Forex Trading Course

Learn The Basics About Fibonacci Analysis & It's Application To Trading The FOREX market

Fibonacci Numbers

Fibonacci numbers are the result of work by Leonardo Fibonacci around 1170 while studying the Great Pyramid of Gizeh. The fibonacci numbers are a numerical sequence shown below:

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... and so on to infinity

This sequence of numbers appears to have little importance to the untrained eye however there are many remarkable properties:

1. The next number in the fibonacci sequence is obtained by adding the current and previous number, e.g. 1+2=3, 8+13=21

2. After the 1st couple of numbers, if you take the ratio of any two consecutive numbers you get approx 0.618, e.g.

3/5= 0.6

5/8= 0.625

8/13= 0.615 and so on

3. If you take the ration of two alternate numbers you get approx 0.382, e.g.

3/8= 0.375

5/13= 0.385

8/21= 0.380 and so on

It has been found that the Fibonacci numbers sequence can be used to predict many things that occur in nature, science, math's and engineering. In trading the sequence is used as the basis for the Elliot Wave Theory which is used to predict stock market patterns.

In the technical analysis of stocks Fibonacci numbers are commonly used to determine potential support, resistance, and price objectives.

A 38.2% retracements usually imply that the prior trend will continue, and are considered natural retracements in a healthy trend.

A 61.8% retracements imply a new trend is establishing itself.

A 50% retracement implies indecision.

The average trader does not need to know all the details about the sequence because all the calculations are usually performed by the trading tool (if it incorporates fibonacci numbers), however the trader must understand how to apply the retracement levels in order to make trading decisions.

See the Fibonacci Trading Risk Calculator to see the calculations in action.

There is a great new CD tutorial course that will teach you everything you know to develop the ability to pinpoint market top and bottom turning points. Check out the "FibonacciSecrets" CD Course by clicking here

Report is provided by permission of Mark McRae, by the same author are these excellent trading courses and ebooks:

Trading For Beginners

The Surefire Forex Trading Course