Fibonacci retracement can be an excellent tool to use when it comes to making binary option trading decisions. A lot of veteran traders swear by them and say they work up to 70% of the time. That figure sounds a little high for sure, but there is no denying that a lot of traders have some success when using the 13^th Century mathematician’s numbers. Let’s take a look at using Fibonacci with an 80% retracement; it’s one of the retracements which are now being used more frequently.

Fibonacci’s 61.8% retracement has long been known as the golden ratio, but that is starting to change a little bit as other ratios have been proven to work more often. It is hard to say exactly why Fibonacci ratios work and they are not by any means always perfect, but there must be something to them as it is widely known that many of the big traders and firms use them.

Traders think using Fibonacci ratios are great for making trades with small defined risks. Fibonacci levels will help you to determine the best possible retracement levels that you should sell and buy at, and they will also provide you with fairly accurate price targets with their swing highs and lows.

So what is special about the 80% retracement? For one it is a required retracement figure when you try to short the move. To explain it a little more clearly; if you have a trend that is bearish and it looks like a new trend is beginning to form, waiting for the 80% replacement will help you decide to short pair and then the stop loss can be placed above the high where the bearish move got its start.

When it’s applied to binary options trading, not only should the retracement level remain the same, but the direction that you are trading in will be the same too. This would encourage you to buy put options as the market reaches the Fibonacci 80% retracement and then set the expiration date according to the time frame your analyses technical chart was base on.

If you are using the retracement according to Elliot waves theory, corrective waves are the only place Fibonacci 80% retracement can happen. Keep in mind when you are using this retracement level to look for a common, irregular or flat line.

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John Miller

Author at 7 Binary Options

John Miller is the main author of content here at 7 Binary Options. He’s also the brand’s lead investment consultant. He’s been working for 7 Binary Options since April 2014 and brings a wealth of knowledge and experience to his role. He’s played a crucial part in developing the site and helping it grow. In his role as writer and consultant, John’s keen to help others get ahead in the ever-changing world of binary options and forex trading. He’s always happy to advise others, whether it’s complete beginners learning the ropes or more experienced traders looking for some hints and tips.

John certainly knows what he’s talking about. He graduated from California State University in 2008 with a Master’s Degree in Investments and Securities. Since entering the world of work, he’s continued to put his degree to use. He’s spent over a decade working in the investment banking sector and thanks to his foresight, skills and education, he’s in a prime position to offer help to others looking to start investing.

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