How to Use Fibonacci Retracement Levels for Better Entries on DotBig
In trading, it is important to find the best seconds to sell or buy assets to maximize profits. Sometimes, they catch a “financial wave” using Fibonacci levels. Further, let’s figure out how to use given retracement levels correctly and how the DotBig trading platform will help you to earn more by applying the Fibonacci system of numbers.
What Is the Fibonacci Method?
The method is based on the mathematical relations of the Fibonacci sequence and is used in various financial markets, including Forex, stock market, cryptocurrencies and commodities. Fibonacci levels are key components of technical analysis that are widely used in online trading. With their help, dealers predict price movements, find support, resistance, and pivot points. Fibonacci levels help traders make informed decisions based on universal mathematical proportions that reflect natural market patterns.
Fibonacci Sequence Specifics
The Fibonacci sequence comes with an infinite row of numbers. Each next number is the sum of the previous pair. The golden ratio of Fibonacci is reflected in the spontaneous behavior of various financial markets. Therefore, the Fibonacci series is widely used in technical analysis methods when forecasting price movements.
Starting from the 5-th, they increase according to the Golden ratio principle and the next number is 1,618 times larger. Thus, the number row itself looks like this: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 and so on.
Online Trading and Fibonacci Levels
American Ralph Nelson Elliott analyzed stock charts over 75 years and came to the conclusion that quotes move in waves in proportions close to the ratio of 1.618. The result of his work was to combine the theory of market cyclicity and the Fibonacci system into a wave theory named after him.
Further, the stock market found that corrections take place within the Fibonacci sequence. As a percentage, the indicators look like this: 23,6%, 38,2%, 50%, 61,8%, 76,4%. They began to be used in technical analysis.
Due to perfect visibility, Fibonacci tools and its numbers are widely popular among traders who use technical analysis to predict price movements.
DotBig Analytical Capabilities for Traders
Successful Forex trading is impossible without deep market analysis. Besides, for a novice it is crucial to run deals on Forex with a trustworthy broker.
The DotBig Forex company offers a complete set of tools for technical and fundamental analysis, suitable for traders and investors of any skill level.
1. Technical tools
Online broker supports given indicators:
● Moving averages.
● RSI and MACD.
● Fibonacci levels.
● Candle patterns.
2. Economic calendar
Besides, DotBig investments offers an economic calendar presenting important market cases regarding exchange rates:
● Global central banks calendar.
● Publication of macroeconomic cases (GDP, unemployment rate, inflation).
● Financial reports of top corporations worldwide.
3. Customized graphics
DotBig exchange provides users with customized forms and charts with various indicators for building trend lines, and save templates for future deals.
4. Algorithmic online trading
With DotBig, one can trade using advanced robots and scripts and automate routine Forex processes.
How to apply Fibonacci levels when trading on DotBig?
Fibonacci levels are used in various trading strategies, from scalping to long-term investing. They help to determine the entry and exit points of an asset. The appropriate moments for this are 38.2%, 50% or 61.8%.
With a rising trend, experts recommend opening a position just above one of these levels. To avoid a false breakdown, it is recommended to set a “stop loss” slightly below these levels.
If the trend is falling or you want to use a “short”, you also need to start from the levels, but set the “stop loss” slightly above them in case the asset grows.
The level’s versatility allows traders to use the Fibonacci method for analyzing assets, including currency pairs, stocks, indices, cryptocurrencies, and commodities. The construction of Fibonacci levels on price charts is determined by the rule: each of them shows a part of the previously completed movement. Accordingly, to build levels, it is necessary:
● Highlight the completed movement on the chart (a trend wave before the correction begins).
● Count the difference between the maximum and minimum movement prices.
● Calculate the level.
● Put it on the graph, taking one of the selected extremes as the starting point.
Since the Fibonacci retracement is symmetrical, the choice of the upper or lower point of the interval as a reference point is of secondary importance.
Modern trading platforms like the DotBig broker have freed the users from calculations. These terminals are supplied with a ready-made tool called Fibonacci lines or levels, which is built from two points – the maximum and minimum of movement.
Successful Entries on DotBig Using Fibonacci Levels
The Fibonacci trading method is just one of the tools on the stock exchange that must be used in combination with others. Situationally, it can help determine the correct entry point, the scale of growth and correction of the asset. But before buying and selling, it is still worth conducting a fundamental analysis of the asset and assessing the market situation.
DotBig provides technical indicators, such as Fibonacci levels, allowing traders to follow market trends and find optimal entry and exit points. The ability to integrate additional indicators is particularly attractive to newbies and professionals who strive for high accuracy in their forecasts.
Experienced traders find in DotBig everything they need to work effectively, even with the use of complex strategies and active trading in various markets. Professional DotBig reviews prove that clients appreciate its current trading service with advanced analytical capabilities for better Forex market entries.