How to add a Fibonacci retracement in Metatrader 4

1. dean spearman on July 2nd, 2009 4:29 pm
   

   The fibonaaci video was very helpful,thanks
2. Char in L.A. on July 3rd, 2009 11:36 am
   

   GBP/USD Fibs: Why use April low instead of early March or end-Jan. lows (daily chart)? Is how far back you go arbitrary or is there some rule/formula? Obviously short-term charts (hour/5 min.) use more recent retracements. Thanks, Greg, for your wonderful daily commentary!
3. Greg Michalowski on July 3rd, 2009 12:26 pm
   

   That is a great question Char. The answer is other lows could have been used. What is important in using Fibonacci’s, is to use a low price that initiated a move higher (or lower). In this case, the GBPUSD consolidated for around 3 weeks in April before the next leg to the upside. This is significant length of time. So when looking for a correction of that “wave” higher, using the low in April is acceptable. You could also use the low in March or January if taking even a longer term view, however. The problem with that is the target is farther away and therefore less realistic.

   In this case the trend move from April to the consolidated high this week (to 1.6743) took time and clearly was a trend move higher. With the failed break to the upside this week, technicians will look at that high as “the” high for this wave. Targets to the downside using Fibo Retracements start to come in play.

   As you know, the move down has to continue to remaiin below key technical levels to satisfy the target fibonacci levels. Nevertheless, it is important to have a target as it gives the potential reward. Knowing the reward is paramount as it gives traders a positive goal to reach for, and also allows the trader to get fixed in their mind that the potential exists from a technical basis that the GBPUSD CAN go to 1.5846. This helps prevent buying at 1.6200 for instance and getting out too early. Most trend moves are helped by traders who can’t believe a move to 1.5846 can happen. They therefore buy at 1.6230 and get stopped at 1.6187. They buy at 1.6130 and get stopped at 1.6050. They buy at 1.6000 and get stopped at 1.5940, etc.

   On the risk side, the failure to maintain the price below the 100 hour MA or 200 hour MA might be the stop that says “the market is not doing what it is supposed to do”. As a trader, looking for the successful completion of the steps down are needed and each successive and successful step down, moves the trader closer to the reward (note, the reward is unknown, but risks should always be adjusted down as the market changes - i.e. as the 100 and 200 hour MA moves lower or some other technical level is broken to the upside). If the stop is when the price moves above a moving average, use it. The market is not doing what you expect it to do…ie. staying below the moving average.

   The best feeling in the world happens when the reward level approaches and you are ready to buy/take profit against the level while others caught long and feeling the pressure sell to the smart ones below. At that point, you trade with the “houses money” and are in control. The smart money almost always slows the market down at the Fibonacci levels. If it doesn’t slow it down? The market is not doing “what it is supposed to do” (i.e. bounce off the Fibo Retracement level) and you get back on the trend down, targeting the 50% level.

   I hope this helped you.

   Greg Michalowski
4. Greg Michalowski on July 3rd, 2009 12:37 pm
   

   You are welcome Dean. Glad it could be of help.
   Greg
5. Williams on July 6th, 2009 10:05 am
   

   Mr. Greg, thanks for your trainings, its been really helpful. Please, I will like to know how you use the 200 simple moving average and the 100 moving average and how it can help improve my trades. Thank you sir for your time.
6. Greg Michalowski on July 6th, 2009 10:16 am
   

   The simple decision tree is if the current price is above the MA, the bias is bullish. If the current price is below the MA, the bias is bearish. Moving averages are also trend following indicators. If the MA is upward sloping the trend is up. When the MA is going sideways it says the trend is consolidating or non-trending. Markets can either trend or not trend. If the goal of a successful trader is to trade trends, a consolidating or sideways moving moving average can be a leading indicator for a trend move. If a trader can anticipate a trend, they will only need to get the direction right on the move up or down. If the price moves above the MA, the trend should be to the upside. IF the price moves below the MA, the trend should be to the downside.

   We will look to do a video on how to use MA in the near future. There are many ways you can use them. Too many to outline them here, but with a video we can demostrate how to best use the MA to make you a better trader.
7. Char in L.A. on July 6th, 2009 10:34 am
   

   Thanks for the detailed and insightful answer to my Fib question, Greg. I appreciate all that you do.
8. Greg Michalowski on July 6th, 2009 10:43 am
   

   You are most welcome..Greg
9. abayomi alalade on July 7th, 2009 10:45 am
   

   i want to know how to read fib line
10. Greg Michalowski on July 7th, 2009 11:00 am
    

    Fibonacci levels are mainly used to target correction levels.

    As you know, the market does not go up or down in a straight line but will stair step in the direction of the “trend”. When a peak or trough is reached (or perceived to be reached) traders will tend to apply Fibonacci Retracements to the most recent wave. Traders can then use the retracements derived as low risk entry levels for trades in the direction of the major trend.

    In this post today (CLICK HERE FOR POST) , the support at the 50% retracement (and the 100 and 200 bar moving average for that matter) came in at the 1.3976 area. When the market reached this level, buyers/profit takers entered the market and the price decline stalled. Traders who follow the Fibonacci Retracements intraday would buy at the level, with perhaps a 10 pip stop loss. If right - i.e. and the support holds - and the upward trend continues, the upside could be a move back to the highs for the day. If wrong - and as you know we all can be wrong - 10 pips is the risk.

    I hope this helps. Please come back with any additional questions.
    Kind regards,
    Greg Michalowski
11. Char in L.A. on July 7th, 2009 5:13 pm
    

    Hey Greg,
    Do you use Fib extensions for targets? I can’t get mine to work right — for some reason my extensions show up below the direction of the trend instead of above!
    Thanks,
    Char in L.A.
12. Greg Michalowski on July 8th, 2009 7:32 am
    

    Don’t use Fibonacci Extensions. Use the Fibonacci Retracement lines or the icon that has horizontal dotted lines and a small F in the bottom right corner. To see which icon and the procedure for setting the Fibonacci levels, go to http://forex.fxdd.com/training-videos and watch the video “NEW! How to add a Fibonacci retracement in MT4″

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