Trading in Market with Fibonacci sequence

Trading in Market with Fibonacci sequence

Market analysis based on Fibonacci sequence and Golden Ratio helps investors and traders determine with relative accuracy the price behavior, the ideal entry and exit points and stop-loss levels.

Fibonacci numbers, to those who may not be familiar, were named after an Italian mathematician called Leonardo Fibonacci. Without getting too much bogged down into technical details, Fibonacci numbers can be simply stated as a series of numbers in which the next number in the sequence is obtained by taking a certain number in the sequence and adding to it its predecessor.

Secrets of Fibonacci and Traders

Fibonacci numbers are a great fascination with traders who use Fibonacci numbers in setting what is called as stop loss orders. There are different Fibonacci Retracement Level Percentages like 75%, 50%, 33%, 38.2,% and 68.2%. Among these, 68.2% and 38.2% are important percentages for Retracement level. For instance, if 0 is the initiating price and 100 is the peak price, the Retracement level percentage in this case would be 50 % if the price declines to 50. This is just the same scenario what we pragmatically observe in the market without any technical back up. In a downward moving market which is subject to experience upward push, these Retracement levels can be easily applied.

Using Fibonacci technical analysis, a trader can set placement levels for stop loss by specifying certain zones of trading which act as important criteria for market analysis. Once zones are defined, a Fibonacci number can help define stops in different market scenarios like the support zone under placement level getting violated or trading price falling down. One of the biggest advantages of Fibonacci Retracement levels is that it supports pre-defined exits for traders without incurring much loss.

One can learn Fibonacci techniques of market analysis through a number of ways like referring to some trading books, attending seminars and institution counseling or by taking online courses for both basic and advanced level trading. Understanding stock market with the technical application of Fibonacci sequence is always helpful in the long run.