Fibonacci Trading System Exposed

Fibonacci Trading System

Fibonacci has formed the basis for many trading systems, with many billions of dollars traded on the fibonacci technique it is worth looking at. This system is based on series of number where each is a sum of the two preceding numbers. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55...

Traders look at not just this numbers but the ratios between these numbers: Fibonacci Ratios. The important ones are .236, .50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and 1.00 is added. These ratios are mathematical principles with prevalence in nature around us. Stocks, Futures, Forex, Indices, and all other liquid instruments often retrace in Fibonacci proportions and advance in Fibonacci proportions as well.
Since these Fibonacci price-points can be calculated in advance, it gives traders the opportunity to predict possible market turnarounds. So when the market gets to these points we can expect profits if the market behaves just as we expect.

Fibonacci - Forex Trading Indicator

The widely most used Fibonacci ratios is the 0.382 ratio. This is easily seen on forex charts. Normally prices are continually changing, somehow following an oscillatory pattern consisting of peaks and valleys. The peak limit is called the resistance level while the valley is usually called a support level. It is important that you know how to set the 0.382 ratio in a forex chart this is very important for traders since it is a reliable indicator of the most probable future moves and shakes of the currency markets; thus giving traders a very good advantage over the market using the fibonacci trick.

How to draw a FIB GRIB

We can identify Fibonacci patterns on charts easily and can be drawn using swing points. Fib grid is drawn from the swing point high and the swing point low of a swing. Basically almost all charting software’s should come with this feature.
Mathematically, these numbers are expressed via this formula:

Fn = the n-th Fibonacci number
Fo = 0
F1 = F2 = 1
Fn = Fn-1 + Fn-2
F(-n) = (-1)n-1 • Fn

The F represents the Fibonacci number and is has some other interesting F properties.