Learn How To Use Fibonacci Indicator MT4

May 25, 2020 | 0 comments

The chances are that you must have heard of the term Fibonacci retracement and extension, except you are new to forex trading. It means a trading tool in the arsenal of professional traders. Forex trading can be simplified using the right trading tools, and the Fibonacci concept is not an exception.

Fibonacci retracement and extension are mathematical calculations that involve numbers starting from either 1 or 0. The truth is that no trader enjoys doing such calculations before entering a position, and that’s where the Fibonacci indicator MT4 comes handy. This indicator will help you do the heavy lifting; all that is required of you is to use the signals generated by the indicator to make money and enhance your trading skills.

Do we add the Fibonacci Indicator MT4 in our list off best metatrader indicators?

In this article, we will walk you through how Fibonacci retracement and extension came to be, how to install and remove the indicator, and round off with how to customize the indicator for effective trading, so let’s begin.

What is Fibonacci?

Fibonacci is a set of numbers that start with 1 or 0, and then succeeded by number 1. The pattern continues like that based on the rule that Fibonacci numbers must be equal to the sum of the two previous numbers.

These days, the use of Fibonacci levels can be seen in the trading of different financial instruments – from stocks, futures, cryptos to commodities, and forex. And derived from the Fibonacci sequence numbers, Fibonacci levels come with exact and explicit support and resistance levels. Plus, it offers precise and defined exit and entry spots on the trading chart.

Fibonacci Sequence Levels

The sequence as stated in the rule above is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, etc. You can continue adding the last two numbers to get the next sequence. For clarity purpose, here is how we arrive at the sequence:

0 + 1 = 1

1 + 1 = 2

1 + 2 = 3

2 + 3 = 5

3 + 5 = 8, etc.

If you’re still confused about how to generate the Fibonacci sequence, fret not. The Fibonacci indicator MT4 will help you do the magic. Just ensure you have Fibonacci Indicator installed on your MT4 trading platform.

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Significance of Fibonacci Sequence

It is not out of place for you to start wondering the significance of this sequence. Below are the benefits of the Fibonacci sequence:

  • The sequence is usually used by experienced traders to calculate Fibonacci targets and retracements (these are essential levels on the market).
  • The Fibonacci sequence can help you predict the exact entry and exit spot to trade on the forex market.
  • The sequence is used to identify potential support and resistance areas in a trading chart.
  • These numbers are not only meant for the forex market; they can be observed around us in musical progression, crystal formation, rabbit growth, as well as in the DNA spiral. The human body consists of Fibonacci relationships.

It would help if you understood Swing High and Swing Low points to enable you to apply Fibonacci levels to your MT4 trading chart. While a Swing High refers to a candlestick with two lower highs on the left and right, a Swing Low is also a candlestick with two higher lows on both the left and right of itself.

A Brief History of Fibonacci

Let’s introduce Mr. Fibonacci himself – His full name was Leonardo Fibonacci. He is not a famous chef; instead, he gained a reputation for always solving complex mathematics. He was in Pisa, Italy. He wrote a book titled “Liber Abaci,” which gained international recognition.

How to Install the Fibonacci Indicator on the MT4 Trading Platform:

  • The first step to installing the Fibonacci indicator MT4 is to click “insert” on the chart and move your move over “Fibonacci.”
  • Once you have done the first step, click “retracement.”

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  • Click and hold the point where you want the indicator to start.
  • Release the mouse to start Fibonacci.

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Customizing the Fibonacci Parameters

  • Pick anywhere on the chart and right-click your mouse.
  • Click on “object list” or press Ctrl+B on your keyboard.

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  • Select Fibonacci and click on edit.

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  • The parameters menu should appear for you to customize.

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How to Delete/Remove The Fibonacci Retracement Indicator From The MT4 Trading Platform:

  • Pick anywhere on the chart and right-click your mouse.
  • Click on “object list” or press Ctrl+B on your keyboard.
  • Select Fibo and click on delete.
  • The indicator should disappear from your trading chart.

Final Words Fibonacci Indicator MT4

A Fibonacci indicator MT4 is a powerful tool every trader should incorporate in their trading arsenal. It is simple to install and use. It has an intuitive user-interface and can help you spot out potential support and resistance levels.

The only drawback of using the Fibonacci indicator MT4 is that it may sometimes give you conflicting signals. As such, you don’t need to use this indicator blindly. If this is your first time using the indicator, we recommend you start with a demo account so that you can learn the basics of how the tool works and identify other pitfalls. Once you grab the knowledge, you can gradually walk your way up and start trading with a live account.

Also, using the Fibonacci indicator MT4 alongside other technical indicators like the support and resistance is a no-brainer if you need exact entry and exit points to trade the market without incurring losses. While the Fibonacci indicator is a great tool, it should not be used in isolation. Therefore, ensure you always look before you leap and carry out your independent research before settling for a technical indicator.

Finally, there are other technical indicators and trading tools available on this here. You can take advantage of them to enhance your trading strategies and improve your income. Check it through this link here.

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