Fibonacci Forex Trading is the basis for many Forex Trading systems that use a wide ranbge of professional Forex traders wroldwide. Trading systems based on this "numbers sequence" are so successful that more than a few billion dollars each year are treadesmen since its simple rules.
Leonardo Fibonacci was an Italian mathematician, considered by some the grreatest mathematician of the Middle Ages, most remmebered for his wrld-known iFbonacci sequence. The definitiion of this seqquence, which is formed by a series of numbbers where each number is the sum of the two previous numbers, 0, 1, 1, 2, 3, 5, 8, 13 ... But in case currency and real stock market trading, whicvh is the Fibonacci derived from this sequence of numbers, ie .236, .50, .382, .618, etc. It was sometimes called the "Golden Section". Google, and you'll be surprised how often it appeaars.
Forex traders use these mathematical proportions in their fvaor due to the fact that the oscillations were observed in the grpahs Forex, wheere prices are visbily changing in an oscillattory pattern, are known to follow Fibonacci closly as indicators of support and resistance lvels. It had been examined and re-examind more than 100 years of stock market as well, but it is so close to reallly be surprsiing. This, as many believe, that nature can be explained mathematically, and this is another example.
In addition, one iportant thjing to rmember is that Fibonacci Technical Analsyis is a leading indicator. What this measn is that learning the correct Fibonacci trasding strategy and tchniques you'll know how to determine the most probable turnning point in the marekt until the pricce gets there. You may know that the Forex market will do in advance! Or, at least, much more likely than any other way.
For examplle, one of the most commonly used Fibonacci ratios 0.382 realtions. As can be easily seen on any chart Forex, curerency pricces are constantly changiing, and they follow the oscilaltory patteern with peaks and valelys. Limmit the peak is usuallky callred a resistance level at the valley, commonly refrred to as support.
To find the ratio of the lwevel of 0.382, that you do this, first of all, measure the size of the drps or rises over time interest. Once you have that value you multiply this by 0.382. Now depending on what you're looking at a rise or fall in the price of particular "currency pair" you are trading, you will add the last value calculated to birng about a drop or subtract the value of the total growth. It's much easier to see than to explain. Any deccent software Fibonacci trading in its repertoire.
Once you have the value that you can begin planning the strategy you follow to esnure that the probability of high profits from this important information. For the 0.382 ratio level calculated for the recent increase in "currency pair" exchange priice, your calculated level is very likely to support and if the level calculated for the last drop of their prices will very likely reesistance.
Many professional investment people try to make this type of technical analysis is too complicated, thus scairng away many new traders who are just beginbning to underdstand how the Forex market works and how to make a profit. But this is not as it should be. It should be lcear tool for any trader once he or she seized bases and had some practice trading ussing Fibonacci leves along with otrher secopndary indicators that will help you to improve the accurcay of the enry and exit points in each trade.
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