Chapter 7 Utilizing Fibonacci retracement
Fibonacci retracement levels can be used to identify your entry points (support level), to set your exit points (resistance levels), or to decide where to put your stop-loss order. The usual method for limiting losses with a stop order is placing the stop order slightly below a Fibonacci level.
For example, if you used Fibonacci retracement to find support levels and your entry point is at the 0.5 Fibonacci level, then a stop loss can be placed slightly below 0.618 or 0.786. If your entry point is at 0.618, stop loss can be placed below 0.786 or 1 (the swing low).
