FibDiv Strategy Explained by Skyrexio
Updated
Hello, everyone!
One of the strategies which I use in my trading routine is FibDiv strategy. This strategy differs from other based on Fibonacci retracement, but in my opinion has higher win rate and clear rules to enter and exit trades. To apply this strategy follow the steps below.
1️⃣FIBONACCI RETRACEMENT SETTINGS
Firstly you should set the additional levels to your Fibonacci retracement tool. You need to enter the following levels: 0, 0.5, 0.61, 1, -0.18, -0.27, -0.61. The zone between -0.27 and -0.18 is the first strong resistance. -0.61 is the final target. All these additional level should be appeared above zero level as you can see on the Chart 1.
2️⃣HOW TO FIND THE IMPULSE?
FibDiv strategy is the trend following one. The idea is to identify the impulse and buy at the potential correction bottom. Here are the rules to correctly identify the impulse.
1.Start at the some local bottom point and follow the next candles
2.Stop at the point, where you will see 3 red candles. These candles should not obligatory be consequtive, but first red candle's open should be higher than second's and third's
3.Compare the highest green candle's close and next red candle's open. If close > open put the 0 Fibonacci level to green candle's high. Otherwise put on red candle's high
4.Place 1 Fibonacci level at the impulse start
5.We identified impulse🚀
3️⃣HOW TO OPEN TRADE?
In our case we consider only long trade case. You can use the reverse logic to find short trades. When the impulse was identified we should wait for the price reach 0.5 Fibonacci retracement level. There we can consider the potential long setups on the lower time frame. For example if you use 4h go to 15-30 min to find the local setups which you used to use in your trading. Fib Div gave you the confluence zone where you can find any trades with higher probability. If you want me to tell you about these setups smash the rocket 🚀 button and I will share another article.
If you are new in trading you can just buy at 0.5 - 0.61 level and put your stop loss below 1 Fibonacci level.
4️⃣WHEN YOU SHOULD CLOSE TRADE?
If the price continues going down after reaching the buy zone and break the 1 Fibonacci level - Fibo is invalidated and trend is broken. Remove the Fibonacci and search for the next impulse.
If your entry was right and price continues pumping the first target is zone between -0.27 and -0.18. You can close 50% of position here and for the rest part set stop loss at entry and wait for the final target at -0.618. Close the rest 50% here and remove the Fibonacci. Find the new impulse and repeat this approach. On the chart 2 you can find the proper setup for this strategy on Bitcoin.
I need to tell you also that if you place your stop loss below level 1, you is going to have 1.5-2 : 1 risk to reward ratio. It's enough to make money, but not perfect. Advanced techniques finding entry point which I mentioned above will allow you to increase risk to reward ratio up to 5:1 or higher.
Best regards, Ivan
🔥Guys, if you want me to tell you about advanced techniques from my experience follow me and smash the rocket🚀 button.🔥
One of the strategies which I use in my trading routine is FibDiv strategy. This strategy differs from other based on Fibonacci retracement, but in my opinion has higher win rate and clear rules to enter and exit trades. To apply this strategy follow the steps below.
1️⃣FIBONACCI RETRACEMENT SETTINGS
Firstly you should set the additional levels to your Fibonacci retracement tool. You need to enter the following levels: 0, 0.5, 0.61, 1, -0.18, -0.27, -0.61. The zone between -0.27 and -0.18 is the first strong resistance. -0.61 is the final target. All these additional level should be appeared above zero level as you can see on the Chart 1.
2️⃣HOW TO FIND THE IMPULSE?
FibDiv strategy is the trend following one. The idea is to identify the impulse and buy at the potential correction bottom. Here are the rules to correctly identify the impulse.
1.Start at the some local bottom point and follow the next candles
2.Stop at the point, where you will see 3 red candles. These candles should not obligatory be consequtive, but first red candle's open should be higher than second's and third's
3.Compare the highest green candle's close and next red candle's open. If close > open put the 0 Fibonacci level to green candle's high. Otherwise put on red candle's high
4.Place 1 Fibonacci level at the impulse start
5.We identified impulse🚀
3️⃣HOW TO OPEN TRADE?
In our case we consider only long trade case. You can use the reverse logic to find short trades. When the impulse was identified we should wait for the price reach 0.5 Fibonacci retracement level. There we can consider the potential long setups on the lower time frame. For example if you use 4h go to 15-30 min to find the local setups which you used to use in your trading. Fib Div gave you the confluence zone where you can find any trades with higher probability. If you want me to tell you about these setups smash the rocket 🚀 button and I will share another article.
If you are new in trading you can just buy at 0.5 - 0.61 level and put your stop loss below 1 Fibonacci level.
4️⃣WHEN YOU SHOULD CLOSE TRADE?
If the price continues going down after reaching the buy zone and break the 1 Fibonacci level - Fibo is invalidated and trend is broken. Remove the Fibonacci and search for the next impulse.
If your entry was right and price continues pumping the first target is zone between -0.27 and -0.18. You can close 50% of position here and for the rest part set stop loss at entry and wait for the final target at -0.618. Close the rest 50% here and remove the Fibonacci. Find the new impulse and repeat this approach. On the chart 2 you can find the proper setup for this strategy on Bitcoin.
I need to tell you also that if you place your stop loss below level 1, you is going to have 1.5-2 : 1 risk to reward ratio. It's enough to make money, but not perfect. Advanced techniques finding entry point which I mentioned above will allow you to increase risk to reward ratio up to 5:1 or higher.
Best regards, Ivan
🔥Guys, if you want me to tell you about advanced techniques from my experience follow me and smash the rocket🚀 button.🔥
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