45# Fibonacci Trading Machine Strategy

Submit by Dimitri 2024

Fibomachine Pro 1.3 is a technical trading strategy that leverages Fibonacci retracement levels to identify potential price reversal zones and to time market entries and exits. Fibonacci retracements are widely used by traders to forecast levels where price corrections might end, and the trend is likely to resume. The tool is designed to plot Fibonacci levels based on recent price swings and provide both buy and sell signals with target and stop levels.

How the Strategy Works

Fibonacci Levels:
- The strategy calculates Fibonacci retracement levels based on recent price highs and lows.
- Key Fibonacci levels, such as 23.6%, 38.2%, 50%, 61.8%, and 100%, are plotted on the chart to mark potential support and resistance levels.
- These levels represent potential price zones where the market may reverse or continue trending.
Setup Strategy

Time Frame 30 min or higher.

Currency pairs: any.

Indicators MT4:

Fibomachine indicator;

History Signal Trend indicator.

Symbol Changer.

Entry Signals:
- Buy Signals:
  - A buy signal is typically triggered when the price hits a predefined Fibonacci retracement level (often 61.8% or 50%) during a correction in an uptrend.
  - The Fibomachine Pro will recommend entering long positions when the price bounces off key Fibonacci levels, indicating that the correction might be over, and the primary trend is resuming.
- Sell Signals:
  - A sell signal is triggered when the price touches specific Fibonacci levels during a retracement in a downtrend.
  - The tool signals short entries when the price reacts to Fibonacci resistance levels, suggesting that the retracement is likely ending and the downtrend will continue.
Stop Loss and Take Profit:
- The strategy provides clear stop-loss and take-profit levels:
  - The stop-loss is usually placed just beyond the next Fibonacci level above or below the entry point, providing a logical point of invalidation if the market goes against the trade.
  - The take-profit levels are typically based on Fibonacci extension targets, such as 161.8% or 261.8%, or other predefined price zones where the price might encounter resistance/support in the direction of the trade.
- A common rule is to set a stop loss slightly beyond the last Fibonacci level to allow for potential price wicks and volatility.

Note: The only change you need to make to this system is to place the stop loss on the previous swing High/Low and set the Profit Target as Medium Take Profit. This is a winning strategy as it tends to have a profitability > 57%.

Risk Management:
- The strategy follows a risk-reward ratio, often aiming for a 1:2 or higher ratio. This ensures that the potential reward outweighs the risk in each trade.
- By utilizing Fibonacci retracement levels for both stop losses and take profit targets, traders maintain consistent risk management practices.
Trend Identification:
- Fibomachine Pro also helps in identifying the primary trend. It avoids trading against the prevailing trend by only taking trades in the direction of the larger trend (e.g., buy signals in an uptrend and sell signals in a downtrend).
- The tool may use additional moving averages or trendlines to confirm trend direction before triggering signals.