Auto Fibo Indicator For MT4
Table Of Contents:
- Auto Fibo Indicator For MT4
- Trading ideas with the Auto Fibo Indicator For MT4
- Interpreting the Auto Fibo Indicator For MT4
- Auto Fibo Indicator For MT4 - Buy Entries
- Auto Fibo Indicator For MT4 - Sell Entries
- Auto Fibo Indicator For MT4 - Conclusion
The Auto Fibo Indicator For MT4 is an indicator which uses the basis of the ZigZag indicator to automatically draw Fibonacci ratios or levels for each Zig and Zag movement within the market. It makes sense to do so because the apparent structure of price movements during trending conditions is considered to take the form of ZigZags therefore it makes sense to use the Fibonacci metrics in conjunction with the ZigZag indicator. It is an absolute mundane and tedious task to mock up your charts with ZigZag formations and to calculate and draw in the Fibonacci levels manually!
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
Trading ideas with the Auto Fibo Indicator For MT4
Fibonacci and ZigZag indicators are some of the most commonly used indicators since they tend to show the market trends better. However, it would require some technical background to accurately draw the Fibonacci and also interpret the ZigZag indicators.
The Auto Fibo Indicator For MT4 combines the two indicators by using the ZigZag indicator to automatically plot the Fibonacci levels and thus taking the burden of manually drawing the levels of the trader’s hands.
With the Fibonacci levels left, the only thing that the trader is left with is understanding how to interpret them to place and close trades. In this article, we shall get into the details of how you should use the Auto Fibo Indicator For MT4 to trade.
Interpreting the Auto Fibo Indicator For MT4
When the indicator is loaded on to the trading chart, it automatically generates the daily Fibonacci retracement levels using the lowest and highest market prices.
When the market is retracing from a bearish trend, the Auto Fibo Indicator For MT4 uses the lowest market price as the starting point and the highest market price as the endpoint plotting the Fibonacci retracement levels upwards.
On the other hand, if the market is retracing from a bullish trend, the Auto Fibo Indicator For MT4 uses the highest market price as the starting point and the lowest market price as the endpoint plotting the Fibonacci retracement levels downwards.
The Auto Fibo Indicator For MT4 plots the 0.0%, 23.6%, 38.2%, 50.0%, 61.8%, 100.0%, 161.8%, 261.8%, and 423.6%. In case some of this levels are not visible in your trading screen, click at the right-hand side and crossly using your mouse wheel to condense the chart to see those features that can’t fit in your current screen.
The indicator also gives the actual market prices corresponding to each of the levels. This helps the trader to identify the exact level as per the market prices.
The most important levels of retracement are 0.0%, 23.6%, 38.2%, 50.0%, 61.8%, and 100.0%. These divide the previous market trend into five sections. The trader should target these levels as the take profit levels when trading the retracement.
For instance, if you open the trading chart and find the market between 23.6 % and 32.8%, you should place your trade with 23.6% as the take profit. However, it is usually advisable to avoid trading before the retracement hits the 23.6% since you may not be very sure whether the market is on a long term retracement or just a short term retracement that will quickly turn into a trend continuation of the previous trend.
When the market goes past the 100.0%, it is normally a sign that a break up has happened and the market could be on the current trend quite longer.
Auto Fibo Indicator For MT4 - Buy Entries
To place a buy trade (long position), the Auto Fibo Indicator For MT4 indicator should be showing the retracement levels moving from down upwards; meaning the 0.0% is at the bottom and 100.0% is at the top.
However, to confirm the trend, you should combine the indicator with a trend indicator. You should also be on the lookout for some candlesticks like hammers, and doji, which indicates a trend reversal.
In the chart above, for example, the retracement is well past the 23.6%. However, a bearish hammer candlestick has just formed indicating there is a probability it could be the beginning of a bearish trend or retracement. In such a case, it is best to wait for the market trend to turn bullish for you to place a buy. To identify a bullish trend you can use a trend indicator like the moving average or any other of your choice.
Once you make a buy entry, you should place your take profit level at the immediate Fibonacci level above the price you have entered your buy at.
Auto Fibo Indicator For MT4 - Sell Entries
To place a sell trade (short position), the Auto Fibo Indicator For MT4 indicator should be showing the retracement levels moving from up downwards: meaning the 0.0% is at the top and 100.0% is at the bottom.
However, to confirm the trend, you should combine the indicator with a trend indicator. You should also be on the lookout for some candlesticks like hammers and Doji, which indicates a trend reversal.
In the above screenshot, the retracement levels of 26.3%, 28.3% and 50.0% have been passed and the market is currently in a bearish candlestick which seems to be a hammer, which is a good indication that there could be a bearish retracement two candlesticks after the market registered a slight bullish movement. In such a case you may place a sell trade even if the market prices are still above the moving average.
Once you make a sell entry, you should place your take profit level at the immediate Fibonacci level below the price you have entered your buy at.
Auto Fibo Indicator For MT4 - Conclusion
The forex market moves in swings; meaning when the market is up you expect it to move down after some time. The only problem is identifying when the market is moving up and when it is moving down.
The Auto Fibo Indicator For MT4 is simple to use an indicator that helps you identify when the market trends change and also provides you with the target levels for the market retracements when the trend changes.
It is a great choice for both professionals and beginners. The trader does not need to have any technical background in drawing Fibonacci levels since the indicator automatically generates those for him/her. The only required knowledge is how to use the Fibonacci levels and after going this guide, you shall be able to use the Auto Fibo Indicator For MT4 to trade.
