Do you know the win rate of the Fibonacci Trading Strategy?
Do you know if the Fibonacci levels actually work?
Well, if you have been watching the Trading Rush channel for a while, you know that Fibonacci trading sucks because I have tested it 100 times.
The data said the Fibonacci levels have no value at all.
The price doesn’t care about the levels.
But I did that test in the forex market.
What if I give the Fibonacci Trading Strategy a helping hand?
Like, what if I tested it in the stock market, where the price is in an uptrend most of the time?
Most things you buy in this uptrend, especially on the one-day timeframe, have a much higher probability of making money.
So, do you think Fibonacci trading can make money, or will it still suck?
If it can’t make money even in this good market structure, then the Fibonacci Trading Strategy really sucks badly, and we should not use it.
Here’s how I set up the test.
I went to the S&P 500 stock market index on the one-day timeframe.
I started testing from around the first candlestick data I could find.
I used the default Fibonacci tool levels, the ones you see here.
Basically, what people do is, when the price is in an uptrend, they draw the Fibonacci tool from the previous swing low to the recent swing high, something like this.
Then, the Fibonacci levels will show up.
When the price moves down to one of these levels, they take a long trade.
Many usually use extra confirmation near the levels, like a candlestick pattern.
But extra confirmation doesn’t matter if the Fibonacci levels themselves don’t have any significance.
Like, if you draw a random line and take trades based on it, it will be the same as trading Fibonacci if it doesn’t work.
So, the big question is, do the Fibonacci levels work, especially when given a good market structure?
Well, I drew Fibonacci 100 times, and here’s what happened.
Since I was testing in the stock market, which is in an uptrend most of the time, I only took long setups.
In other words, I drew the Fibonacci tool from the previous swing low to the recent swing high.
And then, when the price moved down and gave a pullback, I checked at around which Fibonacci level the pullback ended.
For example, if the pullback ended at around the 61.8% Fibonacci level, then I saw that level as having significance.
In other words, the price respected that Fibonacci level.
Well, after drawing Fibonacci 100 times, this is the data I got.
And guess what?
It’s just like the data we saw in the previous forex testing video.
Look at the pie chart; the latest data looks just like the previous testing data.
In both the forex and the stock market, none of the Fibonacci trading levels showed any significance!
Like, the price ignored these levels completely most of the time.
The price went at or below the 100% level, which is outside the Fibonacci tool, around 40% of the time.
The rest of the time, it saw all the Fibonacci levels as random normal price levels, nothing special.
You could have made your neighbor’s dog draw a random line, and it would have worked just as well as the Fibonacci levels.
So, now we have tested the Fibonacci tool 200 times.
In both the forex and the stock market, it sucks really, really badly.
Just use the tool to see the pullback percentage or something, not to take trades.
Don’t use the Fibonacci Trading Strategy just because you saw a trading guru use it.
Follow data instead.
It shows you the truth!
That’s all!