Fibonacci Trick for measuring Risk to Reward Ratio

10 thg 4, 2023

If you don't use your fibb tool much, (save your settings as a template first if you do) or for just a quick check to see if there is enough reward for the risk in the trade, you can set up your Fibonacci in increments of 1 (2.5 is 1:1.5)
Do this as far as you like. You can extend lines left or right to check if the R Ratio you are looking for will fit this market structure, or if you should wait for a better set up.

I happen to see this in a YouTube video, and thought it was very interesting and more than useful...

The settings are as follows :

0 - loss/stop loss price
1 - 1 unit of risk (100 percent)
2 - 1 unit of risk plus 1 unit of reward (1:1)
2.5 - 1 unit of risk, 1.5 unit reward (1:1.5)
3 - 1 unit of risk, 2 unit reward (1:2)

..... and so on.

Then just save it as a template for quick set up later


-- Example of use 6 (600 percent) is 1:5. Just subtract 1 for the risk and the remaining is the reward ratio. Each 100 percent mark is a single unit of risk (-1)

In MT4 its much better to see it directly, as you can label the levels how you wish (using the same formula)