...