Trading Binaries with the Fibonacci Tool

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Trading Binaries with the Fibonacci Tool

A Sure-fire Way of Trading Binaries with the Fibonacci Tool

In my experience dealing with retail traders, I have come to discover that the Fibonacci retracement tool is one of those lesser used technical indicators in market analysis. Mention the MACD or moving average indicators and traders will immediately brighten up with recognition. But talk about Fibonacci and everyone just draws blank.

Retracements are a normal part of trading. They occur all the time and a trader needs to know how to use retracements to his advantage. This is what the Fibonacci retracement tool does for you. The tool plots five horizontal lines on the charts which correspond to 5 possible areas to which prices may retrace, with the distances expressed in terms of percentage of the original move:

Prices can retrace to any of these points. So how would you use the retracement tool to trade binary options?

If I were to trade binary options using retracement, this is what I would do:

1) I would select a strongly trending financial instrument, such as gold, EURJPY, GBPJPY or EURUSD.

2) I would select a time frame that will confirm that what is playing out in the market is actually a retracement and not something else. I would therefore choose the Daily chart.

3) I would purchase a “Touch” option in the Touch/No Touch trade type as my preferred trading option, picking a point between current prices and the 23.6% retracement point.

Use This Strategy At The Leading Brokers:

Nadex Exchange $250 100% » Visit RaceOption $250 90% 100% Deposit match bonus » Visit BinaryCent $100 85% 100% Bonus on ANY 1st Deposit » Visit

Trade Technique

Take a look at the Daily chart for the EURUSD. Note that by selecting this chart, I have already fulfilled my first two trade conditions. It is a daily chart, showing me when a retracement is actually occurring, and the EURUSD trends well, being the most actively traded currency pair in the market.

I am now looking for how to fulfil my third condition, which is actually my trade objective. I want to pick a strike price at a point along the course of the price retracement, between the market price and the 23.6% Fibo level. To do this successfully, I must be sure that a retracement is actually in progress. How do I confirm this?

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Look at the area where a blue arrow points to “drag Fibo tool here” on the left side of the chart. The bullish momentum of the EURUSD has actually been checkmated by the formation of a reversal candlestick pattern, a bearish harami. An expanded version of that point is shown below:

Occurring at the peak of a bullish momentum is a clear reversal signal. The retracement followed soon after, and went all the way to the 50% retracement point.

Trading binary options is not rocket science. It just takes a trader knowing what to do and when to do it. But it also requires that the trader must be quite knowledgeable about topics such as candlesticks, chart patterns, etc. A trader has to be thoroughly at home with the candlestick patterns. If there is any topic in the financial markets that deserves attention, this is it. With candlesticks, you can determine price direction easily, and then add other tools to increase the success rate of your trade calls.

Trading Binary Options with Fibonacci

We watched many traders and noticed that very few of them use Fibonacci retracement tool when analyzing the market. Traders are well aware of other technical indicators like moving average or MACD, but when we asked about Fibonacci tool, they were lost.

If you know how to use retracements right, you can make it your advantage. By Using Fibonacci retracement levels you will see how far a market has retraced from some earlier move. This article will show you in details how Fibonacci binary options trading works.

What Fibonacci Tool Does?

This tool draws 5 horizontal lines on the chart that show 5 possible areas of retracement. The distance between the lines is expressed as a percentage from the initial move:

Retracement can be made to any of these areas.

How to make Fibonacci Binary Trading?

We recommend you to follow the next tactics if you want to do Fibonacci binary option trading using the Fibonacci retracement tool:

  1. Choose a highly trending financial instrument, such as Gold, EUR/USD, EUR/JPY or GBP/JPY.
  2. Choose a time frame that will indicate what is going on with the market and the retracement itself. Daily chart is most commonly used in such case.
  3. Choose “Touch” as preferred option for trading in the Touch/No Touch trade type. Then pick a point between the actual price and the 23.6% retracement level.

Fibonacci Binary Options Trading Technique

Examine your Daily chart for the EUR/USD currency pair. By choosing this chart you have already fulfilled first two conditions for such trading. On this chart you can see actual retracements and you will not confuse it with any other moves. And the second condition is that EUR/USD currency pair has a very good trend. This is also the reason why many traders choose this currency pair for trading on the FX market. It is important to start trading binary options with Fibonacci tool on the asset that has a good trend.

Now only the third condition left. This is the main condition for trading binary options using Fibonacci retracement tool. Now you need to choose the price to open the position alongside the retracement course between the current market price and 23.6% Fibonacci retracement level. To make sure everything is correct you must check that a retracement is really moving. Next you will find how you can do this.

On the left side of the chart you can see an area with the blue arrow pointing to the button “Move Fibonacci tool here”. EUR/USD had been consistently growing over the period of more than 10 candlesticks. Yet the price has reversed by the formation that is often referred to as a bearish harami. This type of a candlestick pattern is a sign that a price is going to reverse. The explanation of this point is given below:

If it occurs at the maximum of bullish point – it means that the price is about to go down. The retracement that appeared straight after this, decreased to 50% retracement level.

In fact, binary options’ trading is not that difficult. Of course, trader better be familiar with fundamental trading terms and theories, like chart patterns, candlestick, bullish and bearish points. Among many topics about %financial markets%, you should pay a special attention to candlesticks, because understanding them will make the process of defining a price much easier. But do not relax – keep exploring other useful trading tools.

So, in this article you have found out how you can start trading binary options Fibonacci method, now it is time to pick up one of the best binary options brokers and start benefiting from your knowledge. Next time Binary Options Hub will tell you about another interesting aspect of binary options trading. For now – you can go through our binary options tips section and find another helpful article.

7 Binary Options

The Fibonacci tool comes with the trading platform and represents a great indicator that can help options traders to optimize their trades. It features retracement, expansion, time zones which the trader can use to find the perfect striking price, as well as the expiration date that is required to cash in the trade.

The Fibonacci Retracement enables tracking down waves, and the Fibonacci Expansion indicates impulsive moves. Fibonacci also takes into account expiry periods so it offers the Fibonacci time zone. Out main focus at the 7BO binary options education will be the Fibonacci Extension tool and how it can be used in trading and what benefits it offers.

The Fibonacci Extension Tool Explained

Every options trader is aware that the time factor is crucial when trading, and the Fibonacci tool can help traders earn some money if the relevant time period has been chosen.

Our examples are based on the most frequent pattern found in the options market, i.e. the impulsive move based on the Elliott Waves theory. The goal is to extend one wave minimum, which in practice often turned out to be the third wave. After a trader identifies what could be the first way, he is supposed to use the Fibonacci tool for extension and wait until a 161.8% extension is possible between the previous and the current wave. To activate the extension tool, a trader simply has to click at the beginning of the first wave and at the end of the second wave and wait for the outcome which should take place at the level of 161.8%. if the level is not reached, it means that the move was not impulsive meaning that the estimate that preceded the setup of the extension tool should be reconsidered.

The Fibonacci Numbers as Predictors

Fibonacci is a common tool used in numerous technical analyses which only reinforces its significance in trading. Pattern-based predictions rely heavily on the Fibonacci numbers since otherwise, they might not even be possible. The Fibonacci Expansion tool’s role is to figure out the extended waves in an impulsive movement.

When an impulsive move is displayed, then the price will move radical enough to extend one wave which can be spotted immediately since it is a very long stand out of the rest. The Fibonacci Expansion tool is used to find the exact spot of the minimum limits that characterize the wave extension.

We can illustrate that in the following example. Let’s say we have an upside movement and an accelerating market, but our market analysis suggests that the wheel will turn in a given moment. Traders should look at the length of the first wave higher and calculate the 161.8% extension of it in order to find the potential level and to know when to strike.

Search for Extended Waves

An educated guess would be to apply the extension from the second move to the end of the third move with an expiration date within the timeframe that displayed the impulsive move and then, place a put option to strike the right price.

Extended waves are the best to be looked for upon important news releases, prior to economic important events, since they are strong indicators of impulsive moves. Intensive movements are usually triggered by an important news. News like GDP release, Unemployment rates and inflation, retail sales, can all influence the monetary policy of a country to change, which further on, will keep the market moving.

Corrective Waves and Fibonacci Waves

Corrective waves are also very suitable to employ the Fibonacci Extension tool including a flat b wave which can become strong and break the wave’s high or lows, which depends on whether the wave is rather bullish or bearish. In such a situation, the b wave’s push over the 161.8% level would indicate that the upcoming c wave is not going to break the high/low of the previous wave a, which suggest that the best thing to do is to trade a call option when the trend reaches the wave an area.

The Fibonacci Expansion tool is easy to find on any platform. It is always listed on the menu and can be automatically selected. The exception is the Meta Trader platform, where you have the option to insert Fibonacci Expansion, and this process is also very simple requiring only clicking on it and dragging it to the screen. The Meta Trader Fibonacci Expansion tool is limited in terms that it is is not supported if you are looking for running correction waves. For example, if the bearish corrective wave is found above the end of the preceding bullish movement, it means that the Fibonacci tool is not available with the MT 4. But, other platforms like the JForex, support the tool even in this kind of cases, so you do not have to limit yourself to the MT4 if you want to experience the Fibonacci Extension tool to the fullest. This tool is one of the most common indicators used for trading, and once a trader finally understands when to apply it, it can account for significant profits in your account balance.

Start trading now by opening a FREE account on one of our recommended brokers.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo
    Binomo

    2nd place! Good choice!

Like this post? Please share to your friends:
Binary Options Trading Wiki
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: