Many successful traders in the United Kingdom say the Fibonacci trading strategy is the best way to place a trade in favour of the long-term market trend. Though there are many different ways of trading, the financial instrument but the use of Fibonacci retracement tool is extremely unique.
Some novice traders trade this market with an indicator based trading system. They overload their trading chart to find the best trade setup. Indicators are nothing but your helping tools. You should never place your trades based on the indicators reading. Some novice traders trade the key retracement levels by using the indicator readings which is entirely wrong. Today we will give you some fantastic tips which will help to master the Fibonacci trading system.
Use the key swings of the market
The majority of the traders do not know how to find the key swings in the market. They are always placing trades in the lower time frame. Lower time frame trading is hazardous. If you do some research, you will understand that most of the false trading signals are generated in the lower time frame.
You need to use the daily time frame to find the high-quality trade setups. Try to find the key swings of the market to draw the major retracement levels. Make sure you are trading the market with a professional broker so that you can easily enjoy the best trading environment.
To find the bullish retracement level, you need to draw the Fibonacci retracement level from the key swing low to swing high. Things might seem little complicated to you, but if you demo trade the market for few months, everything will become comfortable for you.
Use the price action confirmation signal
There are three major retracement levels in the Fibonacci retracement tools. The expert traders in the United Kingdom usually suggest novice traders should place a trade at the 38.2%, 50% and 61.8% retracement level.
However, placing pending orders in the spread betting trading industry is going to increase your risk exposure to a great extent. Try to learn the price action trading strategy since it is one of the easiest ways to find profitable trades in favour of the long-term trend.
This system is based on the formations of the Japanese candlestick pattern. If you use the price action trading system, you can easily use tight stop-loss even at an extreme level of market volatility. However, when you do the price action analysis make sure you are using the higher time frame data. If possible, do the multiple time frame analysis since it will filter out the false trading signals.
Trade with discipline
No matter which trading system you follow, discipline and control is the key to become a profitable trader. Many rookie traders have blown their trading account due to high-risk trading. No one in this world can give you the guarantee that a particular trade will work for you.
The outcome of each trade is entirely random, and you need to consider the probability factors in this market. You should never place a trade with massive risk since it will ruin your trading career. The pro-UK traders never take more than 3-5% of their account capital.
The Fibonacci trading system is extremely easy for experienced traders. Instead of trading the live market you need to demo trade the market for the first six months as it will help you understand the complex nature of the market.
Try to do the technical analysis in the higher time frame so that you can easily avoid the false trading signals. Never trade this market with money that you cannot afford to lose. Always try to follow a conservative method of trading.