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 Online?
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 Online.
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 "Automated 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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