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.