Jul 24, 2018 · 3 min read

The future of Forex is here and it’s thanks to a formula that was developed nearly 1000 years ago. Fibonacci trading can help many to improve their financial situation today.

In today’s world there are many different ways to earn a living. While the majority of us are just stuck in standard jobs, the recent advancements in technology has allowed anyone with an internet connection, to start developing additional streams of income.

One of the most popular ways to make money online is through investing and trading. Now this is no secret and has been used by mankind for 1000’s of years. The main difference now, is the ability for anyone to get involved. Gone are the days where only Fortune 500 companies and big banks could join the game. The playing field has been leveled.

Forex is the term used for “Foreign Exchange”. The act of exchanging one currency for another, with the aim of obtaining a profit from the trade. This is a very lucrative market with Trillions of dollars being traded every single day.

In order to achieve the best results, Forex traders must learn to use as much information as possible. One way this is done is through the use of Technical Analysis. This involves using charts and historical information of a particular market, in order to determine good entry and exit points for trading.

One of the most effective methods of technical analysis is known as Fibonacci Trading. This is where a connection is noticed between the areas of resistance and support. This allows traders to look at the history and spot opportunities to profit in rising or falling markets.

The term Fibonacci was derived from it’s founder, Leonardo Fibonacci, a famous mathematician from Italy. He noticed a pattern of ratios that occurred from adding the previous two numbers together.

E.g. 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144
In this sequence 0 + 1 = 1, 1+1 = 2, 1+2 = 3 etc.

This pattern provides a series of numbers, where the ratio of corresponding numbers is calculated. If you measure the ratio of a number to it’s succeeding number you get .618 Eg. 55 divided by 89. = .618 If the ratio between alternate numbers is measured, a result of .382 is recorded.

These numbers are often referred to as the “Golden Mean” or the ideal moderate position between two numbers. Now that we know the rule on how Fibonacci numbers are derived, we’re able to determine Retracement and Extension levels.

Fibonacci Retracement Levels:
0.236, 0.382, 0.500, 0.618, 0.764

Fibonacci Extension Levels:
0, 0.382, 0.618, 1.000, 1.382, 1.618

Retracement levels help traders determine areas of potential support/resistance in a moving market and help to determine a good time to buy in. Extension levels are used to provide an estimate of when the best possible time is to close a trade & take the profit.

The popularity of Fibonacci trading means that certain buy/sell levels are almost predictable, as a large number of traders rely on these signals for their day to day trading.

There are many pieces of software out there which can assist in calculating and mapping these numbers for your specific market. There are fantastic tools that do the hard calculations for you, to determine the ideal entry & exit points for a trade.

Some providers have gone above and beyond, creating a unique and revolutionary software with an array of advanced features. This allows traders to get the latest information and trading signals directly, to ensure the best possible results.

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