 The Fibonacci trading strategy is a long-term strategy based on support and resistance. Fibonacci numbers are an important indicator of support and resistance in trading. Many algorithms and traders respect the Fibonacci levels.

## At a glance – Fibonacci trading strategy

Time needed: 5 Minuten.

The 2 steps of the Fib trading strategy explained:

1. Open a position

Once you have charted your fib retracement, you can jump in to a position directly above a support. After that, make sure to set a stop loss order as a hedge below the level of the entry.

2. Profit taking

Take your profit either at the upper end of the current fib level or at another resistance.

## How the Fibonacci tool works

On most exchanges with Trading View, Fibonacci numbers can be included through the toolbox on the lower left side. Refer to the following screenshot:

For an ascending trend, you now place the tool at the lowest point of the trend and drag it to the highest point, see figure:

The finished image now shows the different fib levels:

## What do the Fibonacci levels indicate?

Basically, the higher the time frame considered, the more valuable the statement. A fibonacci on the 1m (1 minute) chart says of course less than a fibonacci on a 1d (1 day) chart. Basically, the lower the Fibonacci levels, the stronger the resistance from the bottom to the top but also from the top to the bottom. If the price is above the fibonacci level, it is considered a support. If the price is below the fibonacci level, it is considered a resistance.

### Step 1 – Entry

Beim Fibonacci Trading geht es um den Einstieg direkt über einen Support mit der Absicherung (Stop Loss) unter dem Fibonacci Level. Hier ein Beispiel:

Since the Fibonacci levels form a strong support, it is often worthwhile to enter at this point with a hedge below the level. The ratio between risk and reward is often very good here.

### Step 2 – Take Profit

For the take profit, either the upper end of the Fibonacci level or further resistances in the chart are suitable. The stop loss should be tightened either way once you reach a certain point in profit. How far also depends on your fees and your initial risk. You should take at least 2x more profit than you were in risk by the stop loss.

This strategy is more suitable for traders with a bigger time frame. Of course, the Fibonacci levels can also be traded on smaller timeframes, but the risk of being stopped out too early is very high. If you prefer to trade in smaller timeframes we recommend our HTF strategies.

What is your experience with Fibonacci Trading so far? What is your Fibonacci trading strategy? Feel free to write us in the comments, we are keen to hear from you.

Fibonacci retracements are mathematically based on the golden ratio or fibonacci numbers. A total distance between two prices is divided into several areas of different sizes defined by the fibonacci numbers. Since many traders follow these numbers, there is often a tradeable, self-fulfilling prophecy.