Fibonaccial Online Forex Trading Techniques

Fibonacci was the great mathematician from Italy. He founded
the new sequence of numbers and it was named after him
called as fibonacci. The 0, 1, 1, 2, 3, 5, 8, 13, 21, 34,
55, 89, 144, 233, 377,610 etc are the numbers of this
sequence which has the starting of 0 and 1. Each number in
this sequence is the sum of the preceding two numbers. How can this be applied to Forex Trading?

The higher up in the sequence,the closer two consecutive
"Fibonacci numbers" of the sequence which are divided by
each other will approach to the golden ratio.When this ratio
is applied to the trading stocks,it produces two results as
primary and secondary.The primary result refers to moving
in one direction while the secondary in the opposite
direction.

In primary trend,the most common Fibonacci retracement
levels are 38.2%,50%,61.8%.These standard levels are used by
most basic stock charting applications.These Fibonacci
retracement levels act almost as magnets once the
countertrend rally takes place.Apart from above three there
are few other levels that can provide resistance.These are
75%, 78.6%, 87.5%, and 88.7% retracement levels. We can use this for Currency Trading.

The thumb rule states that the retracement levels makes
about 50%, and the earlier mentioned levels attracts the
price by behaving like magnets. The price must be analyzed
by the persons who are familiar on those levels. Always the
prices do not move in constant. Stocks, futures, forex,all
instruments which are liquid,will often oscilate in
Fibonacci proportions.

The charts of price scale and time scale can be enhanced
with the applications of Fibonacci numbers. With the few
simple indicators of Fibonacci ratio, can be used to
determine robable price turning points,optimum entry,exit
and stop-loss levels.

After identifying the primary trend, use price reversal
pattern recognition to coincide with a fibonacci retracement
level to confirm that the countertrend move has ceased.Then
look for the stock to test the recent lows and double bottom
or break through that level.

In "Foreign Currency Trading",the trader must be aware of the
international markets as there can be "risk arbitrage" in
the market situations.The trader can use "forex signal
trading"for the assistance. In Forex trading,the currency of
one nation is traded for that of another.So one needs to be
fully aware of the market situations in order to be "forex
trading".

This application of Fibonacci to trading can be very
complex for a new beginner and does take time and experience
to perfect it.Many floor traders use these Fibonacci
retracement levels. These levels are used by many advanced
traders as well,it allows them to become a self-fulfilling
prophecy.

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