Fibonacci
sequence and specially the ratios derived from it are present in many
natural phenomena and human designs, giving the specific proportions
derived from them close resemblance to a natural law; and forex
trading, being so human, and with all its complexity is not an
exemption for the application of these specific proportions.
Fibonacci forex trading is the basis of many forex trading systems used
by a great number of professional forex brokers around the globe, and
many billions of dollars are profitable traded every year based on
these trading techniques.
Fibonacci was an Italian mathematician and he is best remembered by his
world famous Fibonacci sequence, the definition of this sequence is
that it’s formed by a series of numbers where each number is the sum of
the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ...But in the case of
currency trading what is more important for the forex trader is the
Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50,
.382, .618, etc.
These ratios are mathematical proportions prevalent in many places and
structures in nature, as well as in many man made creations.
Forex trading can greatly benefit from this mathematical proportions
due to the fact that the oscillations observed in forex charts, where
prices are visibly changing in an oscillatory pattern, follow Fibonacci
ratios very closely as indicators of resistance and support levels;
maybe not to the last cent, but so close as to be really amazing.
Fibonacci price points, or levels, for any forex currency pair can be
calculated in advance so that the trader will know when to enter or
exit the market if the prediction given by the Fibonacci forex day
trading system he uses fulfills its predictions.
Many people tries to make this analysis overly complicated scaring away
many new forex traders that are just beginning to understand how the
forex market works and how to make a profit in it. But this is not how
it has to be. I can’t say it’s a simple concept but it is quite
understandable for any trader once he or she has grasped the basics and
has had some practice trading using Fibonacci levels along with other
secondary indicators that will help to improve the accuracy of the
entry and exit point for every particular trade.
