Powerful Fibonacci Retracements Strategy Using AutoFibo MT4

 

Table Of Contents:

  1. Powerful Fibonacci Retracements Strategy Using AutoFibo MT4
  2. Key factors that you need to know
  3. Functions of the critical factors
    1. Auto Fibo MT4 indicator
    2. 100 SMA
    3. Swing high and Low
  4. The long trade setup sequence
    1. Stop loss
    2. Take Profit
  5. The short trade setup sequence
    1. Stop loss
    2. Take profit
  6. Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator – Useful advice
  7. Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator – Conclusion

 

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator For MT4 uses Fibonacci retracement levels to enter a trend continuation trade in direction of the initial move (the main trend). This strategy mainly depends on the AutoFibo MT4 Indicator but we still need to rely on an additional indicator that will help us to determine the existing trend.

The well-known retracement levels are 23.6, 38.2, 50.0, and 61.8. These are the important levels in which we need to look for the trade signals. After installing the AutoFibo Mt4 indicator, these levels will be drawn automatically based on the most recent swing high and low. Now let’s see the prime factors which are used to develop this strategy.

 

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Key factors that you need to know

 

  1. Auto Fibo MT4 indicator
  2. 100 SMA
  3. Pin bar and engulfing pattern
  4. Swing high and low

 

Chart setup with the Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator For MT4

 

Functions of the critical factors

 

Auto Fibo MT4 indicator

It is a special kind of tool that constantly analyzes the highs and lows of the market. Based on the highs and lows, it creates the simple Fibonacci retracement level. Some of you might be confused with the bands formed by the Auto Fibo MT4 indicator, but it doesn’t have many functions in the trade execution process.

Input parameter for the Auto Fibo MT4 indicator

The default band value is set to 48 but if you intend to smoothen the formation patterns in the band, you should be using a higher value. But if you alter any default settings, you should be testing the functions of the Auto Fibo MT4 indicator in the practice trading account.

 

100 SMA

The 100 SMA is going to help us to determine the trend directions. In general, the Fibonacci users often take trades without considering the strength of the existing trend. To offset this problem, we will be relying on the 100 SMA which will act as the dynamic support and resistance.

If the price of trade above 100 SMA, consider the Fibonacci retracement levels as the buying spot. On the contrary, the position of the price is below the 100 SMA, you should consider the Fibonacci retracement level as a selling spot.

 

Swing high and Low

One of the amazing things about using the Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator is the identification process of swing high and swing low. The Auto Fibo indicator will draw the barrier which will help you to identify the swing highs and lows.

Identification of swing high and low

The top blue band will help you to analyze the key swing high and the purple color lower band will help you to assess the key swing low. Based on the swing high and swing low, you can also find the SL and TP while using the Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator.

 

The long trade setup sequence

The Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator is more like trend based trading strategy. Before you take any trade, you need to be sure that the existing trend is bullish and favoring the long trade setup. That means the position of the red color 100 SMA should be trading below the current price level. Now let’s see the prime condition which will allow us to execute the long trade.

 

Conditions to execute the long trade

 

  1. Analyze the price position in contrast with the 100 SMA. The price should be trading above the 100 SMA indicating the bulls are dominating the market.
  2. The slope in the 100 SMA should be positive and should be trading close to the bullish retracement level.
  3. You need to wait for the retest of the important Fibonacci support level. That means the price should test an important Fibonacci bullish retracement level and bounce off.
  4. The Fibonacci retracement level should be backed by the 100 SMA. However, it is not necessary that the 100 SMA must coincide with the Fibonacci support level. As long as the price is trading above the 100 SMA, you can take the long trade.
  5. Check the economic calendar and make sure no high-impact news is being scheduled in the upcoming 30 minutes.
  6. After checking all these conditions, you may take the long trade with low risk.

 

Execution of long trade

 

Stop loss

To determine the SL price, you may use the neared low. In that can case, you may use the lower band drawn by the Auto Fibo indicator. But you should follow this approach only if the price is trading at the lowest Fibonacci retracement level.

To be on the safe side, you should set the SL below the low of the bullish rejection candle. Try to maintain a 1:5 risk to reward ratio while using this system.

 

Take Profit

To determine the TP level, you have manually check the resistance level. You may also place the TP at the nearest key swing high. But the risk to reward ratio must be higher than 1:5.

 

The short trade setup sequence

In this segment, we will learn to open new short trade without using a complex method. At times, you will get puzzled to find the perfectly positioned 100 SMA. This is where you need to follow this technique. But note that, this method is a bit more advanced and requires a cautious step. Without any further delay, let’s see the sequential steps to execute the short trade.

 

Conditions to execute the short trade

 

  1. Pick an asset which is already making new higher highs and higher low. The position of the 100 SMA should not matter.
  2. Move back to the daily or the 4H time frame and see if the 100 SMA suggests the currency trend is bearish.
  3. Look for the bearish rejection in the price at the Fibonacci retracement level drawn by the Auto Fibo indicator. If you use the indicator in the M30 time frame, you must take trades during the active trading sessions.
  4. After spotting the bearish rejection in the Fibonacci retracement level, check the slope of the 100 SMA. If it is negative, the trade setup is valid.
  5. Once you have checked all these conditions, you do have the option to open a new short trade in favor of the existing bearish trend.

 

Execution of short trade

 

Stop loss

The stop loss placement while using the Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator is a very straightforward process. You may set the stop loss above the resistance level which is usually determined by using the Fibonacci retracement level. If you intend to use a more conservative way, start relying on the price action confirmation signals to set the SL price.

 

Take profit

To determine the take profit in the trade, you should be very cautious with your actions. The TP should be determined in such a way so that the minimum risk to reward ratio is 1:5. Use the nearest support level to determine the TP level.

 

Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator – Useful advice

Fibonacci-based trading strategy always provides strategic trade signals. But to take real advantage of using this system, you should be analyzing the market data in a very standard way. Try to evaluate the trade signals by using the higher time frame data. Once you learn to analyze the data in a higher time frame, you should be able to ride the trend without having many problems.

As a rookie trader, you may also learn the proper function of this trading method by using the demo account. The paper trading account will make you more comfortable with the trading system. Most importantly, you can decide whether this system truly suits the trading personality or not.

 

Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator – Conclusion

Learning about a new trading system like Powerful Fibonacci Retracements Strategy Using Auto Fibo MT4 Indicator is quite challenging. You need to cautious about the retracement phase and be aware that the Fibonacci retracement levels are often broken.

So, try to use a strong risk management plan and always trade the market in stable hours. Forget about the aggressive approach and limit your risk factors in every possible way.

Download the complete system description and the files here:

FREE Powerful Fibonacci Retracements Strategy Using AutoFibo MT4 Indicator

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