If you are looking to learn how to use fibonacci ratio retracements, you have come to the right spot. A few years back I read a book by Constance Brown – “Technical Analysis for the Trading Professional”. She made a very good point on how the ‘theorist’ among technical analysts would, incorrectly, choose the extremeities of a move to draw fibonacci retracements.
Choosing the right place to draw fibonacci ratio retracements could mark the difference between success and failure in trading decisions.
This shows the 'wrong' way to draw fibonacci retracements
Such an approach would often result in their missing a good move because the market falls just short of their ideal retracement levels. The practising professional would spend a few extra minutes to see what were the pressure points in recent history and choose to ignore the spikes that shows up ever so often. Why make the same mistake as some poor trader whose stops were run in by the market at the extremities? Here is a demonstration of the two outcomes using the chart of Sterling Pound. The same technique for using fibonacci ratio retracements works equally well, whether you are considering the chart of a stock, an index, forex or a commodity.
The preferred way to draw fibonacci retracement grid
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not very conversant with elliot waves..but now taking interest after reading your blogs…do you see gbp/usd in wave 3…
Hi Venkatesh, I suggest you take a look at the GBP/USD update today.
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please suggest a good book to learn elliottwaves, its the best tool
Rajesh, A standard book is Prechter’s. Judging from the number of queries on this topic, I guess I should write a book myself!
an autographed first for me.you are brilliant
Sir, i want to make a career in share market and i trade in nifty options , kindly suggest what knowledge i should gain to make good profits daily thanx
Hi Shunty, To be honest, I am not qualified to give you such advice. It is impossible to make good profits daily. Most good traders lose often, but when they make money they make a big profit that offsets many small losses. However, a majority of traders do the opposite. They lose often, like everyone else, but they take small profits. Thus they end up losing. These are well known tendencies of human nature and unless you are one of the rare ace traders, you should keep trading as a hobby and not a livelihood.