S&P 500 ‘Buy’ At 1.618 Fibonacci Retracement Level
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Here’s an S&P 500 trade setup I recently took to demonstrate using one of my favourite technical analysis tools, Fibonacci retracement.
Trade Setup
- 1-day timeframe for a swing trade
- Price hit 1.618 Fibonacci retracement level
- I was bullish on the S&P 500, so I entered a long (buy) position
- I set my take profit at 1.272 Fibonacci level
- I set my stop loss for an equal 1:1 risk-to-reward
- I was risking 2.43% to make 2.43%
Advanced Risk Management
- I could have adjusted my stop-loss as the trade moved in my favour.
Alternative Trade Setup
I could have entered multiple long positions to target multiple Fibonacci levels, but this would have increased my risk. As a conservative trader, I prefer to enter only one position per price level in case my analysis is wrong.
Disclaimer: This example is for informational and educational purposes only and should not be considered financial advice or a recommendation to buy or sell any security. Trading involves significant risk, and past performance does not guarantee future results. Conduct your own research and consult with a financial professional. The information discussed here is personal to the author and may not be suitable for all traders.
