Ok, going to throw in a little education from a trade I got on earlier. Nothing overly special from this trade. 30 pip move (and counting hopefully, the trade is still running).
First of all, I always draw my Fibonacci tool from top to bottom, never bottom to top but I appreciate there are people who do otherwise.
So drawing from swing high(0.90517) on the 1H chart, to swing low(0.89571).The fib tool I use is custom if wondering, only 3 levels included.
I monitored the price waiting for a strong price action signal for a sell(large pin bar on candle in a down trend) The price moved through the .382 level once before dipping slightly and moving through to the 0.5 level. Notice I did not take the trade when it rejected on the first occasion as there was no strong price action candles. I took the trade on when the candle bar which is circled was closed. Always wait for the right price action!.
The risk to reward ratio for this was very good, very little risk. Anything that went through the red highlighted area would have stopped me out, a 15pip stop loss for what I hope to be a 50+ pip move.
This may have not been explained well but I will try do better in future, but in summary:
1. Price action - Personally the most important signal when trading. Wait for the correct signal - There are 1000s of trades to take. 2. Technical analysis - In this trade I used the fibonacci tool to identify an area that the price respected and rejected. 3. Money management/Risk reward ratio - Always respect this with every trade. Do not take on trades without ratio being in your favour.
When combining the 3 of the above to your advantage you give yourself a chance at gaining from the markets.
Thanks!
Trade closed manually
⋅
Took 77 pips profit from total simple analysis. It doesn't have to be complicated!