top of page
  • Writer's pictureAvik Chowdhury

Share Market Trading: Fibonacci Sequence in Share Market

Level of understanding required: Intermediate



Fibonacci in share market
Fibonacci in share market

Fibonacci series in share market open up a world of opportunities in Share Trading. Note: I will not discuss the entire intricate methods of plotting Fibonacci but just demonstrate how I used it today for a successful trade.


Look at the above figure carefully. The market was falling from the levels of 42400. Initially, if you notice, the market was swinging in a volatile manner (at the start of the figure). You may also see a flag and pole pattern initially, BUT, the markets started to fall from 42133. When it started to fall, it started touching my key levels (in yellow). First it broke 42000 and then it headed for 41818. I was expecting a reversal from 41818 (which was one of my key levels). You can see my blog on how I plot key levels. Link: https://www.wealthspartanz.com/post/share-market-investing-key-levels


Anyways, the market did reverse at 41802. When the market started going up from there, I plotted the Fibonacci levels from the top (42400) to the bottom (41802). On plotting, some important levels on the Fibonacci, first important level was at 38% - 42015. Thereafter, the key levels were 42082 (50%) and 42148 (61.8%). My first target was at 38% or 42015 (I was pretty confident on this). Then I decided, I will trail my stop loss post that level and will surely exit at 42082.


I took the trade around 41830. Luckily for me, it easily touched 42000 and continued on a momentum to hit the next target of 42082. Since, I was trailing on Stop Loss, the red candle formed after that and my position was automatically closed. The market did go up after that but that was off my plan and I didn't get the benefit of it.


Note:


  • It is very difficult to predict the market therefore we need to trade our plan with proper stop loss considerations

  • Fibonacci in share market is a lead indicator - it leads traders to have targets before the price action and not after

  • Even best of traders go wrong due to the volatile nature of the market. There are so many variables and therefore predicting may be very difficult to do - accurately

  • Learn these scientific tools and use them to make more of right trades than wrong

  • No one can be 100% right with trades. If you can get say >50% right, you will make profits. Here, the right trades should have a higher value of win vs the losses on average (like I try to make 20 points on the options premium on winning trades and try to keep my loss to 10 points with a >50% win rate)


Some of my blogs which could be relevant for you:


https://www.wealthspartanz.com/post/share-market-investing-reversals-from-a-trend-line-with-falling-wedge-pattern




11 views0 comments

Comentarios


bottom of page