7 Days of Trading Challenge: Fibonacci Challenge and Retracements

Monday: Launch of the Challenge

Today's mission: Understanding Fibonacci retracements
Today, we're going to familiarize ourselves with Fibonacci retracements, an essential trading tool for identifying potential support and resistance levels based on market dynamics.

Fibonacci retracements are based on mathematical ratios (23.6%, 38.2%, 50%, 61.8%, and 78.6%) which are used to identify areas where the price could turn around after an impulse.

Tasks to be performed :

• Playback and Video :
  • Read a detailed article on Fibonacci retracements, their history and their application in trading.
  • Listen to our podcast which explains how to plot Fibonacci retracements on a chart and how to use them to identify entry and exit points.

Recommended resources :

• Article : "Mastering Fibonacci retracements for better trading

• Podcast: "Using Fibonacci in trading: How to spot key areas".

• Configuring your chart :

  • Add Fibonacci retracements to your trading platform (MT4, TradingView, etc.).
  • Plot Fibonacci retracements on a significant price movement, whether up or down.
  • Choose two assets to observe (e.g. EUR/USD and NASDAQ 100) and set them to different time scales (H1, H4, D1).

• Observation:

  • Take note of the Fibonacci levels on the charts you've drawn and observe how the price reacts around these key levels. Identify points where the price seems to bounce or reverse.

Tuesday to Thursday: Analysis and Strategy

Three-day mission: Develop and test your strategy with Fibonacci

Tuesday: Identifying key levels with Fibonacci

Today, we're going to concentrate on identifying the most significant Fibonacci levels: 23.6%, 38.2%, 50%, 61.8%. These are the areas where the price could turn around or pause before continuing its trend.

Tasks to be performed :

• Trace Fibonacci retracements on a recent trend and identify key levels.
• Keep an eye on the price to see if it reaches one of these levels and observe its reaction (rebound, breakout, consolidation).

Wednesday: Entry and exit signals

Today, we're going to use Fibonacci retracements to identify entry points after a pullback and exit points after a trend reversal.

Tasks to be performed :

• Use Fibonacci levels to identify areas where you could enter a counter-trend trade (for example, after a retracement towards 38.2% or 61.8%).
• Set take-profit targets based on Fibonacci extensions (for example, at 161.8% or 261.8%).

Thursday: Backtesting and strategy optimization

Test your strategy on past data to verify its effectiveness before putting it into practice.

Tasks to be performed :

• Perform a backtest on the Fibonacci retracements you've traced over several assets and time scales. Check whether your entries and exits would have been profitable.
• Adjust your strategies according to backtesting results: adjust Fibonacci levels or modify your entry criteria.

Friday: Practice

Today's mission: Execute your trades with Fibonacci
Today, we're going to take action and execute your trades using Fibonacci retracements.

Tasks to be performed :

• Place your real trades or demo trades according to the Fibonacci levels you've identified.

• Use a stop-loss below support levels and a take-profit at Fibonacci extension levels.

• Trading Journal :

  • Make a note of every trade you execute, including the reason for your entry and exit, stop-loss and take-profit levels, and the results at the end of the day.
  • Analyze the reasons why certain trades have been winners or losers and the adjustments needed.

Saturday: Review and Adjustments

Today's mission: Analyze results and adjust your strategy
Once you've completed your trades, it's time to review your performance and analyze your results.

Tasks to be performed :

• Review your Friday trades and identify the elements that worked well.
• Modify your strategy if necessary: perhaps a particular Fibonacci level was more relevant, or the entry criteria need adjustment.

Sunday: Taking stock and sharing

Today's mission: Take stock and share your results
To conclude this challenge, we're going to take stock of the week and share your progress with the community.

Tasks to be performed :

• Summary :

  • Write a detailed report on your trading week with Fibonacci. What objectives did you achieve? What were your greatest discoveries?
  • Think about what you can improve for future challenges.

• Share :

  • Share your results and thoughts on social networks. Use the hashtag #xenesy and tag @xenesy_project in your posts.
  • Encourage other participants to do the same, to share their strategies and experiences.

Conclusion

Fibonacci retracements are an extremely powerful tool for identifying key market levels. They enable you to spot entry and exit zones based on reliable mathematical calculations, while offering a disciplined approach to navigating trends. This challenge has enabled you to test Fibonacci retracements in real-life conditions and improve your ability to trade in line with market corrections.

Good luck to you all, and see you soon on the markets!